On Wednesday the Chancellor Rishi Sunak is due to announce a raft of new packages aimed at boosting the UK economy as it attempts to recover from the devastation the pandemic has brought.
A range of new measures have been talked about in recent days, however, the one our industry wants the most, a VAT cut for energy-efficient windows and doors, may not be on the list.
Building, jobs and training
Last week Boris Johnson announced that the Government would accelerate £5bn of allocated money to be invested in infrastructure projects, including roads, the building of hospitals and increasing A&E capacity. You can find out more about that here. It was welcomed in most parts, however, there were calls that it wasn’t enough and that the money being used was money already earmarked for such things. We’ll be waiting to see if Rishi Sunak will have more meat to put on the bone, so to speak, which will build on the PM’s statement of “build, build, build” last week.
One of the expected announcements on Wednesday is the Chancellor will make available £1000 to businesses that take on 16-24-year-olds for work experience. Notice I didn’t say apprenticeships there. A report from The Telegraph says that the idea will form a £111m plan to triple the number of trainees. Perhaps the Chancellor has learned from previous Governments, namely David Cameron’s and his plan to create 3m new apprenticeships. A target missed. I suspect the hope is that the work experience given to the 16-24 year-olds will turn into apprenticeships or other employment further down the road. At a time when the industry is working through a major glut of work, £1000 to take on a young person with a potential career in the sector might not be that bad an idea. I still think we would prefer full-on apprenticeships.
More help is on the way for jobseekers as the number of coaches at job centres is set to double to 27,000. Various areas of our industry are in dire need of new people to rejuvenate our sector. We’re all saying how busy we are, so now is the time to start opening our doors to those who need employment and show them a prosperous and positive path through fenestration in this country.
One of the plans being considered is a stamp duty “holiday” for first-time buyers and areas in the north where they won seats from Labour. However, I have read that whilst it could be announced, it may not be implemented until the Autumn, which would effectively put that part of the market on hold as people would simply sit on their hands until the scheme takes effect.
There is also a plan to introduce a holiday for National Insurance payments. Its been estimated the move could create hundreds of thousands of new jobs as it cuts costs to employ new people. With the furlough scheme winding down at the end of October, with the prospect of large job losses, the Government are going to need to get creative and keep the cashpoint open if they are to stave off huge unemployment numbers.
During the Spring Budget, the Chancellor announced a massive infrastructure and building plan, costing hundreds of billions of pounds over the next few years. I would like to see that accelerated much faster. Projects brought forward rapidly, money given to local areas to quicker enact regeneration plans. Much of that means new buildings, which means for our industry, new windows and doors to put into those buildings. I also believe it will create a feel-good factor for the country as it sees itself build its way out of a crisis. The one caveat I would put on that is that this has to be done in a green and sustainable way. No going back to the inefficient, climate-damaging methods. We have a chance to learn a lesson here, let’s not ignore it.
To cut VAT or not to cut VAT?
One of the major ideas touted in recent weeks is to cut VAT to 15% or lower to help encourage consumers to spend. This is what happened during the financial crisis 12 years ago, where the Government at the time lowered the rate from 17.5% to 15%. It has since risen to 20%. Personally, given the sheer scale of the crisis, they’re going to have to go a lot lower than 15% if it’s going to prove effective. 5% perhaps isn’t going to be enough to make those cautious about spending money open their wallets.
This one doesn’t seem as clear cut as the other ideas. The previous Chancellor Sajid Javid has said a VAT cut from 20% to 17% would cost £21bn, but could charge up spending in return. The speculation around a VAT rate cut has died down in recent days, so I’m not convinced that on Wednesday this is going to be one of the measures announced. According to reports in the Independent the Chancellor wants to see how quickly spending recovers before making a decision, so I think that maybe this is one for the next full Budget or an extra spending review, perhaps in October or November this year.
It has also been suggested that VAT rate cuts might be more targeted, rather than a blanket cut. For example, one idea I have read about is that the hospitality sector, including pubs and restaurants, could see a large rate cut to encourage people to go and have a pint and a meal. It may well be that the Chancellor wants to see which sectors are doing OK and ones which need help and implement VAT cuts more precisely.
From a fenestration sector perspective, much of the industry has long called for a VAT rate cut to 5% or lower to bring it in line with other home improvement products which enjoy much lower rates. If they are going to be specific about which areas might be able to see a cut, I hope that we will be acknowledged.
Personally, I’m not holding out much hope for a VAT cut announcement on Wednesday. I think it will come later on in the year. So if we’re not getting that, instead it would be good to see some significant investment in training and upskilling, apprenticeships, financial incentives for companies to go green and a huge (accelerated) infrastructure plan, both commercial and residential. Plenty of sectors could benefit from that, including ours.
We shall wait with baited breath.
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