July 20, 2024

How dialling up the green revolution would give UK construction something to sink its teeth into

Ahead of the autumn budget on 27th October, Brendan Sharkey, Head of Construction and Real Estate at MHA, says that with the pandemic subsiding, the Chancellor should introduce more measures to get the construction industry to focus on sustainability.

“With the pandemic subsiding and the 2021 United Nations Climate Change Conference (COP26) approaching, the autumn budget is the perfect opportunity for the UK government to really push the green agenda in the construction sector. Public investment and targeted tax reliefs could send a steady pipeline of work to builders and civil engineers and speed up the country’s transition to net zero emissions by 2050. Rishi Sunak should also consider creating a dedicated body to take charge of promoting sustainability, just as Homes England oversees the government’s house building targets.

“One opportunity is to invest to upgrade the UK’s transport network in the face of growing numbers of electric vehicles (EVs). There are targets for housing so why not EV charging points? With a clear direction of travel laid down in government targets the upshot would be petrol stations and forecourts redesigned for EV charging. This would generate plenty of work for construction workers up and down the country while enhancing the sale of electric vehicles.

“The current temporary increase in the Annual Investment Allowance (AIA) to £1m ends on 31st December 2021 whereupon the AIA limit reverts to £200k. After this ends, it would be a good idea to keep a permanent higher threshold specifically for “green qualifying expenditure” thereby creating a ‘Green AIA’.

“Much has been said about the need to improve high streets and residential areas. Here we need incentives to encourage the re-use of buildings, such as those standing empty on the nation’s high streets and to support a retro-fit agenda (a process to make buildings more energy efficient). One way to create this incentive would be for the Chancellor to impose a VAT rate of 0% for materials and labour used in sustainable projects. Alternatively, he could simplify and extend the scope of the reduced 5% VAT rate that applies to the installation of energy-saving materials. Measures such as this would help insulate 22m English homes and further accelerate the achievement of net zero emissions by 2050. Moreover, such a measure would reflect well on the government.

“Last, but by no means least, greater funding of the Building Safety Fund is required to replace all the unsafe cladding systems (3,000 applications already submitted to the MHCLG) and allow residents in multi-occupational buildings to be safe in their homes.”