CIOB Spring Statement Speculation Blog

Whilst the Statement does not include major tax or spending changes, which are made once a year at the Budget, it will be an opportunity for the Government to update policymakers and the public on the health of the UK economy, current Office for Budget Responsibility (OBR) fiscal data, future economic predictions as well as the progress of the goals set out in the 2021 Autumn Budget. 

Unlike the previous two Spring Statements (Spring 2020 and Spring 2021) which focused on the Covid-19 pandemic economic relief and subsequent recovery, this statement represents a unique challenge to the Chancellor as he wishes to reassure the public that the post-pandemic recovery continues to be strong whilst also addressing the increased financial pressures on households as a result of the current cost of living and energy crisis.   

In terms of the economic context, the Chancellor went into the statement drafting process with a backdrop of the strongest economic growth in a century as well as currently low unemployment. However, many commentators theorise that an initial policy-light draft statement has been torn up in the wake of the War in Ukraine and its effect on the price of energy and fuel. There will be an enormous pressure on the Chancellor to publish a now policy-heavy statement that provides both solutions and reassurance on how the Government plans to relieve the pressure created by a surge in energy and fuel prices and their impacts on the cost of living in the UK.  

Unsurprisingly commentators suggest that the Spring Statement is likely to focus on several key issues that have arisen as a result of the ongoing War in Ukraine. Primarily, there have been calls from Conservative backbenchers to increase defence spending, renewed pushes on Government to publish plans for Covid-19 borrowing repayments as well as calls to announce initiatives to tackle the cost of energy. Alongside this, there has been speculation that the Spring Statement will also contain further details about the proposed Health and Social Care Levy which constitutes a 1.25 per cent rise in National Insurance (NI) to cover a reform of the care system, although, more recently, there have been suggestions that the Levy will be reduced below 1.25 per cent. Other theories include a potential rise in the National Minimum Wage, a rise in Council Tax bills as well as a further rise in Capital Gains Tax.  

For construction, it is likely that the Statement will provide further details and a confirmation of the implementation of the proposed 4 per cent Residential Property Developer Tax (RPDT). This is set to be introduced in April 2022, as large-scale property developers are starting to see profits return to pre-pandemic levels. 

Focusing on the ongoing energy crisis, the Government could introduce a suite of initiatives to alleviate the pressure on households in the UK. These could include a reduction on the 20 per cent green fuel levy that was imposed to encourage households to pursue less carbon intensive energy sources, an extension to the Government commitment to provide households with £350 to help with rising energy bills costs, an expansion of the criteria for applicants to the Warm Home Discount scheme and an extension of the freeze on fuel duty.  

While we do not expect the Spring Statement to include much detail over the general improvement of the built environment, we believe there is an opportunity to both address the need to improve the quality of housing across the board while simultaneously helping alleviate the reliance on carbon intensive energy systems. 

We believe that pursuing a National Retrofit Strategy, as proposed by the Construction Leadership Council (CLC), provides an opportunity to not only help meet the UK’s legally binding carbon targets but also to reduce the need for carbon intensive energy in the home which will reduce energy bills in the long-term. The repair, maintenance and improvement (RMI) of the UK’s existing housing stock will be an essential step in improving the energy efficiency of buildings and therefore will be a crucial step towards reducing energy bills overall.  

As a core component of decarbonising buildings to ensure that renters, leaseholders and occupants can reduce the cost of living we are calling for the Government to commit to a national retrofit strategy as it will create new jobs, deliver growth across the country and take many people out of fuel poverty. 

The policy and public affairs team will be monitoring the Spring Statement and will be producing further analysis of its contents once released which you can look out for here.