Budget 2006: schools and sport take priority

The key points of interest for the construction industry in Gordon Brown's 10th consecutive Budget were few, and as ever, lacking in detail, but schools and sport took top priority.

Grabbing the headlines are:

• £34bn of new investment in schools over the next five years, starying at £5.6bn this year, rising to £8bn in 2010.
• £34m of funding for the National Sports Foundation, which will administer the PPP programme for the renovation of local sports facilities.
• £600m of investment in training provision (including facilities) for athletes ahead of the 2012 Olympics.
• £30bn of funds generated by the sale of public sector assets by 2010.

On housebuilding and home-ownership, the chancellor revealed that real estate equity investment trusts (similar to the successful US model) will be set up, while £970m will be set aside shared equity schemes (wher people need only own 25% of their property).

The insulation industry stands to gain from government plans to increase energy efficiency in buildings. Brown said Margaret Beckett will announce government assistance to insulate one-quarter of British homes, approximately two million, before the next election.

In technology, the R&D tax credit scheme will be expanded to double the number of companies. 

The government will also push for lower energy prices, said Brown. Contractors have faced escalating materials prices, as manufacturers have passed on increases in gas and electricity. Brown said the government will propose measures against European energy firms, which are keeping UK prices high, when the European Council meets tomorrow.

He said: “We propose that all energy markets that fail to liberalise be open to independent investigation and enforcement.”

Products makers will continue to face red tape, when Brown scotched plans for an end of the Climate Change Levy (CCL) and instead opted for an increase. He said: “I reject representations to abolish the CCL. Having kept the CCL at the original level for five years, we will increase it in line with inflation.”

Contractors will continue to pay £1.60 a tonne on aggregates, after Brown rejected industry pleas to scrap the Aggregates Levy. However, fuel duty was frozen until September.

The headline economic statistics were: inflation this year will be 2%, while ecomonmic growth will be 2% to 2.5%.

For detailed analysis of the Budget by Grant Thornton, go to: http://www.budgetcomment.com.