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Budget 2013: What those in the FM industry are saying

21 March 2013

Good or bad, it seems everybody has an opinion on the budget. Here's a selection of some of those from the FM industry.

Andrew Sugars, group corporate development director at Servest, said: “Given how little room for manoeuvre the Chancellor had, we welcome the few pro business and growth measures he was able to introduce, in particular the reduction in corporation tax, although we’ll have to wait two years for that. Public sector spending looks like it will continue to be constrained which could open up further outsourcing opportunities. For many of our employees, the raising of the personal tax threshold to £10,000, earlier than planned, will help their own budgeting.”

Mark Cosh, director of SiteXOrbis, said that the impetus given to building new houses to help to alleviate the housing shortage in the UK is excellent news. “The increase in the Build to Rent fund from £200 million to £1 billion to support development of more homes in England together with the doubling of the existing Affordable Homes Guarantee Programme, will go some way to reduce the housing shortage. It will also create significant jobs in construction, housing and facilities management.

“The changes to the Right to Buy scheme to give more social tenants the opportunity of home ownership is also positive. By reducing the qualifying period from five years to three years and raising the maximum discount cash cap in London to £100,000, more tenants will be able to buy their council homes. But this must be accompanied by the new build programme set out above or it risks reducing the available housig stock for vulnerable people.

“At the same time, we need to see more emphasis on getting void properties back into relettable condition, rather than just focusing on new builds. Empty social housing reduces the sense of neighbourhood in areas and, without proper management, can become a magnet for crime and other anti-social behaviour.”

On pubs, Cosh said: “The news that general beer duty will be reduced by 2 per cent from Monday (25 March 2013), which is worth 1 penny on a pint of beer, the escalator for beer duty next year will be cancelled and instead increases by inflation thereafter, is great news for community pubs – and will hopefully help to stem the time of pub closures. These again can become an eyesore within a community and encourage crime.”

And on fuel duty: “We welcome the news that the planned 1.89 pence fuel duty increase, which was set to come into force in September 2013, has been cancelled. Although we use the latest technical innovations to reduce the need for travel, we have a fleet of more than 200 vehicles and this move will allow us to continue to keep our costs low for our customers. The new tax incentives for ultra low-emission cars will also encourage us to look at lower-emission options to further reduce our environmental impact.”

Leonie Greene, head of external affairs for the Solar Trade Association (STA) said: “The Chancellor's fixation with old technologies flies in the face of mainstream evidence. The World Bank said last year that business as usual in the face of climate change presents an international crisis. Rising fossil fuel prices are impacting on inflation and household energy bills. Ofgem analysis shows a gas supply crunch is coming our way, increasing prices. For all these reasons, it is vital to divert energy infrastructure investment into renewables as quickly as possible.

“Renewable technologies like solar need bold leadership and a positive vision if we're to compete successfully in the global race the Prime Minister keeps highlighting. We’re on a path to nowhere if his Chancellor continues to ignore climate change, the economic potential of the green economy, and the dangerous upward trajectory of fossil fuel prices.”

Juergen Maier, MD of Siemens Industry UK and Ireland also commented on today’s Budget:
"It was welcome news that borrowing appears under control, but with growth forecasts revised downwards, I was hoping for some more of the underspend to be invested in infrastructure projects. The Chancellor’s account of our infrastructure was seen through rose tinted spectacles and actually much more is needed to support energy and transport.

“Very welcome was the Chancellor’s support for industry sector strategies, for example for low emission vehicles. I'm also very supportive for increasing R&D tax credits. Ultimately, with the economic climate remaining challenging we need long term support for R&D and an industrial strategy for Britain."

Gareth Tancred CEO of BIFM had the following to say: “There were generally low expectations of George Osborne’s fourth Budget and he predictably delivered few surprises with a fiscally neutral statement placing emphasis on reducing the deficit and ongoing reductions in departmental budgets. But there was some welcome news for the facilities management sector.

“The £3 billion extra for new infrastructure projects every year from 2015-16 until 2020 from roads and railways to power stations and other large-scale projects is excellent news for the facilities management industry. It gives our profession the opportunity to be involved in their design at an early stage to ensure a facility is created with a whole life cost approach. Although undoubtedly the boost could have been more generous, it has sown the seeds for growth and will create extra jobs. And while the public sector spending outlook looks grim (and set to be even more tightly controlled) this may open up opportunities for further FM outsourcing and estate rationalisation. As an industry we must ensure we have the right people with the right skills to respond to this need.

“The 1 per cent off corporation tax (to take it to 20 per cent in 2015) will boost the FM supply side and makes the UK one of the most competitive places to do business – it will have the lowest corporation tax of any country in the G20. This will encourage foreign businesses to come to the UK (and British businesses to stay) ensuring long-term property development and an ongoing and growing FM requirement.

“The rise in personal income tax allowance to £10,000 from April 2014 – a year earlier than initially planned – will make millions of lower-paid workers in the facilities sector such as cleaners £560 a year better off. By next April 2.7 million low income workers will not pay income tax and basic rate tax payers will pay £705 less income tax a year – good news for facilities services staff on the front line.

“And the cancellation of the 1.89 pence fuel duty increase, planned for September this year, is welcome news for FM businesses with large vehicle fleets travelling many thousands of miles a year. As is the tax incentives for ultra low-emission cars which will encourage more fleet managers to use these vehicles as part of their day-to-day operations, thereby reducing their organisation’s environmental impact. Meanwhile the fact that the government is reviewing and updating the list of assets that will qualify for capital allowances in relation to energy efficiency and water technology will encourage facilities professionals to adopt the very latest in technical innovation.

“The news that government procurement from small firms is to rise fivefold, through a substantial expansion of the Small Business Research Initiative, will benefit some of the smaller players in the facilities management industry who have typically been put off tendering for public sector contracts. The value of contracts through this route will increase from £40 million in 2012-13 to over £100 million in 2013-14. But this still represents just 0.5 per cent of procurement budgets and more needs to be done in this area to encourage smaller firms to bid for government work.

“In the 2012 Budget, Osborne’s announced an additional £150m to support the roll-out of super-fast broadband in cities across the UK. In today’s Budget, he discussed how the sale of 4G mobile spectrum will deliver competitive high speed mobile broadband from summer 2013. This will help businesses to move away from major cities, and set up in other areas easing congestion, reducing commuting times and improving work-life balance. In order to meet the commitment to release 500MHz of spectrum by 2020, Osborne announced that the government will look to introduce further financial incentives to ensure more efficient use and management of public sector spectrum holdings.

“Despite these tidbits, the picture is far from rosy. The Office for Budget Responsibility revised growth forecasts for 2013 down from 1.2 per cent to 0.6 per cent with growth of 1.8 per cent in 2014. And the budget deficit is higher than forecast in the Autumn Statement. But a triple dip recession looks likely to be avoided and there is talk of growth of more than 2 per cent from 2015 onwards. While the 2013 Budget offers some small crumbs of comfort for FMs, it’s what happens when the growth forecast becomes growth fact that is more important. And the message is very much ‘wait and see’."

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