2013 BUDGET: Highlights and quotes

Published:  21 March, 2013

The government has unveiled a raft of measures to boost infrastructure, support the housing market and cut the deficit in its Budget, announced 20 April.

The Help to Buy scheme will replace the existing FirstBuy scheme but, unlike FirstBuy, funding will be made available to all homeowners purchasing newbuild homes up to the value of £600,000, instead of solely first-time buyers.

Help to Buy will enable purchasers to put down a 5% deposit, and then take out a shared equity loan of up to 20% of the cost of the property. The loan will be interest free for five years, and paid back on the sale of the property.

The Chancellor also committed an extra £225 million of funding to plans to build 15,000 more affordable homes in England by 2015, a move which is hoped will bring a much-needed boost to the wider construction sector.

The industry has given a mixed reaction to the Budget, though most have welcomed the additional investment.

Dr Diana Montgomery, chief executive of the Construction Products Asssociation, described the new Help to Buy programme as a potential game-changer. "We are encouraged that government has combined these plans with a catalyst for potential home buyers in the form of the new 'Help to Buy' programme. Nevertheless, last year we built only half of the number of homes we need, and the downward revision in economic growth only reinforces the need for these measures to boost construction and the economy."

National House-Building Council (NHBC) chief executive Mike Quinton said: "We warmly welcome the expansion of measures for people who want to buy their own homes. This will help boost the housing market and provide vital support for the construction industry. Builders up and down the country have been working hard to build high-quality homes while operating in tough economic times. Housebuilding fell 9% in 2012 compared to the previous year. It is therefore great news that housing has been the centrepiece of this Budget. This is a positive step for homebuilders and homeowners."

The Help to Buy Scheme in particular was described as a "bold, but desperate" move by Richard Threlfall, KPMG's head of infrastructure, building and construction, who added that the Chancellor had thrown the UK's "beleagured" construction industry a new lifeline. "Ultimately, the construction industry and all trades that support construction of new houses in the UK will benefit from the new scheme."

Brian Berry, chief executive of the Federation of Master Builders (FMB), expressed concern that the new scheme would be too complex to make a real difference. "Britain's SME builders are in need of relief after years of shrinking workloads and rising costs. More than three-quarters of our members recently told us that the most important thing the government could do to revitalise the home repair, maintenance and energy-efficiency markets would be to cut VAT. This would also provide a level playing field when competing with builders who choose to avoid charging VAT.

"If Ministers want an industry-wide boost to jobs and growth while delivering desperately-needed new homes and meeting energy-efficiency targets, we need bolder measures such as cutting VAT on domestic repair and maintenance work, and reducing the regulatory burden which discourages so many small developers from even contemplating building new homes."

Berry's comment was also echoed by Michael Levack, executive director of the Scottish Building Federation, who repeated his previous calls for a targeted VAT cut on building repairs, maintenance and home improvements. This, he said, would provide a much-needed boost to smaller construction firms. "The Chancellor has ignored the plight of legitimate building companies that struggle to compete against the ‘cash-in-hand’ cowboys that are the parasites of our industry, he warned. What is more, he has missed a golden opportunity to stimulate investment in initiatives to make our built environment greener and more energy efficient.

The Chancellor also re-affirmed the government’s plans for all newly-built homes to be zero carbon by 2016. Tim Pollard, Plumb Center’s head of sustainability, said: “It's great the government is recognising the importance of switching to a sustainable economy, and we're excited with the plans for zero carbon homes. With energy bills on the rise and many in the UK suffering from fuel poverty, something has to be done."