UK

House-Building And Infrastructure Key Targets For Business Groups' Budget Pleas

11/03/2013 10:17 GMT | Updated 18/03/2013 19:14 GMT

Business groups have begun lobbying the government to move away from slow-growth areas of spending and instead target house-building and infrastructure projects, ahead of the 2013 Budget.

The Confederation of British Industry (CBI), British Chambers of Commerce (BCC) and manufacturing group EEF all made submissions to the chancellor on Monday, with suggestions on how to keep tackling the deficit while helping firms create jobs.

The CBI said the Budget should be fiscally neutral, but shift £2.2 billion from current spending to high-growth areas.

About £1.25bn should be earmarked for building 50,000 affordable homes, which would create 75,000 jobs, the body continued. It also repeated a plea for measures to help companies gain access to finance.

Director general John Cridland said: "The government must stick to its fiscal plan but now is the time to kick-start confidence. Our measures will provide another boost for the housing market and will benefit first-time buyers, those trapped in negative equity and those looking to refurbish their homes.

"To boost the construction sector, we are calling for 50,000 new affordable homes to be built, incentives for refurbishing empty homes and the housing guarantee scheme to be extended to all types of housing. We must supercharge the NewBuy scheme to allow second-time buyers struggling to get on the next rung of the property ladder."

The BCC also favours house-building schemes, calling for 100,000 additional new houses to be built by the government or housing associations by 2015.

It backed the chancellor's deficit reduction plan, but warned that a point may soon be reached where that reduction becomes impossible without sustained economic growth.

It urged ministers to take "tough decisions" to reprioritise spending, including shifting money from unproductive areas towards measures that can be delivered quickly.

Director general John Longworth said: "The chancellor should seize this opportunity and go all out in the name of growth. Our Budget submission is calling for measures that create an environment of enterprise, stimulate exports, kick-start infrastructure projects and create a structure of business finance which supports growing companies.

"Government spending remains far too focused on unproductive programmes, rather than measures that underpin economic growth, wealth creation and prosperity. With our economy teetering on a knife edge, it is not acceptable to protect wasteful current spending at the expense of capital investment and tax cuts that can spur long-term growth."

The BCC also pressed the government to freeze business rates for three years and expand support for companies exporting goods and services.

And it backed spending more of the Treasury's coffers on infrastructure, and calling for a fund to repair local roads.

The EEF agreed favouring investment in infrastructure, as well as increased competition in banking, over house-building.

Chief executive Terry Scuoler said the government had to demonstrate it had the strategy to deliver the stronger economy that will pay down the deficit.

"This means accelerating action that will deliver public investment in key areas and unlock investment by the private sector," he said.

The appeal for more housing echoes a report from the Local Government Association, which found the current cap on the amount councils can borrow for house building was damaging economic growth.

By removing the cap, the LGA estimates the economy would grow by 0.6%, and lead to the building of up to 60,000 new homes over the next five years.

Councillor Mike Jones, chairman of the LGA's environment and housing board, said many of government's recent attempts to breathe life into the struggling house-building industry have failed to recognise that the main obstacle to a recovery hasn't been a lack of willingness, but a lack of money.

"Councils are eager to kick-start the housing market into action by using their assets and good credit ratings to invest, but are being prevented from doing so by an arbitrary cap," he said.

"Given the pressing need for more housing and the relative safety of the investment, it makes no sense for government to place this extra restriction on local authorities.

"The country desperately needs more housing, developers need investment and our flatlining economy is in urgent need of a shot in the arm. The chancellor could deliver all three by using his Budget to give councils the financial autonomy to embark on an ambitious house-building programme."

The Budget is due to be delivered on 20 March, 2013.