Chancellor of the Exchequer Rishi Sunak has announced his budget for 2021, as the country looks to start recovery from the Covid-19 pandemic.
The budget covered several issues of particular interest to the plumbing and heating industry, including:
- Extension of the furlough scheme until the end of September, with employees continuing to receive 80% of their wages until the scheme ends. Businesses using the furlough scheme will be asked to contribute 10% to wages in July and 20% in August. From September the scheme will be gradually phased out.
- The self-employment income support scheme will be extended to include a fourth and fifth grant. The fourth grant will cover February to April and once again be worth 80% of average trading profits up to £7,500. The fifth grant will cover June to August but work slightly differently. Those whose turnover has fallen by 30% or more will receive an 80% grant. Those whose turnover has fallen by less than 30% will receive a 30% grant. 600,000 newly self-employed workers will now be eligible for the grant as long as they submitted their 2019-2020 tax return before midnight on 2 March 2021.
- Bounce-back loans for businesses to be replaced by a new recovery loan scheme which is 80% guaranteed by the government.
- A new UK Infrastructure Bank will boost investment via green bonds, to accelerate progress to Net Zero.
- Incentive payments for hiring new apprentices (of any age) are being doubled to £3,000.
- £126m will be invested to triple the number of new traineeships.
- Stamp duty holiday to be extended until 30th September 2021.
- No raises to national insurance, income tax or VAT. However, personal tax thresholds will be frozen. The personal allowance will remain at £12,750 until 2026. The higher-rate threshold will increase to £50,270.
- The rate of corporation tax will increase for many to 25% in April 2023. Only businesses with profits of more than £250,000 will be taxed at the full 25% rate.Companies with profits of less than £50,000 will remain at 19%.
- Eight freeports to be introduced to help boost the economy, with tax breaks to encourage construction, private investment and job creation.
The heating and plumbing industry has had a mixed reaction to Sunak’s speech.
Kevin Wellman, CEO of the Chartered Institute of Plumbing & Heating Engineering (CIPHE) has largely welcomed the budget announcement: “The Chancellor’s budget has business in mind and the continuation of the furlough scheme indicates that minimising unemployment remains critical. We are encouraged to see further support for the self-employed and SMEs, especially for the 600,000 newly self-employed who missed out on support over the last 12-months.
“As unemployment has risen, it is encouraging that incentives to employ older apprentices are now on a level playing field with their younger counterparts. The £3000 payment is a step in the right direction, but as ever we would urge government to push further to help SMEs in developing the next generation of the workforce. This is needed with urgency in the plumbing and heating industry as it focuses on its contribution to the government’s net-zero commitments. Detail on how green bonds can further support this will be welcomed.”
“Overall, the budget looks good for the industry, with the announced super deduction on investment in plant and machinery assets particularly attractive for manufacturing and even more so in an industry undergoing significant change. The stamp duty holiday extension should release funds for homeowners to work on their property, giving a welcome boost of demand for the industry.”
In response to the Chancellor’s announcement that £126m of funding will be made available to create 40,000 new traineeships, along with cash incentives for firms to take on apprentices and a new apprenticeship programme, Mark Wilkins, Technologies and Training Director at Vaillant, comments:
“The Government’s proposed investment in creating new traineeships and further incentives for employers to hire apprentices is to be welcomed, especially at a time when there is an urgent need to address the skills gap in industries such as ours.
“However, if the Government is to achieve its ambition to drive a ‘green industrial revolution’ in this country, it is vital that these apprenticeships are geared towards delivering the types of sustainable technologies that will lower the UK’s carbon emissions and help it to reach net zero.
“Decarbonising heat in buildings is one of the key areas that needs further support if we are to achieve the 2050 net zero target. But at the moment, there are simply not enough qualified engineers on the ground to deliver low carbon heating at the scale required. That’s why more needs to be done to incentivise the current and next generation of installers to undertake the necessary training.
“Vaillant already offers courses and works with industry bodies in developing formal training programmes and frameworks, but part of the traineeship investment should go towards supporting more engineers to train in designing and installing low carbon heating solutions, whether that’s for heat pump or hydrogen based systems. If the Government plans to use £12bn to create a UK Infrastructure Bank and invest in long-term projects like renewable energy, it also needs to ensure that there are sufficient engineers on the ground to install the associated systems at point of use. The Green Homes Grant’s failure to meet the targets promised serves as an example of what can happen if funding is not matched by the number of skilled professionals to deliver what’s needed.
“As ever, the devil will be in the detail, and we await further announcements to see if the proposed programmes will help to bridge the skills gap that is currently limiting our ability to roll out energy saving measures and low-carbon technologies.”
Responding to the 2021 Budget, OFTEC Chief Executive Paul Rose said:
“The Chancellor didn’t hold back in outlining the financial toll the Covid-19 pandemic has taken on the UK economy, so it’s perhaps not surprising there were very few new green announcements, other than re-commitments to existing policies.
“We mustn’t let this pandemic halt progress on creating a greener economy but, with little cash in the government’s pot and consumers tightening their belts, it’s clear more than ever that the route to a low carbon future needs to be driven by affordable and cost-effective solutions and not unrealistic spending expectations.
“OFTEC wants to play our part in the off-grid sector which is why we are securing support to transition oil heated homes onto a renewable liquid fuel which provides an almost drop-in replacement for Kerosene. This can deliver substantial carbon savings of almost 90% compared kerosene and, more importantly, at a fraction of the cost of other low carbon options to both the government and consumers.
“With all the damage Covid-19 has done, let’s not let it put our decarbonisation goals at risk as well.”
Iain Bevan, Commercial Manager – Heating & Renewables at eco-technology brand Daikin UK – is pleased with the boost for apprenticeships.
“It’s reassuring to hear the government affirm its commitment to the UK’s transition to net-zero. Investing in the green industry is not only crucial to long-term economic growth, it is also vital in enabling us to achieve this low carbon vision.
“Now, prioritising investment in training in particular is essential if we are to build the highly-skilled workforce required to realise a greener future. For the heat pump market alone, we estimate around 17,000 new installers will be required to meet anticipated demand within the next ten years.
“The boost for apprenticeships cannot come soon enough. However, training at all levels, from apprenticeships through to experienced tradespeople, is needed if people are to acquire the skills they desperately need to develop a career in the green sector.
“At Daikin we’re working with those already in the industry to ensure they get the training they need to upskill and protect their future through initiatives such as our Sustainable Home Network. We also have an established apprenticeship programme and are always looking for ambitious and talented individuals who are keen to kickstart a successful career in heating.”
However, Adrian Ramsay – CEO of the MCS Charitable Foundation – expressed disappointment at the Chancellor’s latest Budget.
“This is an incredibly disappointing budget on the environment. The government has talked about the need for a green economic recovery, but this budget lacks any concerted focus on the climate emergency.
“At MCS, we want to see a package put in place to make UK homes greener. This should include scrapping of VAT on renewable energy and a well-run, long-term incentive scheme that will make renewable energy accessible to all and give installers confidence to grow their businesses.
“With the right policies we can drive new jobs in green industries while reducing carbon emissions and creating cosy homes across the country.”
There were some areas that also left the CIPHE’s Kevin Wellman feeling less positive:
“We would have liked to have seen further, dedicated support for the fuel and water poor. The impact of isolation and its relationship with public services has rarely been brought into sharper focus than in 2020 so it is hoped that an announcement is still to come about their protection. Equally, the freeze on national insurance, income tax and VAT is tempered by the same on the personal allowance. While the rise in corporation tax is not unexpected, the overall picture is one of wider future tax rises. While the budget is aimed at economic recovery, it’s very clear we’ll be paying for the pandemic for years to come. Now must be about ensuring the country is best placed to respond and to support its citizens when the next crisis emerges.”