TDUK calls for budget action to protect net zero as recession sets in

The CPA forecast reflects the troubling state of the UK economy as a whole and the pressures that businesses and households are under. This kind of economic environment creates a threat to the government’s net-zero carbon agenda, as businesses are forced to switch focus from innovation to survival.  

We are already seeing a struggle across the construction sector with high numbers of insolvencies now commonplace thanks to rising material and energy costs. Many timber businesses are SMEs and will be affected by the predicted drop off in residential new build and repair and maintenance work, hurting their ability to contribute to the green economy.  

As we head towards the spring budget [March 15], it is therefore vital the government maintains its commitment to levelling up, the infrastructure pipeline and transitioning to net-zero, to provide as much certainty and clear investment incentives as possible for construction businesses.

We need to see a clear and consistent plan that includes continued investment in infrastructure projects, support for upskilling, money to improve the planning system and incentives for businesses to deliver environmentally friendly building projects.

The Government also needs to set a clear direction of travel in the policy arena, not something that’s been a strong point of theirs. A commitment to the regulation of whole-life carbon would be welcomed as a game changer by the timber industry, alongside the implementation of a long overdue national retrofit strategy to decarbonise existing housing stock. We would also like to see a firm commitment to Chris Skidmore’s Mission Net-Zero Review recommendations across the whole UK economy.  

This will help businesses make positive decisions about investments and also help smaller businesses plan for the future. What is important is we are preparing for, and preparing to create, better times. When economic conditions improve, we don’t want to find the wheels have fallen off on the construction industry and that we have missed an opportunity to create jobs and growth in the green economy.  

CPA WINTER FORECAST SUMMARY

- Construction is set for recession this year with output set to fall 4.7% according to the Construction Products Association’s (CPA) winter forecast.

- Private housing new build and private housing repair, maintenance and improvement – the largest and third largest construction sectors – are set to be the worst affected, with falls in these areas partially offset by continued growth in infrastructure.

- While the industry is predicted a slow return to growth (+0.6%) in 2024, the long-term trajectory for the private housing market could go two ways, according to the CPA.

- The sector’s output is predicted to grow 2.4% in 2023 and 2.5% in 2024.

- In the medium-term, projects towards the end of the government’s Spending Review are expected to be pushed back into the next review period due to budgetary constraints.