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24 August 2016
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BIFM: Budget falls short on productivity drivers

17 March 2016 | Marino Donati


BIFM chief executive James Sutton has suggested that Chancellor George Osborne’s latest budget, delivered yesterday, was “somewhat limited” as regards the drive for greater productivity.


Commenting on the Budget, Sutton said: “The Chancellor set the scene with the Office for Budget Responsibility (OBR)’s revised growth forecast for the UK economy until 2020, with an expectation of slower growth than previously anticipated and further uncertainty for the global economy.


“Although he stated that his measures would help create an enterprise culture, we felt that the announcements were somewhat limited. These appeared to focus on financial controls and taxation breaks for business as a way of increasing income, rather than focusing on the full range of productivity drivers.”


Sutton cited the FM sector’s major contribution to the UK economy, accounting for around 7 per cent of overall GDP, roughly 10 per cent of the UK working population and up to £111 billion a year to the UK economy.


“With this in mind we would have welcomed further stimulants to upskill existing workers,” said Sutton. 


"The emphasis on educational improvements was focused on future generations, an important area, but there was little on developing our current workforce and those immediately entering work. It is these people who are able to impact productivity and growth with immediate effect.


“FM professionals have a significant role to play in enabling productivity in the workplace. We would have liked to have seen a stronger focus on in-work development programmes and schemes. For example, the opportunity to progress and develop skills means employees are often better engaged and more productive. Therefore, we were surprised to have not seen the chancellor build on the foundations of the apprenticeship levy announced in the Autumn Statement.”


The Chancellor also used the budget to announce the abolishment of the Carbon Reduction Commitment (CRC) energy-efficiency scheme. It will be phased out at the end of the 2018-19 compliance year, with government working with the devolved end on closure details for the reporting element of the scheme.

 

The CRC, a mandatory reporting and pricing scheme designed to incentivise energy efficiency and cut emissions in large energy users in the public and private sectors across the UK, was introduced in 2007. The decision to scrap it follows a consultation on simplification of the business energy tax landscape launched last September.

 

The cost of abolishing the CRC scheme will be met by an increase in the main rates of the Climate Change Levy from April 1, 2019, according to the Budget statement.


There will be an equivalent increase the CCL discount for sectors with Climate Change Agreements to compensate for the increase in CCL main rates. The CCL discount for electricity will increase from 90 per cent to 93 per cent, and the discount for gas will increase from 65 per cent to 78 per cent from 1 April 2019.

 

The Budget statement also said the government would allocate at least £50 million for innovation in energy storage, demand-side response and other smart technologies over the next five years to help new technologies and business models access the market.