UK construction stimulus explained

The construction industry in the UK has been hit hard by the economic fallout of the COVID-19 pandemic.

With that being the case, thousands of jobs have been on the line and the industry has been pushing for a stimulus to retain jobs and to boost construction activity. In July 2020, the UK government delivered, with a new £5 billion injection to get the industry back on track.

Here, we’re looking at what the stimulus involves and how it impacts businesses within the industry. This is what we know:

The “build, build and build” scheme

Prime Minister, Boris Johnson stated in a Tweet: “We want to build ourselves back to health.” Initially, plans outlined the “build, build and build” scheme, but later iterations of the plan include large amounts set aside for repairs. For example, £1.8 billion has been earmarked for immediate repair and upgrade work in schools and colleges, as well as 50 new school building projects next year. Around £1.5 billion is set aside for upgrades to hospitals as well as £1 billion for other local projects, and smaller amounts set aside for roads and maintenance of the courts. 

The idea is that many of those local projects should be (as they describe) “shovel ready,” meaning they can be planned and completed over a short period of time. This will create more jobs (at least in the short-term) as well.

A further initiative that will help to stimulate the construction industry is an initial injection of £2 billion for a Green Homes Grant scheme. Under this scheme, homeowners and landlords are to receive up to £5000 to cover up to two-thirds of the cost of making their homes more energy efficient. Additionally, low-income households will receive grants of up to £10,000 to cover the full cost of such alterations. The government hopes to upgrade 600,000 homes through this scheme and help the country to meet its net zero targets in the process.

Incentives for retaining employees

Chancellor of the Exchequer, Rishi Sunak, described urgent job losses as “the most significant challenge” faced by the UK. With this in mind, there are a couple of parts to the stimulus package that are there to encourage employers to retain or hire more workers.

First, there are 9 million workers furloughed across the UK, including many from the construction sector. The new stimulus encourages companies to bring workers back by providing the company with £1000 for every worker they bring back. This is intended to kick in after the Job Retention Scheme ends on October 31. The key requirements for the bonus are below with respect to each employee:

• At any point in time was validly furloughed and claimed for under the JRS;
• Earns on average at least £520 per month between 1 November 2020 and 31 January 2021; and
• Remains in continuous employment until at least 31 January 2021.

If you plan on claiming this payment, here is some advice from KPMG:

“HMRC’s new guidance states that JRB claims may be jeopardised if the employer’s payroll records are inaccurate or out of date. It also says employers should ensure their JRS claims have been accurately submitted, and HMRC have been notified of any necessary amendments.

JRB payments will be withheld if HMRC believes JRS claims have been fraudulently claimed or inflated. This is a clear indication that good JRS and general payroll return compliance are necessary preconditions to claiming a JRB payment.”

Incentives for hiring and training

There are a couple of additional incentives for hiring and training, including for businesses in the construction industry:

Hiring a new apprentice

The stimulus package brings additional incentive for hiring new apprentices, on top of the regular £1000 that you get for taking on an apprentice who is aged 16 to 18 years old, or is

under 25 and has an education, health and care plan or has been in the care of their local authority.

Additional payments support organisations and companies that take on new apprentices between 1 August 2020 and 31 January 2021. Here’s what employers get:

• £2,000 for apprentices aged 16 to 24
• £1,500 for apprentices aged 25 and over
  

You’ll get the payment in 2 equal instalments: 50% after the apprentice completes 90 days of their apprenticeship and the remaining 50% after 365 days. To get the full payment, the apprenticeship must last for at least one year.

In order to take advantage of this additional payment, you can apply for the payment from 1 September 2020, after you add new apprentices to your apprenticeship service account.

Hiring the unemployed

The Kickstart Scheme is another key part of the stimulus package, designed to encourage employers to hire from the unemployed. It subsidises companies who create new jobs for people aged between 16 and 24 who have been claiming Universal Credit and who are deemed to be at risk of long-term unemployment. To qualify, employers must offer a minimum of 25 hours a week of work, paid at least at the minimum wage, for six months.

The government subsidy pays the wages of the person hired through Kickstarter, for up to 25 hours per week of work at the minimum wage, along with associated national insurance, pension and administrative costs. This amounts to a total of around £6,500 over six months. Employers can top up wages to beyond minimum wage if they wish.

If your company was around for the Future Jobs Fund back in 2009, the Kickstarter Scheme is roughly modeled on that. The jobs it funds must be new and the company must prove that the job role has been made in addition to what they already had. Additionally, it should be a high quality job - something that develops the skills needed for long-term employment. Employers must also provide training and support for their ‘Kickstarters” to find permanent employment.

At the time of writing this, applications are yet to open up, but are expected to be open to employers shortly.

Construction Talent Retention Scheme

The government is funding the Construction Leadership Council’s talent retention scheme in an effort to support the redeployment of workers that are in danger of redundancy. The idea is to retain talented workers and match them with appropriate job opportunities across the UK. It also allows for temporary employee loans between businesses.

Both employers and candidates can sign up via the Construction Leadership Council’s portal here.

Final thoughts

While construction has been hit hard by the COVID-19 pandemic, there is reason to be hopeful that we will see a turnaround. Already, since work resumed in most areas in May, there has been a resurgence of stronger economic activity within the construction sector.

With many companies and individuals being hit hard, the UK’s construction stimulus seeks to get everyone back to work. It pulls the timeline forward on many planned infrastructure projects and brings opportunities for upgrade work, too.

This may also be a great time to look at hiring and training, so that you have people coming up through the ranks. The Kickstart and apprenticeship schemes provide the opportunity for construction businesses to take advantage of government subsidies for hiring. Check it out and be sure to know the dates - these schemes currently have time limits.