The Chancellor of the Exchequer George Osborne delivered his first Budget Statement to the House of Commons today.

The Budget responded to the serious economic situation currently faced by the UK, and outlined cuts in spending and an increase in taxation which are likely to hit the architecture profession and construction industry at an already difficult time.

Among the key points of most interest to the Royal Institute of British Architects (RIBA) are:

• VAT to increase to 20% 4 January 2011
• No reduction in capital spending but they will assess where to prioritise spending. Priority to be given to projects which yield significant economic benefits
• Confirm introduction of green investment bank and Infrastructure UK
• Reduce Corporation Tax rate by 20% for small businesses
• New businesses set up outside of London, the South East and the Eastern region will be exempt from up to £5,000 of employer national insurance payments, for each of their first 10 employees hired.
• A new enterprise capital fund and an increase in enterprise finance guarantee for additional lending for small businesses
• £11 billion cut from welfare budget including cut off for housing benefits and disability living allowance
• 25% cuts on average for all government departments, except health and international development but with details to be announced in the Comprehensive Spending Review 20 October.

Speaking today, RIBA President Ruth Reed said:

“The spending cuts announced in today’s budget were widely predicted. However a commitment to maintain capital spending is very encouraging, and we endorse George Osbourne’s view that this should protect the most productive public sector investment. We will have to wait until the comprehensive spending review in October to find out more detail of government department cuts and whether architects and the construction industry will feel the pain of these decisions.

“The Chancellor today said that this is a strong enterprise-led recovery; this highlights areas of opportunity for architecture practices to capitalise upon. Cuts to public sector funding and council tax freezes will mean that times are tough.  However, as pressure on public finances becomes more acute, it the Government will need to achieve the best long-term value for public money.  Throughout the recession, we’ve been emphasising and demonstrating that well-designed, sustainable buildings can help achieve this goal. Money spent on well-designed schools, housing and hospitals is money well spent, with tangible value. The Government must continue to invest in vital infrastructure projects, and recognise the importance of these projects to the construction industry and the UK’s long-term economic interests.

“The Government’s policy programme aims to devolve decision-making to local level. Architects are well-placed to support Local Authorities in doing so – through consultation, advice on design and planning and by acting as client design advisers. There will also, we expect, be a huge programme of retrofitting existing homes and other buildings. Architects can provide best value through design solutions that make the most of refurbishment programmes and will need to ensure they are equipped to undertake this kind of work.”