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Michael Ankers, chief executive of the Construction Products Association, welcomed the announcement, but noted that the government had missed an opportunity to help the industry over VAT on repair and maintenance work.

The chancellor also announced the abolition of stamp duty in some areas and a flat rate of VAT for small businesses to help reduce paper work.

Brown said that, from Friday, stamp duty would be abolished on residential and commercial properties valued at up to £150,000 in deprived areas of the country.

The RICS policy officer Joanna Summer hailed the abolition of stamp duty as a boost for regeneration. She said previous initiatives had failed because they had fallen foul of European Union aid rules.

Brown listed measures to aid businesses, including changes in capital gains tax on business assets. The rates will be 10% for assets held for longer than two years and 20% for assets held for up to a year. They come into force in April.

Brown confirmed that a flat-rate VAT structure, aimed at small and medium-sized businesses, would be introduced. He said this would cut the average firm's tax by £1000.

The stamp duty change is cosmetic – these houses sell for less than the £60,000 threshold anyway

Roger Humber, Anglia Housing Group

He added that he remained cautiously optimistic about the economy, which had maintained a growth rate of 2.5% this year.

Brown said there would be an announcement from planning minister Lord Falconer on the planning green paper in the next few days.

A Construction Confederation spokesman said it was encouraged by the chancellor's optimism about the economy but wary of his growth rate predictions.

Roger Humber, a housing consultant and chairman of Anglia Housing Group, expressed reservations about the changes in stamp duty.

He said: "The change is cosmetic rather than real – most of these houses sell for less than the £60,000 threshold anyway."