HMT Budget Blog October 2018

Posted on November 19, 2018

This years’ Budget has been heralded as the largest "fiscal loosening" since 2010. The headline being that the Budget shows that the hard work of austerity is paying off. However the Office for Budget Responsibility (OBR) attributed the budget to its downward revision to the underlying borrowing requirement over the next five years.

The vast majority of this will go on the NHS, but there is also funding for housing and homeownership and regeneration of the high street.  We set out below a selection of the key announcements (the paragraph references refer the Chancellors Budget report):

Infrastructure

4.7 - The Budget announces the biggest ever strategic roads investment package, and additional steps for the nationwide rollout of digital infrastructure. By 2021 the government will be investing £9 billion a year more in infrastructure.

Modernising transport

4.9 Roads Investment Strategy 2 – […] investment in England’s strategic roads and […]  and progress transformative projects like the A66 Trans-Pennine, the Oxford‑Cambridge Expressway, and the Lower Thames Crossing. The government expects to spend £25.3 billion on this strategy up to 2025.

4.11 Transforming Cities Fund extension – the government is extending the Transforming Cities Fund by a year to 2022-23. This will provide an extra £240 million to the six metro mayors for significant transport investment in their areas: £21 million for Cambridgeshire and Peterborough, £69.5 million for Greater Manchester, £38.5 million for Liverpool City Region, £23 million for West of England, £71.5 million for the West Midlands, and £16.5 million for Tees Valley. Note that a further £440 million will be made available on a competitive basis to ten city regions with no mayor.  Not having to compete for funding is a key incentive for devolved metro-mayors.

Housing

4.55 Delivering housing investment – Further commitments of:

  • £291 million from the Housing Infrastructure Fund, […] to unlock 18,000 new homes in East London through improvements to the Docklands Light Railway
  • the British Business Bank will deliver a new scheme providing guarantees to support up to £1 billion of lending to SME housebuilders
  • providing £653 million to 2021-22 for strategic partnerships with nine housing associations to deliver over 13,000 homes
  • £75 million from the Home Building Fund for St Modwen plc, to fund infrastructure to build over 13,000 new homes
  • a new five-year strategic business plan for Homes England.

4.57 Accelerating housing delivery – Alongside the Budget, Sir Oliver Letwin published his independent review of the gap between housing completions and the amount of land allocated or permissioned. The review concluded that greater differentiation in the types and tenures of housing delivered on large sites would increase the market absorption rates of new homes.  Letwin has set out recommendations to achieve this aim through changes to planning policy. The government confirms that Help to Buy Equity Loan funding will not be made contingent on large sites with existing outline permission being developed in conformity with any new planning policy on differentiation. The government will honour any funding commitments made to sites with existing outline planning permission, regardless of any new planning policy on differentiation.  This will be a relief to house-builders.

4.58 Planning reform – The Budget announces that the government has launched a consultation on new permitted development rights to allow upwards extensions above commercial premises and residential properties, including blocks of flats, and to allow commercial buildings to be demolished and replaced with homes.

4.59 Land value uplift – The government confirms that it will introduce a simpler system of developer contributions that provides more certainty for developers and local authorities, while enabling local areas to capture a greater share of uplift in land values for infrastructure and affordable housing. The reforms include simplifying the process for setting a higher zonal Community Infrastructure Levy in areas of high land value uplift, and removing all restrictions on Section 106 pooling towards a single piece of infrastructure. The government will also introduce a Strategic Infrastructure Tariff for Combined Authorities and joint planning committees with strategic planning powers. – see the that government’s response to the March 2018 consultation on S106 and CIL which was published alongside the Budget and can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/752183/Developer_Contributions_Government_Response.pdf

4.60 Strategic housing deals – The government will make £10 million capacity funding available to support ambitious housing deals with authorities in areas of high housing demand to deliver above their Local Housing Need. – Another opportunity for metro-mayors and devolved city-regions.

4.61 Help to Buy Equity Loan – The Budget announces that from April 2021, a new Help to Buy Equity Loan scheme will run for 2 years before closing in March 2023. The government does not intend to introduce a further Help to Buy Equity Loan scheme after March 2023.

4.63 New discounted homes in up to 500 neighbourhoods – The government wants to see parishes and communities provide many more homes for local people to buy, at prices they can afford. The Localism Act allows the people who know their area best to come together to prepare neighbourhood plans and development orders, to ensure they get the right homes, in the right places. The government will provide £8.5 million of resource support so that up to 500 parishes can allocate or permission land for homes sold at a discount. Neighbourhood plans and orders are approved by local referendums, and the government will update planning guidance to ensure that these cannot be unfairly overruled by local planning authorities. The government will also explore how it can empower neighbourhood groups to offer these homes first to people with a direct connection to the local area. – It will be interesting to see how well this fund is taken up, but it provides another opportunity for community groups alongside Homes England’s community housing fund.

 Investing in UK towns and cities

4.76 Future High Streets Fund –  […] the government will launch a new Future High Streets Fund to invest £675 million in England to support local areas to develop and fund plans to make their high streets and town centres fit for the future. It will include £55 million for heritage-based regeneration, restoring historic high streets to boost retail and bring properties back into use as homes, offices and cultural venues. The Fund will also establish a new High Streets Taskforce to disseminate best practice among local leaders.  – This complements the work of organisations such as Heritage Lottery Fund which will launch its new funding programmes in 2019.

 4.77 High streets planning – The government will consult on planning measures to support high streets to evolve. As part of this, it will consult on creating a more flexible and responsive ‘change of use’ regime with new Permitted Development Rights that make it easier to establish new mixed‑use business models on the high street.