Positive message from Spring Statement

A short, but upbeat, Spring Statement has been delivered by the Chancellor, Phillip Hammond.

Describing himself as ‘positively Tigger-like’ about the economy, the Chancellor delivered a statement which reflected on the positives being felt economically and in business.

With employment increasing to record levels and British manufacturing experiencing its longest period of expansion in 50 years, the OBR has increased its forecast for this year – leading to an enthused Chancellor.

With the change to the budget’s timing arriving at the last Autumn statement, the Chancellor has used the Spring statement to give an update on the progressions made since the budget. In particular he focussed on the government’s ambitious plan to tackle the UK’s housing challenge and build the homes the country needs.

An investment programme of at least £44Bn over the next five years was announced at Autumn Budget 2017, designed to raise the supply of homes to 300,000 a year on average by the mid-2020s. In the Spring Statement Mr Hammond confirms this job is in hand:

He said: “we are working with 44 areas on their bids into the £4.1Bn Housing Infrastructure Fund to help build the homes that the country needs”

The Chancellor also announced a £100M funding boost to the West Midlands for a housing package to support the mayor’s ambitious target of delivering 215,000 homes by 2030 to 2031. The funding, which will help acquire land and prepare it for housing as well as increasing density, recognises the Mayor’s commitment to deliver an increase of nearly 16,000 homes a year and ensure that all local authorities in the area have local plans in place by the end of 2019.

The Housing Infrastructure Fund Forward Funding bid for Housing Growth Areas including the Commonwealth Games site at Perry Barr through to co-development – will be taken forward to the next stage of the competitive HIF process.

This comes ahead of a planned announcement next week setting out the 44 areas the government work with through the Housing Infrastructure Fund. Through this co-development stage the government will be working with areas to develop projects with £4.1Bn available, to help build the homes the country needs.

Mr Hammond confirmed that the Housing Growth Partnership, which provides financial support for small housebuilders, will be more than doubled to £220M, with London due to receive £1.67Bn to start building a further 27,000 affordable homes by the end of 2021-22.

At the Autumn Budget, the Chancellor announced the abolition of stamp duty for first-time buyers of homes under £300,000, with buyers of properties up to £500,000 benefitting from the change. During his statement he confirmed that some 60,000 first-time buyers have benefitted so far.

The statement also gave him the opportunity to reflect on the work carried out to improve transport in and between English cities. Some £1.7Bn was awarded in the Autumn statement to projects improving transport, with half of this given to Combined Authorities with mayors. The Spring statement invites tenders from across the country for the remaining funds.

All in all the Chancellor sent a positive message, ridiculing those who expected a dire forecast in the face of political and economic unrest as ‘Eeyores’.

Reactions from our industry are cautious:

Darren Caplan, Chief Executive of the Railway Industry Association, said: “The Railway Industry Association welcomes the Chancellor’s acknowledgment in his statement today that rail projects are driving economic growth across the UK economy. In his Spring Statement he highlighted Crossrail and East-West Rail, as well as the importance of more devolved transport spending, particularly in the Northern Powerhouse and Midlands Engine regions.

“However, given transport infrastructure is vital for future economic growth, particularly in a post Brexit world, we urge the Chancellor to also continue making the case for other essential projects too, such as Northern Powerhouse Rail and Crossrail 2.”

Mark Charlton, Head of UK Research at Colliers International commented: “Recognising the cost to the UK economy of congestion on British roads (c. £9bn per annum), £1.7Bn was announced in the Autumn Budget for improving transport in English cities. Half of this has been allocated to Combined Authorities with mayors. The government is now accepting bids from English cities for the remaining £840M. The resulting infrastructure spend could result in new relief roads and the subsequent release of land parcels ripe for development. This could provide opportunities for the development community – both residential and commercial (retail and logistics).”

Director of Planning, Jonathan Manns, said: “The announcement that London will receive £1.67Bn to start building a further 27,000 affordable homes by the end of 2021-22 is another small step in the right direction. However, the fact that the Chancellor felt the need to stress this would include Social Rented homes again underlines the difficult balance which must be struck between the total volume of new properties built and extent to which they are genuinely affordable.”

Iain McIlwee, CEO British Woodworking Federation, said: “While it’s encouraging to hear the Chancellor commit to investment for raising housing supply in today’s spring statement, the question should be asked why an allocation of this budget is not being diverted to fund the vital safety works that are needed on existing buildings? Fire safety concerns have been building up for a number of years, either through ineffective maintenance or fundamental design, specification and installation problems. Grenfell has shone a spotlight on this, yet still financial and political barriers are preventing essential works from taking place and leaving vulnerable people sleeping in buildings that are potentially unsafe. As the collateral costs of Grenfell become more apparent and reports that only three council owned high rises out of the 160 that failed the government’s fire safety tests have yet been reclad it is imperative that we see the Treasury making an allocation for such potentially life-critical work.

“We believe that the solution is to establish a Building Safety Fund, similar to the Pension Protection Fund. The fund would allow Housing Associations and Local Authorities to focus on what needed to be done whilst applying to the scheme to fund the works (a defined percentage of the likely costs). The Building Safety Fund could also manage litigation should it be deemed a third-party is liable. The fund would help to speed up work on existing buildings and would centralise legal matters through controlled precedence. We would recommend looking at Insurance Premium Tax as a way to levy the fund. The much-needed corrective works in social housing should be high on the government’s priority list and we urge the Chancellor to consider this option when reviewing the forthcoming budget.”

 

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