Building in the Budget
Here’s a snapshot of some of Philip Hammond’s main building-related announcements last week
Was last week’s Budget written at Number 11, or at Number 10? Was it a post-austerity giveaway, or was it window-dressed prudence?
The jury is still out on these questions. But the Budget did contain plenty of concrete news for anyone interested in housing and construction.
Meeting housing needs
It is well documented that there is a significant and long-term housing shortage in the UK, and last year’s Budget pledged to raise the supply by the end of the current Parliament to 300,000 a year. Further measures that were announced in this year’s Budget to achieve this ambition included:
- the availability of £291 million from the Housing Infrastructure Fund, funded by the NPIF, to unlock 18,000 new homes in East London through improvements to the Docklands Light Railway
- a new scheme under the British Business Bank, providing guarantees to support up to £1 billion of lending to SME housebuilders
- the provision of £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 (which was published on 30 October 2018, after the Budget)
- planning reforms, including 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
- 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
- £10 million capacity funding to support ambitious housing deals with authorities in areas of high housing demand to deliver above their Local Housing Need
- a new Help to Buy Equity Loan scheme, running for two years from April 2021 to March 2023. The new scheme will be available for first-time buyers only, and for houses with a market value up to new regional property price caps
- the allocation of £8.5 million of resource support under the Localism Act, enabling up to 500 parishes to allocate or permission land for affordable homes for local people. As part of this, the Chancellor announced planning guidance would be updated to ensure neighbourhood plans cannot be unfairly overruled by local planning authorities.
An end to the Housing Revenue Account cap
Over the longer term, the Chancellor said, the Housing Revenue Account cap that controls local authority borrowing for house building would be abolished from 29 October 2018 in England, enabling councils to increase house building to around 10,000 homes per year. The Welsh Government would be taking immediate steps to lift the cap in Wales. He also said that the Housing Infrastructure Fund, funded by the NPIF, would increase by £500 million to a total £5.5 billion, unlocking up to 650,000 new homes.
In last year’s Budget, Philip Hammond announced the formation of a review panel under Sir Oliver Letwin to examine the gap between housing completions and the amount of land allocated or permissioned. That review has now been published, and the Chancellor said there was no evidence of speculative land banking.
The supply of new housing also depends on the availability of a sufficiently large and well-trained workforce, and the Budget included a package of reforms to strengthen the role of employers in the apprenticeship programme, so they can develop the skills they need to succeed.
If you’d like to read more about the government’s housing announcements last week, you can find the full Budget here – see Section 5.11. And if you’d like details of the Chancellor’s announcements on skills, apprenticeships and training, you’ll find those in Section 5.10.