Budget High Jinx – What’s In It For Our Sector?

By Julian Seymour

It is fair to say that this week has been one of mixed messages for an industry that feels it has been under attack by the Government in recent months. 

Just yesterday we saw the Rt Hon Michael Gove MP calling out individual companies in Parliament as he endeavours to force them to sign up to his ‘Cladding Contract’, and using some pretty strong language as he did so. In the months running up to that there have been a series of proposed changes to policy and legislation which could cut housebuilding to around half the rate of the 300,000 new homes per year the Government say is needed to resolve the housing crisis. 

But today seemed to be a day of reconciliation from the Chancellor, with a Budget full of “E”s – Enterprise, Education, Employment, Everywhere – which overtly pushed for more growth and construction. He welcomed, and gave incentives to, the film and creative sectors, life sciences and net zero carbon energy (nuclear). At the same time he recognised that the economy can avoid “technical” recession this year despite a small contraction, something which can only be realistically achieved if the construction sector marches on. 

What did the Budget say for the built environment? 

Some highlights from the Budget for the built environment sector were: 

• 12 restyled Investment Zones based in the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be “at least” one each in Scotland, Northern Ireland and Wales. Each zone will have to be a partnership between a Local Authority and University or research body
• £200m for levelling up projects 
• An additional £161m for mayoral authorities 
• An extra £400m for “levelling up partnerships” in areas of particular deprivation with Redcar and Cleveland highlighted as an example
• £8.8bn over five years for transport in the city regions 
• Welcome for the strength of the creative sector and plans to extend Pinewood Studios 
• Expenditure credit of £34m to encourage more creative projects (films, computer games etc) coming to the UK
• Support for nuclear facilities with significant new investment in existing sites and in modular reactors with nuclear being re-classed as “Environmentally Sustainable” 
• £20bn for Carbon Capture and storage schemes 
• Small and medium-sized businesses will be able to claim a credit worth £27 for every £100 they spend on R&D (if R&D spend is over 40% of outgoings) 
• The reform of the local approach to nutrient neutrality was not part of the speech but had been pre-briefed to national newspapers. 

It was also announced that there will be a consultation on moving the roles and responsibilities of Local Enterprise Partnerships into Local Authorities, a move which has been styled as a move towards “Civic Entrepreneurship”. You can read more about this particular measure in this article from my colleague Dan Humphreys. 

Is the Government split over development? 

There has been a very apparent split between the Conservative Party leadership, which is pushing for growth, and it’s back bench MPs, who are seeking to prevent what they deem to be inappropriate development in their areas – and safeguard their seats.

However, the Budget also serves to highlight the mixed messages coming out of Whitehall. 

Mr Gove has long been known to consider the housebuilding sector (in particular) as a closed shop, operating almost as a monopoly, with some “difficult” meetings with leading members of the sector reported. He has been ambivalent about the need to meet the country’s housing needs, caving in quickly on changes to the NPPF despite manifesto pledges made under Johnson to increase the number of homes being built. 

Mr Hunt is perhaps more pragmatic – as is required by his role at the Treasury – from which viewpoint he can see that the development sector represents a double digit percentage of the UK economy. While there were no direct measures contained in this Budget, the focus on growth has potential implications for the outcomes of the current consultations on the NPPF and the passage of the Levelling Up Bill through its Parliamentary stages. 

Of course, we can’t expect any real change in direction on these issues until after the local elections in May at the earliest – so watch this space for more news.