Tuesday22 August 2017

The budget: what you need to know

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“Cumbersome” planning regulations a key target in the plan for economic growth

“Britain is open for business,” said George Osborne, delivering this year’s budget to cheers from his front-bench compatriots.

He started shakily, revising growth predictions for 2011 from 2.1% to 1.7% growth for the economy in 2011. But he said that borrowing would fall even further than predicted to £146 billion this year, then to £122 billion as part of a long-term target of £29 billion in 2015/16.

The biggest short-term impact for architects will come from reforms to the planning system.

New planning rules will be introduced to require planners to prioritise growth and jobs when considering applications - with a default “yes” answer to development. The government had already revealed it was urging councils to scap 106 agreements signed with developers before the credit crunch, which ministers believe are standing in the way of economic growth.

“Cumbersome planning rules and bad regulations stand in the way of jobs,” said Osborn, who claimed that councils were spending 13% more on planning due to red tape despite a one-third drop in applications. National targets on previously developed land will be removed and use class changes allowed, however fears that green belts would be scrapped proved unfounded.

Osborne also outlined a number of initiatives that could offer new sources of work, including a scheme to encourage first-time buyers to purchase new-build property, with government loans of up to 20% of the value of the house. The Communities & Local Government department is being asked to ringfence £250 million for the scheme.

The move was welcomed by the House Builders Federation, which described it as “a shot in the arm” for housing, while warning that a longer term plan was still needed.

Osborne also revealed a new programme to create 24 technical colleges as well as plans for new higher education science facilities and new support for innovative small businesses engaged in research and development. Small businesses will also see the rate relief holiday extended till October 2012 at a cost of £370 million.

The chancellor said he wanted this government to be the “greenest ever” with the introduction of the first carbon floor rates for industry with charges of £16 per tonne of CO2, and the creation of a Green Investment Bank in 2012 which will start with an initial £3 billion of public funding to invest in “risky” green projects. However he also introduced a policy change for zero-carbon homes meaning that new housing from 2016 onwards will not be required to contribute net zero addition to the carbon footprint of the UK’s housing stock (see Plan for Growth document attached to this story).

Other annoucements included additional funding for the railway infrastructure and the creation of 21 new “enterprise zones” across the UK with reduced business rates and increased allowances. In return for reducing planning restrictions, local authorities will be allowed to invest any surplus created by these new zones in local developments.

The chancellor said 40,000 extra apprenticeships would also be created for unemployed young people.

The response:

  • The ’Green’ government

The UK Green Building Council accused the government of making a U-turn on zero carbon homes by scrapping plans to ensure that all new homes from 2016 onwards would have had to source all their energy from carbon neutral sources.

Paul King, chief executive of the UK Green Building Council, said:

“In the space of two weeks, this government has gone from a firm commitment on zero carbon homes, to a watered down policy. A zero carbon home will no longer do what it says on the tin. The world leading commitment that new homes would not add to the carbon footprint of our housing stock from 2016 has been scrapped despite a remarkable consensus between industry and NGOs in support of it.

“Thanks to a crude de-regulation agenda we now have a policy that is not only anti-green but anti-growth.  Low carbon construction has been one of the few sectors showing genuine green shoots of growth. This U-turn will result in loss of confidence leading to lower investment, less innovation, fewer green jobs and fewer carbon reductions. It is a backward step by a government that wanted to be seen as ‘the greenest ever’.”

The Federation of Master Builders said that the government had failed to ignite the forthcoming Green Deal programme by offering no extra incentives for consumers, such as reduced VAT on energy efficient retrofit initiatives.

  • Enterprise zones

Simon Rubinsohn, RICS chief economist, said: “It is not clear how effective new enterprise zones will be in stimulating long term sustainable development beyond an initial boost. While the tax breaks and changes to planning restrictions may draw short term investment into an area they also have a number of downsides.

“The total cost to Government can be expensive and there often needs to be other public investment in areas such as transport infrastructure.

“Enterprise zones also draw development from other nearby areas that do not receive benefits, in some cases simply shifting local economic problems from one area to another. While they may have helped some areas in the 1980s, enterprise zones are unlikely to have the same impact now.”

  • Use class changes

Simon Rubinsohn, RICS chief economist said: “As the economy grows there will be a need for additional accommodation for expanding and new businesses and too many conversions to residential property could mean that appropriate space is not available. Short sighted changes could lead to a lack of commercial property, delaying the recovery.

“This situation could be made worse by the Government’s continued imposition of empty property rates which are significant barrier to speculative commercial property development.”

  • Small businesses

Richard Diment, director general of the Federation of Master Builders, said: “The announcement that there is to be no new regulation on firms with fewer than 10 staff for three years is welcome news for small builders who have been burdened by excessive regulation and red tape over recent years. However, to be really effective it would be helpful if the Government could go further and cut the existing amount of red tape which is impacting on small businesses.”

  • Planning

Karl Sharro, senior associate partner at PLP Architecture, said: “The budget promises a number of reforms to planning law that would provide a much-needed boost to the design and construction sectors. In particular, the re-introduction of Enterprise Zones and allowing change of use without planning permission will inject dynamism into the sector and reduce the significant amount of red-tape that developers face today.

“In the past, over–complicated planning laws have hindered much needed development, reducing the ability of the sector to contribute efficiently to economic growth. In my opinion, further reform in central London is still needed, given its particular importance and the additional burdens that the planning system have introduced over the last few years. We welcome the budget measures but would encourage further reform to improve the productivity of the sector.”

  • First-time buyers

Mark Clare, chief executive of Barratt Developments, said: “The Chancellor’s initiative to help first-time buyers get onto the property ladder is exactly the tonic the housing market needed.

“It will give young people in their 20s and 30s renewed hope of buying their own home with a deposit of just a few thousand pounds – precisely the opportunity which their parents’ generation took for granted.”



Readers' comments (2)

  • Jobs and economic growth are to be priorities when assessing planning applications. This is now the government policy, local councils and professional obstructionists should take heed!

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  • It would seem we are moving forward with vision with this Government driven motive which is very encouraging for the architectural Profession after decades of stalemates with construction projects severely hindered by poor and lengthy Planning policy and process which has given no benefit whatsoever to the improvement to process and speed of delivery of projects. The knock-on meaning less projects for architectural practices, the construction industry and less architectural jobs. Fingers crossed this will be the panacea to a long overdue resolution.


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