The chancellor of the exchequer has earmarked £15.3bn of new financial support for house-building over the next five years in a bid to add 300,000 new homes to the nation’s housing stock every year.
On the macro-economic front, Mr Hammond said that the Office for Budget Responsibility has confirmed that the UK is on track to meet the government's fiscal rules. Borrowing is forecast to be £49.9bn this year – £8.4bn lower than forecast at last spring’s budget. However the UK still has a debt of more than £1.7 trillion – around £65,000 for every household in the country.
Furthermore, the growth forecast has been cut: the UK economy is now expected to grow by 1.5% in 2017, down from the 2% forecast made in March. Growth has also been cut to 1.4% in 2018, 1.3% in both 2019 and 2020, before picking back up to 1.5%, and finally 1.6% in 2022.
House-building was put front and centre of the autumn 2017 budget statement. State support for house-building includes £1.2bn for the government to buy land to build more homes, and £2.7bn for infrastructure to support housing. Other schemes like Help to Buy continue.
“Over the next five years we will commit a total of at least £44bn of capital funding, loans and guarantees to support our housing market,” said chancellor Philp Hammond in his budget statement to the House of Commons today (Wednesday 22/11/17).
He listed where some of the money would be going:
“New money for the Home Builders Fund to get SME housebuilders building again.
“A £630m small sites fund to unstick the delivery of 40,000 homes.
“A further £2.7bn to more than double the Housing Infrastructure Fund.
“£400m for estate regeneration.
“A £1.1bn fund to unlock strategic sites, including new settlements and urban regeneration schemes.
“A lifting of HRA caps for councils in high demand areas to get them building again.
“And £8bn of new financial guarantees to support private housebuilding and the purpose-built private rented sector.”
He went on: “And because we need a workforce to build these new homes we are providing an additional £34m to develop construction skills across the country.”
The funding for construction training is provided in advance of launching a National Retraining Scheme that will help people get new skills. A further £30m will go towards digital courses using artificial intelligence.
The programme will be overseen by the government, the Trades Union Congress (TUC) and the Confederation of British Industry (CBI). They will decide on other areas of the economy where new skills and training courses are needed.
Planning reform is also in the air. The chancellor has commissioned a review, chaired by Oliver Letwin MP, “to look at the gap between planning permissions and housing starts”. Oliver Letwin is a former 10 Downing Street policy chief, a former shadow chancellor and ran former prime minister David Cameron’s government programme as chancellor of the Duchy of Lancaster. Theresa May had no place for him in her cabinet when she took over as PM.
Mr Letwin has been told to deliver an interim report in time for the chancellor’s spring statement next year. “And if it finds that vitally needed land is being withheld from the market for commercial, rather than technical, reasons we will intervene to change the incentives to ensure such land is brought forward for development, using direct intervention compulsory purchase powers as necessary,” Mr Hammond said – which sounds like the same policy that Ed Miliband had in Labour’s 2015 general election manifesto.
( It's not the first time; earlier this year the Conservatives were accused of nicking Ed Miliband's energy price cap pledge.)
Mr Hammond also repeated previous commitments to building new garden towns. “We will use New Town Development Corporations to kick-start five new locally agreed garden towns in areas of demand pressure. Delivered through public-private partnerships designed to attract long term capital investment from around the world. Last week the National Infrastructure Commission published their report on the Cambridge-Milton Keynes-Oxford corridor. Today we back their vision and commit to building up to 1 million homes by 2050, completing the road and rail infrastructure to support them. And as a down-payment on this plan, we have agreed an ambitious housing deal with Oxfordshire to deliver 100,000 homes by 2031.”
That all helps the builders. To help the buyers, first-time buyers no longer have to pay stamp duty land tax (SDLT) on homes under £300,000. First-time buyers of homes worth between £300,000 and £500,000 will not pay stamp duty on the first £300,000.
There is bad news for facilities management contractors like Interserve and Carillion, who employ vast armies of low wage workers. They are about to see another significant hike to their wage bill. The National Living Wage will rise 4.4% from April, from £7.50 an hour to £7.83, giving full-time workers a further £600 pay increase.
However, these companies do a lot of work in the health sector so could benefit from the extra £6.3bn being put into the National Health Service. The NHS has been promised an extra £ £3.5bn for upgrading buildings and improving care and £2.8bn for improving A&E performance and reducing waiting times for patients.
Some other key points in summary:
- £1.7bn Transforming Cities Fund for transport infrastructure in areas such as Northern Powerhouse and Midlands Engine, (as reported earlier this week).
- Discounted lending available for local authorities for infrastructure projects.
- National Productivity Fund to be extended for a further year and upped to £31bn.
- Further steps to tackle VAT fraud in labour provision in the construction sector.
To read a selection of responses to the 2017 autumn budget from across the construction sector, see our separate report Budget reactions: builders respond
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