Fixing the foundations – property industry reacts to Budget
The points that seem to have most resonated with the industry are those affecting housing, addressing the skills shortage, transport, and – one of the certainties in life – taxes.
Housing and taxes
Reaction was positive to the pledge to spend £5bn on housing, including increasing the supply of affordable housing – mixed with overall caution about the impact of tax rises.
Richard Beresford, chief executive of the National Federation of Builders, noted: “We welcome the £5bn funding boost, affordable housing, commitment allowing councils to retain 100% of Right to Buy receipts and the £3.4bn for retrofitting.
“However, the government’s target to deliver 1.5 million homes is now at a considerable risk due to the increase in Employer National Insurance contributions. This announcement will hinder the industry’s ability to take on and train new staff and support the next generation of skilled workers. While some may point to planning reforms as the solution, those reforms have not yet been implemented, and it will take years before new projects avail of them.”
Angela Mansell, managing director at Mansell Building Solutions, more than echoed this sentiment: “There’s a big fly in the ointment in Labour’s first budget in 15 years. The increase to employer’s National Insurance contributions is anti-business and anti-growth. As an employer of 50+ local people, the financial bite of these changes coupled with the new Employment Rights Bill makes it harder to take a punt on new workers.”
Jennet Siebrits, head of UK research at CBRE, said: “Today’s Budget marks the largest tax increase since 1993, with the biggest impacts affecting businesses as opposed to individuals… [However] the increases to Stamp Duty Land Tax on second homes is material, with a further £6,000 payable on a £300,000 second property immediately. The majority of second homes are owned by private landlords and occupied by private renters. This additional charge will act as a disincentive for would-be landlords to enter the market, which could feed through to the supply of new homes.”
Meanwhile, commenting on the affordable housing aspect of the Budget, Findlay MacAlpine, chief executive of Preferred Homes, said: “The connection between housing, health, and care remains largely unaddressed by today’s Budget and this comes as data from the Care Quality Commission shows the North East and Yorkshire had the highest proportion of delayed discharges due to waiting for home-based care.
“Building more affordable extra care housing is the answer to this, and we hope to see further support for the sector at next spring’s spending review.”
Skills
With a well-documented skills shortage, the construction industry could well benefit from the newly proposed Skills England scheme, and the promise to increase the number of planning officers.
Simon Creer, communications director at the Royal Town Planning Institution, addressed the overall skills shortage: “Our research has highlighted a critical challenge: local planning authorities are steadily losing mid-level and senior planners to the private sector, resulting in a loss of invaluable expertise that cannot easily be replaced by new, capable graduates and apprentices alone.
“While we are encouraged that the new government is responsive to the profession’s resourcing concerns, addressing the productivity of the planning system requires more than increasing the numbers. We need ambitious strategies for both resourcing and retention, with a comprehensive, long-term approach to building capacity in the planning system.”
Meanwhile, Richard Cook, senior economics director at Pegasus Group, highlighted the need for speed when addressing this issue: “If the government hopes to build 1.5m new homes, speeding up delivery is crucial. The current promise averages out to 300,000 new dwellings per annum and a figure of this scale has not been achieved for over 50 years.
“Whilst welcome, it’s hard to see how the chancellor’s promise of an additional £100bn in capital investment over the next five years will be put to use. In May this year, the Construction Industry Training Board estimated there is a need for 250,000 additional construction workers between 2024 and 2028, so without the government first addressing the sector’s skills shortages, it’s hard to see who will be able to actually deliver these projects.”
Transport
Moving swiftly on to transport, which should raise a grimace from for anyone who has travelled on the TransPennine Route, the Budget also committed to upgrading said rail line, improving capacity at Manchester Victoria, and electrifying the Wigan to Bolton route.
The Leeds-Bradford MTS also got a mention, and the tunneling of HS2 to London Euston was confirmed.
Chris Acton, chief executive of Clancy Consulting, said: “We welcome the Chancellor giving more spending power to the Greater Manchester Combined Authority and it will be interesting to see how that is implemented. I’d now like to see innovative ideas to improve skills training regionally and secure the planning resource that will be required to deliver the changes outlined.
“While the wider infrastructure funding will drive vital growth in the North, investment in the Manchester to Liverpool railway would have unlocked even more potential.”
Thomas Pearson, head of real estate commercial at JMW Solicitors, said: “Major infrastructure projects are vital to our region’s success, so it was noteworthy that the chancellor said that Greater Manchester and the West Midlands will be the first mayoral authorities to receive integrated settlements from next year, giving ‘meaningful control of the funding for their local areas’.
“The devil, of course, will be in the detail, but I welcome her confirming funding for several railway projects, including three in Greater Manchester, as well as funding to ‘secure the delivery’ of the TransPennine upgrade between York and Manchester. Connectivity matters.”
Neatly linking transport back round to housing, Brian Yates, Stantec’s UK and Ireland managing director, said: “It was encouraging to hear the chancellor acknowledge the need for further regional development across the North of England, including her specific commitment to the delivery of the TransPennine upgrade. Achieving long-term growth and prosperity and fixing the foundations across the North means harnessing opportunities for greater connectivity and shortened, more reliable journeys.
“It also means streamlining and bolstering the funding process for meaningful long-term regeneration projects, and leveraging the embedded knowledge from combined and local authorities to focus on local priorities and the right opportunities for more new homes.
“As a facilitator working with public and private sector clients at the heart of these issues, we always welcome consistency and certainty from government on the direction of travel. It was welcome to hear a specific reference to the future of the Crown Works Studio Scheme in Sunderland, a project proudly supported by Hydrock, now Stantec.”
Echoing the link between transport and the built environment, Neil Walmsley, regional director UK/Europe, urban solutions, at Hatch said: “Whilst not explicitly mentioned in the chancellor’s speech, the full report acknowledges the critical need to spatially integrate transport, housing, and employment investments. When combined with Integrated Settlements for mayoral combined authorities, local growth plans, and ambitious planning reforms, we see great opportunities for accelerated urban regeneration linked to intensification of development around existing transit modes, with associated benefits for health, carbon, community, and inclusion agendas.”
Callum Hassall, partner at law firm McGuireWoods noted: “Though the ‘levelling up’ rhetoric – a key phrase of the previous government – has been dropped by Labour, it is clear that today’s budget seeks to mark a step change for the regions and the North. Reeves’ commitment to boost local government funding from next year (with Greater Manchester as one of the first recipients) demonstrates a desire to strengthen local areas and empower them to take the reins on funding local initiatives.
“Couple this with the specific funding commitments on housing in Liverpool and rail improvement works between the likes of Wigan, Bolton, Manchester and Leeds, there’s a lot for the North to remain positive about. Of course, the proof is in the property pudding but the choices made today lay the foundations to galvanise the North as a place to ‘invest, invest, invest’.”
Included in the Budget was the announcement that there will be a cut in draught duty by 1.7% – a saving, we were told, of a penny less per pint in a pub. A measure that may help with any Budget hangovers.
