Despite growth being downgraded to 1.5%, the Chancellor has revealed new money, loans and policy changes all aimed at boosting housebuilding towards 300,000 homes a year by the mid 2020s as part of his Budget 2017 which also avoided a tax grab on small businesses.
The Chancellor’s £44 billion housing package includes a housing stimulus package of £15.3 billion of new cash for housing over the next five years. He also announced planning reforms to ensure more land was available for housing, and that better use was made of underused land in our cities and towns.
Mr Hammond said £204m of funding would be allocated for innovation and skills in the construction sector, including training a workforce to build new homes. This will include £34m to scale up innovative training models across the country, including a programme in the West Midlands.
The Government is working with industry to finalise a Construction Sector Deal that will support innovation and skills in the sector, including £170m of investment through the Industrial Strategy Challenge Fund. Construction skills will also be a focus for the National Retraining Scheme.
Richard Steer, Chairman of Gleeds Worldwide, said: “Housing, infrastructure and productivity announcements were the Holy Trinity designed to save his job. Abolishing stamp duty for first time buyers is welcomed, as is some form of planning reform but there was a meagre sum mentioned for training and throwing money at the housing crisis will not solve the labour shortage or skills crisis. Infrastructure investment is also welcome but we need concrete timelines rather than further hollow promises.
“Productivity is a complex issue and his comments on the role of digital enablement underlined that, as an industry, we need to help ourselves but again, short term improvement is linked to a guaranteed labour pool and Brexit has caused a stampede of trades out of the UK, something this government has exacerbated through their dithering. A stalwart attempt but not enough to instill confidence as we crash out of Europe.”
Jon Neale, head of UK Research, JLL, says: “The Budget reveals that the government is starting to put in place measures that recognise that, after Brexit, Britain will need to invest more heavily in infrastructure, skills and R&D. It is also clear that this will increasingly be done through city-regions. The £1.7bn fund for transport city-regions – with half earmarked for those with mayors – will help open up areas of cities such as Birmingham, Manchester and Bristol for new investment.
“Likewise, the commitment to increasing R&D spending will go some way to helping to improve the UK’s poor productivity levels outside London. The investment in 5G and fibre broadband is particularly welcome in this regard. Within the housing announcements, there were signs that the government may put in place an improved regime to capture land value uplifts for new developments – which could provide even more of the infrastructure that could unlock housing sites.”
Brian Berry Chief Executive of the FMB said “Today the Chancellor has put small and medium-sized builders at the heart of ambitious plans to tackle the growing housing crisis. The Chancellor appears to be putting his money where his mouth is with the announcement of £44 billion of capital funding, loans and guarantees.
“In particular, a further £1.5 billion for the Home Building Fund to be targeted specifically at SME housebuilders can play a significant role in channelling crucial funding to this sector. A £630 million fund to prepare small sites for development and proposals to require councils to deliver more new housing supply from faster-to-build smaller sites will provide opportunities to boost small scale development.”
Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said: “1.5 million modest-earning small firms and the self-employed will be relieved that we have seen off a VAT tax grab that would have caused huge economic damage. Instead, FSB is ready to work with the Treasury to simplify an over-complicated tax that on average takes a business a whole week to administer every year.”