Budget 2016: What it means for construction

Planning and Building Control Today outlines the key points from the Budget and how it will impact the construction sector…

Today, Chancellor of the Exchequer George Osborne delivered his Budget, setting out long term goals for government spending. He outlined a number of areas that would impact construction, including house building, planning, and infrastructure development.

Having given itself the ambitious target of creating one million new homes by 2020 and developing a number of major infrastructure projects there is little doubt the government has its work cut out for it. Many of the new measures put into place today during the Budget were designed to meet these goals.

Housing

The Chancellor identified housing as a key policy area. House building has remained a significant priority under this government, as it seeks to tackle the housing crisis.

During his speech, he said: “In every international survey of our country, our failure for a generation to build new housing and new transport has been identified as a major problem.

“But we are the builders. Today we’re setting out measures to speed up our planning system, zone housing development and prepare the country for the arrival of 5G technology.”

However, the Federation of Master Builders warned the Budget missed an opportunity in the government’s race to meet its housing targets.

Chief executive Brian Berry said: “The Government has set itself a target of a million new homes by 2020. That is rightly ambitious, but the continuing gap between what’s being built and what needs to be built makes hitting that target more difficult by the day.”

However, failure to meet interim targets has caused concern that the government will not manage to hit its intended figure.

“Official statistics show that annual housing completions in England totalled just over 140,000 in 2015, a long way short of the 200,000 homes we need every year to hit one million,” Berry added.

“We are nearly 12 months into the current Parliament and the Government is already falling well behind on its targets.

“We recognise that the Government is working on a number of fronts to speed up the planning process and intervene to support first time buyers, and some of the measures in today’s Budget are welcome steps forward.

“Yet these announcements are limited in scope and won’t signal the step change that we need to see. We cannot afford to lose momentum in the battle to beat the housing crisis.”

Planning

Over the past few years the government has worked to reduce the amount of red tape involved in the planning system and create a more streamlined process. Today, the Chancellor revealed further measures would be put in place to speed up the planning process. This will be welcomed news for developers.

One measure is the move towards a more zonal planning system. This should help increase the adoption of local plans for housing and make it easier for local authorities to build faster.

Guidance will also be provided for areas that wish to establish garden villages and market towns of between 1,500 to 10,000 homes.

Meanwhile, the Starter Homes Land Fund prospectus was also launched, inviting local authorities to access £1.2bn funding to deliver starter homes on brownfield land.

Working with local authorities, the government aims to release land with the capacity for 160,000 homes, although how this will be achieved has not been discussed.

Infrastructure

Infrastructure, as with the Autumn Budget, is set to receive a significant boost. In particular, the construction sector should benefit from work on Crossrail 2 and High Speed Rail 3, both of which were given the green light to go ahead.

Some £60m will also be released to develop faster routes between Leeds and Manchester, as well as improving connections between other northern cities, while an additional £80m will be used to fund development of Crossrail 2.

Osborne praised the work of the recently created National Infrastructure Commission, and said he had heeded the recommendations of the group to create stronger links across northern England.

“…we are giving the green light to High Speed 3 between Manchester and Leeds; finding new money to create a 4-lane M62; and will develop the case for a new tunnelled road from Manchester to Sheffield,” he said.

“My HFs for Carlisle, Penrith and Hexham have told us not to neglect the North Pennines. So we’ll upgrade the A66 and A69 too.

“I said we would build the Northern Powerhouse. We’ve put in place the mayors. We’re building the roads. We’re laying the track. We’re making the Northern Powerhouse a reality and rebalancing our country.

“I am also accepting the Infrastructure Commission’s recommendations on energy and on London transport.

“The Government that is delivering Crossrail 1 will now commission Crossrail 2.”

Flood defences

Funding will also be put aside for flood defence work, with some £700m to help rebuild defences in areas hit by storms last year and at the start of this year.

Insurance Premium Tax will also be raised by half a percentage point, which would be used to fund the work.

Osborne said: “To respond to the increasing extreme weather events our country is facing I am today proposing a further substantial increase in flood defences. That would not be affordable within existing budgets.

“So I am going to increase the standard rate of Insurance Premium Tax by just half a percentage point – and commit all the extra money we raise to flood defence spending.

“That’s a £700 million boost to our resilience and flood defences.

“The urgent review already underway by my RHFs the Environment Secretary and the Chancellor of the Duchy of Lancaster will determine how the money is best spent.

“But we can get started now. I have had many representations from colleagues across the House.

“So we are giving the go ahead to the schemes for York, Leeds, Calder Valley, Carlisle and across Cumbria.”