The Spring Budget 2017
A global outlook, but with nothing to say about the broken housing market or industry at home
The Chancellor’s Spring Budget speech was peppered with references to the UK’s role globally. He stated that the Budget was concerned with “preparing for a global future” and he was at pains to state that the Budget was designed to keep “Britain at the cutting edge of the global economy”.
This Budget was inevitably all about preparing for leaving the EU. Many of the announcements related to measures designed to improve competitiveness in terms of inward investment, business innovation and developing a labour force which is equipped to respond to rapidly-evolving employer requirements. The Chancellor also referenced the productivity challenge, although could not offer a “quick fix” to this perennial problem.
While many of the measures announced are progressive, they are likely to deliver results over a long timescale.
We feel that this longer-term approach has come at the expense of more immediate and pressing concerns at home. One need only look to the dysfunctional housing market for an example of a domestic issue which, if unaddressed, will impinge on the UK’s competitiveness as a place to do business.
Support to address the broken housing market, to assist in the regeneration of our towns and cities and measures to address regional economic inequalities are all absent from the Spring Budget. The Chancellor did not once mention the Government’s Housing White Paper, nor its Industrial Strategy Green Paper.
This rather suggests that the housing and industrial challenges that the country faces are not considered important enough to feature in this Spring Budget. We would contest this - they are of the utmost importance to the country’s future prosperity.
Despite the rhetoric about creating an economy which works for all, the Government has again failed to realise the important differences that exist between different parts of the country and the challenges that exist in creating a more balanced pattern of economic growth and investment.
Measures to enhance competitiveness
We welcome the following measures announced today:
The reduction of Corporation Tax to 17% by 2020 which will make Great Britain the lowest corporate tax environment to trade in of the G20. This will help to attract inward investment.
Simplification of the R&D Tax Credit Scheme to ease the administrative burden on businesses. Innovation is key to creating a competitive economy.
£200 million investment to encourage private sector investment in full-fibre broadband networks. This is essential to ensure that all parts of the country are digitally connected, enabling them to trade and communicate efficiently.
A £690 million competition for local authorities to tackle urban congestion. Ensuring efficient movement of people and goods is essential for competitive places.
£90 million funding for the North and £23 million funding for the Midlands to address “pinch points” on the national road network.
Continued support for devolution. We look forward to publication of the Midlands Engine Strategy and details of the extension of devolved powers to the Mayor of London.
A £500 million investment in education for 16-19 year olds. Investment in the workforce of the future to provide vocational skills linked to employer requirements is an essential ingredient for success.
These are all measures which will build strong foundations for a more competitive economy outside the EU over the long term, but they should not come at the expense of shorter-term priorities for investment to address structural problems with the economy that exist now.
“Homework” for the Chancellor
The Chancellor’s outlook was clearly global, but we think that more attention should have been afforded to housing and industrial matters at home. We look to the Autumn Statement for confirmation of support to:
Boost the supply of homes to tackle full housing needs.
Address housing affordability challenges.
Further invest in the infrastructure which makes places competitive.
Address regional disparities in investment levels and productivity.
Further devolve powers to elected city mayors outside London.
It is essential that the Government does not lose sight of the important contribution that housing and industrial strategy makes to the overall competitiveness of UK.
8 March 2017