Spring Statement 2019: Presiding over the Mad Hatter’s Tea Party?
The Spring Statement was clearly overshadowed by the political events of the last 24 hours.
It is important to remember that the Statement is not intended to be a budget and therefore it is not surprising that no major spending or tax “rabbits” were pulled from the Chancellor’s hat. The highlight was the announcement of a £3 billion Affordable Homes Guarantee Fund, underwriting the provision of 30,000 affordable homes. The allocation of £717 million from the Housing Infrastructure Fund (HIF) was also noted (although this is funding that has been previously announced), supporting the delivery of 37,000 new homes. Elsewhere £260 million was allocated for the Borderlands Growth Deal and £53 million was allocated to Local Full Fibre Networks in nine areas. £60 million was awarded from the Transforming Cities Fund (announced 2017) to support infrastructure improvements in ten cities.
While there were no major spending “rabbits”, what ensued did have the air of the Mad Hatter’s tea party, with the Chancellor presiding over a set of Office for Budget Responsibility (OBR) forecasts which are plagued by uncertainty, while pinning all his hopes on a notional Brexit “deal dividend”.
It is apparent that the OBR considers that economic growth will occur at the most subdued rates since the financial crisis (with this year’s growth forecast down rated from 1.6% to 1.2%). In this context, the Chancellor could have chosen to advance spending plans and to enhance confidence. He chose instead to reserve potential expenditure in favour of seeing the economic outcomes of leaving the EU.
Saving for a rainy day
The Chancellor crowed about the potential for a Brexit “deal dividend” – a fiscal and business confidence boost arising from greater business certainty. He favours, for the time being, retaining the fiscal headroom created by a reduction in public sector borrowing (the deficit) and returning to set departmental budgets in the Autumn Spending Review. He outlined that it was then, and not now, that choices could be made about the proportion of a “deal dividend” that could be released for investment in public services, capital expenditure projects, as well as consideration of taxation measures.
The Chancellor was however at pains to point out that the dividend would only ever be a temporary solution to any disruption that might occur as a result of leaving the EU without a deal.
The Autumn Spending Review will be hotly anticipated and will reveal how the Chancellor intends to shore up the economy, reconcile public finances and allegedly bring an end to austerity.
In the meantime, the Spring Statement did include some announcements which will be of great interest to those with property interests:
- Publication of an Oxford-Cambridge Arc Government Ambition and Joint Declaration
- The introduction of a Future Homes Standard from 2025 to future-proof new homes with low carbon heating and energy efficiency measures
- A new academic review of the link between biodiversity and economic growth
- Further capital funding to support investment in science and technology innovation projects
More to come
We can also look forward to the following in the coming months:
- Consultation on “Planning for Future High Streets” – including better use of planning tools to support high streets
- Future of Mobility: Urban Strategy – the Government’s approach to putting the UK at the front of changes in mobility technology
- Independent Report on Build Out Rates –additional planning guidance to support housing diversification on large sites
- Response to consultation on Planning Reform –a package of reforms including allowing greater change of use between premises, and a new permitted development right to allow upwards extension of existing buildings to create new homes
- Accelerated Planning Green Paper - a Green Paper setting out proposals on how greater capacity and capability, performance management and procedural improvements can accelerate the end-to-end planning process
Look out for our imminent briefings on the Oxford-Cambridge Arc and the Future Homes Standard.
13 March 2019