In his Autumn Budget (29 October 2018), the Chancellor, Philip Hammond, announced the end of an era for the Private Finance Initiative by scrapping future projects and closing the scheme.
Philip Hammond said: “I’m committed to PPP [The scheme under which government plans payments for public procurement] where it delivers value to the taxpayer and shifts risk to private sector. There is compelling evidence that PFI does neither.” He said the government will honour existing contracts but “will be no pushover”. There will be a new centre of excellence to monitor deals and no more PFI for future projects.
Other key budget changes include:
SME’s which train apprentices will have their contribution to the Apprenticeship Levy halved from 10% to 5%.
An extra £500m of funding goes to the Housing Infrastructure Fund, £291m for London, aiming tounlock 650,000 new homes. The chancellor said that the Letwin Review, the investigation into why the UK is not building enough homes, recommends reforming the planning system to speed up building.
Melanie Leech, Chief Executive, British Property Federation comments, “The Review also recognised the skills crisis in which we find ourselves. Time is of the essence, and whilst we applaud the Government’s intention to take a few months to consider the response to the wider Review, this is an area in which we need urgent action to sure that we can hit the 300,000 [new build houses] target.”
Help to Buy
An extension to Help to Buy was not mentioned in Hammond’s speech, but is in the Treasury’s Red Book that details budget announcements: “From April 2021, a new Help to Buy Equity Loan scheme will run for two years before closing in March 2023. The new scheme will be available for first-time buyers only, and for houses with a market value up to new regional property price caps. These caps are set at 1.5 times the current forecast regional average first-time buyer price, up to a maximum of £600,000 in London. The government does not intend to introduce a further Help to Buy Equity Loan scheme after March 2023.”
Commenting on the Budget 2018, Brian Berry, Chief Executive of the FMB, said: “It is estimated that as many as 300,000 to 400,000 new homes alone could be created by making use of empty spaces above shops on our high streets.
“We would urge councils to take this opportunity to look again at how they can work with local builders and developers to make better use of existing town centre building, and facilitate the development of wasted space above shops.”
Although the budget promises extensive funding for house building and infrastructure, some organisations have expressed their disappointment with the lack of progress towards reasonable industry requests for fair tax treatment.
Tax relief for new non-residential buildings
A permanent tax break for new non-residential structures and buildings, to be partly funded by an adjustment to the special writing down rate for long life assets from 8% to 6%.
Chris Hewett, Chief Executive at the Solar Trade Association, believes that tax disadvantages will continue to hamper the progress of renewables and smart energy in Britain: “Solar is the biggest clean energy market in the world today and by putting obstacles in the path of this technology the Government is frustrating the urgent energy transition and putting British industries at a disadvantage in global clean energy markets.”
The infrastructure fund will receive a £38bn boost by 2023/24. The government said it was backing the controversial Cambridge-Oxford Arc, which at the recommendation of the National Infrastructure Commission will see a million homes built between the cities by 2050.
Julie Hirigoyen, Chief Executive at UKGBC said, “In the absence of leadership on clean growth in the Budget, it is now more important than ever that businesses show real leadership in reducing emissions. The construction and property industry has a huge part to play; we urgently need to begin decarbonising our buildings on a path to net zero emissions.”
Investment in the high street
£1.5bn is set to be pumped into the UK’s high streets. This comprises of £900 million in business rates relief for nearly 500,000 small businesses, plus £650 million for the transformation of high streets, transport and infrastructure improvements, building restorations, and potential changes to planning rules to allow shops to be converted into homes and offices.