CHANCELLOR RESPONDS TO FMB BUDGET REQUESTS

George Osborne MP, Chancellor of the Exchequer, used his Budget on Wednesday 23 March to set out the Coalition Government’s plan for growth.

Although in many ways it was a missed opportunity to help small and medium sized construction companies the Chancellor did at least listen to the FMB on a number of issues that we have been lobbying on.
 

• Tackle the housing crisis
  The Government is to provide £250 million to support first time buyers to purchase a new-build property. The FirstBuy programme will assist over 10,000 households with equity investments jointly funded with house-builders. Although the announcement is welcome, the FMB is concerned this is not a sustainable solution for people trying get onto the property ladder, or for the tens of thousands of small house builders struggling in the current climate. We will look to work with the Government to ensure the money is spent in the most effective way. In addition, the Government hopes to strengthen demand for residential property by reforming the stamp duty land tax rules applied to bulk purchases. The aim is to reduce barriers to investment in residential property, promoting private rented housing supply
• Introduce a presumption in favour of sustainable development
  The Government has committed to introducing of a new presumption in favour of sustainable development so that the default answer to development is ‘yes’. The FMB hopes to see a robust definition of sustainable development in the forthcoming National Planning Policy Framework.
• Combat the rising cost of fuel
  In response to the current oil prices the Government cut fuel duty by one penny per litre. The Government will also abolish the fuel duty escalator and replace it with a fair fuel stabiliser, which means when oil prices are high, fuel duty will increase by inflation only. The 2011-12 inflation-only increase in fuel duty will be deferred to 1 January 2012. The 2012-13 increase in fuel duty will be implemented on 1 August 2012.
• Invest in skills and training
  The Government is spending around £1.5 billion on the apprenticeship programme with the aim of increasing the number of employers offering apprenticeships. In order to help SMEs, the Government will invest £75 million to support business consortia to set up and maintain advanced and higher apprenticeship schemes, supported by grants.
• Introduce a package of incentives for the Green Deal programme
  The Chancellor hinted at the possibility of future announcements on the Green Deal, saying that the Government will act to encourage and incentivise take-up of the Green Deal so that it will appeal to households, businesses and prospective providers alike, before it is introduced in 2012. However, the FMB is disappointed that the Chancellor missed this opportunity to make a firm commitment to incentives such as a cut in VAT for energy efficiency improvements or changes to council tax, business rates and stamp duty
• Delay the cut to the Small Business Rate Relief The small business rate relief holiday will be extended by one year from 1 October 2011.
  
  For small businesses struggling with the VAT rise and other inflation pressures, the extension to Small Business Rate Relief for properties with a rateable value below £18,000 will help.

LONG-TERM IMPACT OF BUDGET
 

• In terms of the Budget’s longer term impact on the building industry, the changes to the planning system are likely to be the most significant. Much of the detail surrounding the reforms, thought to be the most radical since the planning system was introduced in 1947, is still unclear but do offer developers the hope of overcoming local community opposition. The addition to the Localism Bill as part of the Government’s drive to create a planning system to support economic growth and development will make it more difficult for councils and neighbourhoods to oppose developers’ applications. The new ‘presumption in favour of sustainable development’ will ensure that the default answer to development is ‘yes’ but this in turn could confl ict with previous government policy to devolve powers locally.
• Under the Bill currently going through Parliament, neighbourhoods are to be given the right to create their vision of what their area should look like. In what appears to be a far reaching change, local people will be able to define the types of development that receive automatic planning permission by creating neighbourhood plans and development orders. However, the Budget extends the right to initiate these documents to businesses. In a statement after the Budget the Department for Communities and Local Government (CLG) explained: “This will encourage growth by reducing the need to apply for planning approval in order to develop. Businesses will need to work closely with, and win the approval of, local communities to establish a neighbourhood plan.” Guidance is still needed as to how businesses and developers might be able to exercise these rights but it certainly marks a watershed in policy development which seems to favour economic growth over ‘localism’.
• Finally, the move to allow developers to initiate neighbourhood plans is not the only blow to localism because the neighbourhood plan must itself be consistent with the local council’s own development plans and councils must now prioritise development. In the post Budget documents CLG stated that, “councils must ensure that that they are not imposing any unnecessary burdens in the way of development”, even if that means allowing developers to drop commitments to build schools and roads. So, the opportunity to develop would appear to be much stronger as a result of the Budget and residents’ right to say no may no longer be the ultimate deciding factor which can only be good news for a struggling building industry weighed down by a complex and slow planning system.