26 November 2015
Our experts in housing, energy, and infrastructure share their reactions to yesterday’s Spending Review and Autumn Statement.
The government’s new aid strategy, published alongside the Strategic Defence and Security Review, includes the allocation of 50 percent of the Department for International Development’s (DFID) budget to fragile states and regions in every year of this parliament. It also underlines the expansion of the cross-Government Conflict, Stability and Security Fund (CSSF), supporting the international work of the National Security Council.
Paul Hamer, CEO, welcomes the Government’s commitment to international aid: “The continued ringfencing and support of international development to help eradicate poverty and create stable nations is very good news. Efforts towards promoting stability will provide the most likely long-term solutions to address issues such as the current refugee crisis which has clearly now become a critical global issue that the UK and its partners must endeavour to solve.”
The Spending Review and Autumn Statement invests at least £250 million over the next five years in an ambitious nuclear and research development programme.
Craig Hatch is Head of Asset Management, based in West Cumbria, a region also dubbed Britain’s energy coast. He comments: “We are very pleased with the increased spending in nuclear and other energy generation which will provide further impetus into our strategies to increase our already significant involvement in the sector."
However, the news that a £1bn competition aimed at commercialising carbon capture and storage technology has been cancelled is deemed a serious setback.
Paul Hamer, who is also Chair of Leeds City Region Enterprise Partnership (LEP) Green Economy panel, stresses: “As Paris is about to host COP 21, the 2015 Paris Climate Conference, the decision to cancel funding around carbon capture and storage is most disappointing. This decision could significantly affect our ability to decarbonise the UK whilst transitioning to cleaner energy generation and may indeed place the UK behind other nations in developing leading-edge solutions to mitigate the future impacts of climate change.”
Simon Sjenitzer, Associate Director, Energy & Climate Change Business Development, echoes these concerns: “The Department of Energy & Climate Change appears to have a mixed bag of priorities, with support for shale, energy intensive industries and renewable technology tariff reductions on one hand, but innovation, nuclear and energy efficiency measures on the other. This change in more targeted support appears to put a priority on perhaps not the lowest carbon, but the most short-term cost effective carbon. It will be interesting to see how this all plays at the Paris Climate Change Conference.”
Northern Powerhouse, devolution, transport, infrastructure and skills
A number of devolution packages will bolster the Northern Powerhouse and local growth. This includes £13bn to be spent on Transport in the North, doubling the size of the Enterprise Zone programme, creating seven new Zones, and aiming to have at least five Northern mayors by 2017.
The Government also announced that its Apprenticeship Levy will be set at 0.5% of an employer’s paybill, with an allowance of £15,000 to offset against their levy payment. As such, the levy will only be paid on paybills in excess of £3m (less than 2% of UK employers). It is expected to raise £3b to fund the 3 million apprenticeship the Government hope to deliver by 2019-20.
Paul Hamer welcomes the ‘continued investment into health, education, and infrastructure, which are all essential ingredients of economic growth and key to turn the Northern Powerhouse vision into a reality. I am also pleased to see the commitment to the Apprenticeship Levy. This will support our current and ongoing investment in career development and apprenticeships at WYG.’
WYG has been supporting growth across the North, contributing our expertise to understand the complex issues inherent to the success of the Northern Powerhouse. Most recently, we sponsored ‘The Future of the Northern Powerhouse and Local Government Conference in Manchester, and the IPPR State of the North Report and Conference in Sheffield.
Marc Davies, Head of Environment, and Chair of the Association for Consultancy and Engineering (ACE) Northern Region Group, shares his views: “The increase in investment in infrastructure and commitment to important schemes like HS2 and funding of Transport for the North are good news. They will support longer term economic growth and importantly help the development of the Northern Powerhouse. The cuts to the operational budget of the Department for Transport, however, mean that industry will need to play an increasing role in the delivery of these schemes.”
Craig Hatch adds: “This is very positive news about the formation of a Carlisle Enterprise Zone especially following our recent strategic acquisition of North Associates and Taylor & Hardy which gives us a significant presence in Carlisle. We are able to benefit from this investment this will create.”
The Chancellor’s measures to provide more low cost housing are very much to be welcomed. Aimed at increasing the rate of housebuilding and helping first-time buyers, they represent the most significant Government intervention in the housing market since the 1970s, focussed on a facilitating and financing role. But how will the measures work in practice?
Further planning reforms
Further proposed amendments to the planning system would support the use of brownfield land in the Green Belt especially for starter homes. This seems sensible. There is a risk, though, that some housing may be promoted in relatively isolated locations which may not make for sustainable or integrated communities and will put further pressure on car journeys and transport infrastructure. In meeting the need for housing, authorities will need to take account of brownfield sites in the green belt and assess these alongside the merits of urban extensions in order to achieve a sustainable approach to green belt release and site allocations.
Steven Fidgett, Head of WYG Planning, says: “The release of Green Belt land would make a real difference to housing delivery. However, there will need to be an effective way through the Local Plan process of addressing local views and achieving the most sustainable and integrated communities with a real sense of place.”
Given that the Spending Review includes further cuts to Council budgets, the success of these measures could be limited if local planning authorities have less capacity to progress Local Plans and process planning applications, requiring protection of planning resources and budgets.
Release of brownfield land for 160,000 starter homes
This is promising. Its success will largely depend on the remediation costs of this land and the value at which it will be released. The first task will be to identify suitable sites.
More new starter homes
The Government is funding only 60,000 of the 200,000 new starter homes. The question remains as to how homebuilders will deliver the remaining 140,000 units at 20 percent below market value.
Simon Peake, Associate Planner, comments: “It is a pity that this is only a temporary measure but it is designed to promote home ownership. Allowing these homes to be sold at market value within five years will benefit the fortunate purchasers but the homes will not be part of the affordable housing stock in the long-term. We may need another, similar initiative in five years’ time.”
135,000 New Help to Buy Shared Ownership homes
This proposal will allow more people to buy a share in their home and buy more shares over time. The scheme will relax and remove previous restrictions.
Jeremy Gardiner, Director, says: “It is good to see proposals here for the more traditional affordable sector. But the extension of Right to Buy to housing association tenants, and the replacement of affordable homes contributions from new developments with starter homes, means there will be a drop in traditional, affordable stock in favour of getting people on the housing ladder. The continuing demand for traditional tenure will still need to be met.”
The promise that all sectors could access funding to deliver these homes suggests a diminished role for housing associations.
Homes for rent
The Chancellor is putting measures in place to support 10,000 more homes for rent (for people “saving for a first deposit”). This is welcome but it is not nearly enough to meet demand (especially when the existing stock is being reduced by Right to Buy and replacement of affordable homes contributions by starter homes). Consequently there will be a greater reliance on the private rented sector, for which the Government offers no support and which is key in achieving a flexible housing stock that supports the economy and a mobile workforce.
Homes for older people
The 8,000 homes for older people and those with disabilities is a positive move, although a low number, given our ageing society.
Steven Fidgett adds: “Overall, the measures are intended to make low cost housing available to many more people, which has to be welcomed. We support stimulating housing delivery and growth through the release of public land and brownfield sites. But to make the much needed step change in the rate of housebuilding, more greenfield and Green Belt land will need to be released than is currently identified.”