What the budget means for London business: our round-upNovember 22, 2017
This year’s Budget committed to “build a Britain fit for all”, with the Chancellor pledging to deliver on the PM’s promise to tackle the housing crisis and hailing the economy as one that “continues to confound those who seek to talk it down”.
And it will be important to examine gaps between planning permissions and housing starts, which is exactly what our Fifty Thousand Homes campaign has highlighted. Our ‘Scores on the Doors’ data found that over one in three homes (36%) are not built after planning permission is granted, exacerbating the huge challenge London faces.
London needs to significantly increase housebuilding to attract and retain the people it needs to remain globally competitive post-Brexit. The Mayor’s new London Plan which is set to be published at the end of the month, will increase London’s housebuilding target to 66,000 new homes every year, but our own data shows that we haven’t built more than 24,000 homes in any year over the past decade.
The Budget’s housing announcements are, in general, a welcome first step in the right direction to increasing supply in the capital. Of note is the £15.3 billion of new financial support available for housing over the next five years. This, however, only amounts to £3 billion of additional funding across the country each year, which means thousands of additional new homes each year, not the tens of thousands we’ve been promised. Other encouraging announcements include the lifting of borrowing caps – the so-called Housing Revenue Account – for councils in areas of high affordability pressure, and further loan funding for estate regeneration and the exploration of the new guarantees to support housebuilding. The government must remain focused on freeing up land and making the best use of it, and the Mayor must use the full weight of his powers and influence to bring more land forward for development.
A range of planning measures were announced, but the government has not heeded calls to review green belt policy. Changes to Community Infrastructure Levy (CIL) are proposed, including a consultation looking into speeding up the process of setting and revising the levy. It will also consider allowing some councils to introduce an additional Mayoral type CIL for major infrastructure and new CIL rates to reflect land value uplift for a change of use. While these measures address some of our members’ key asks, they do not go far enough to reduce complexity or address the impact of the current CIL regime on viability and affordable housing delivery in many parts of London.
Skills shortages are a top concern for business, and the £406m for maths and technical education is welcome. Business would like to see a similar investment in soft skills and careers education, areas where our Skills Commission has identified poor performance affecting productivity and growth. The launch of a National Retraining Scheme is also a positive step. £34 million has been pledged towards addressing construction skills shortage, an area of particular concern for business. London’s construction sector currently employs some 300,000 people, half of which are overseas workers. With restrictions to expected migration post-Brexit, it is crucial that the government works closely with business to see these announcements through. Business is committed to playing a full role in developing its workforce, and our Skills Commission is bringing a strong business voice to the table.
And, hidden away deep in the Budget paper, are two commitments we’ve long been calling for: the government will make it easier for skilled students to apply for work in the UK post-study, and scientists and valuable researchers will be wooed by a series of important changes to the immigration rules. We heartily welcome this move and will work with government to ensure London benefits from these changes.
An extra £3 billion is being set aside for Brexit contingency planning, but interestingly the new OBR economic forecasts make no attempt to factor in the current uncertainty of the Brexit negotiations. Rather, it assumes an orderly Brexit and no cliff-edge. Our survey of over 1,000 businesses found that two-thirds need a transition deal in place by the summer of 2018. The government must make sure that it secures this deal without delay to provide certainty for the 54% of businesses that have been putting off vital decisions on investment and recruitment.
London business will also welcome the Chancellor’s explicit commitment to work with TfL on the funding and financing of Crossrail 2. This will continue to be a priority area of work for us over the coming months. Looking more broadly, the planned £1.7 billion of investment in transport across English cities represents a positive step in the right direction in addressing regional imbalances in transport investment. Cities across the country must put across a strong joined-up message to government that better cooperation and connectivity is critical to retaining our post-Brexit competitiveness.