Mini-Budget 2022 | Main takeaways, industry reaction

Though billed as a “mini” budget, chancellor Kwasi Kwarteng’s announcement on Friday seemed anything but small.

Changes to income tax, the lifting of a cap on bankers’ bonuses, and the reversal of a National Insurance increase were all included in the government’s Growth Plan.

• Read The Growth Plan 2022

For the property industry, there were four announcements in particular that had special weight.

Stamp Duty changes

No Stamp Duty will be paid on the first £250,000 of a property, with first-time buyers having that threshold raised from £300,000 to £425,000. These changes are effective immediately, Kwarteng said.

Investment zones

More than 40 investment zones throughout the UK will have lower taxes for businesses and benefit from a streamlined planning process. There would also be no business rates in these areas, no stamp duty on newly occupied business premises and no national insurance to be paid by a company on the first £50,000 pounds earned by a new hire. More information on the planning reforms is set to be announced on a later date.

In the North West, the government is working with the following local authorities to establish these investment zones: Blackpool Council, Cheshire West and Chester Council, Cumbria County Council, Greater Manchester Combined Authority, Lancashire County Council, and Liverpool City Region.

The full list of proposed investment zones can be found on page 33 of The Growth Plan.

Infrastructure acceleration

Kwarteng said he would introduce legislation to cut barriers and restrictions enabling the acceleration of projects focused on roads, rail and energy infrastructure. These include introducing planning reform to simplify the planning system. The goal is to have construction start on these key infrastructure projects by the end of next year.

There are 138 projects on the government’s list including Northern Powerhouse Rail, freeports, Hynet hydrogen pipeline, the Hynet carbon capture and storage cluster, Liverpool City Region’s green bus routes, and an upgrade to the Transpennine Route. The full list can be found on page 35 of The Growth Plan.

Initiatives to increase housebuilding

The Growth Plan includes a promise to reform the planning system to push for the building of more homes. An announcement is set to be made later this autumn.

To promote the sale of land for housing, The Growth Plan also states that “the government will promote the disposal of surplus public sector land by allowing departments greater flexibility to reinvest the proceeds of land sales over multiple years”.

Relevant pages are 20 and 21 in The Growth Plan.

• READ MORE: Mini-Budget features glaring omission on business rates 

Industry reaction

Comments have been edited for clarity and brevity.

Cautiously optimistic

Steve Hogg, head of the North West at JLL said: “Plans to help both households and businesses alike with their bills will be welcomed across the UK but we can’t afford to lose sight of the need to address lasting regional inequalities.

“Low-tax investment zones and stamp duty cuts will grab headlines but what’s needed is a concerted effort to drive long-term investment and regeneration in our towns and cities. For businesses in the North West, that requires a recommitment from this government to spend on infrastructure, education and net zero projects. With two years until the next General Election, time is of the essence for this government to get it right and get businesses and investors on side. We’ll be looking for more from the budget proper later this autumn.”

The announcement fails to address productivity

Robert White, chief executive of Brabners, said: “Many households and businesses will welcome the benefits of today’s tax and energy interventions and, more generally, the new administration’s focus on growth. However, the need to address underlying low productivity in the UK remains.

“Shorter-term intervention measures like those announced today need to be matched by a longer-term investment plan aimed at reducing barriers such as poor connectivity and a lack of social mobility – particularly in the North where the need for the government to deliver on its commitment to ‘level up’ is ever more pressing.”

Investment zones are a good idea

Jessica Bowles, director of strategy at Bruntwood said: “The idea is a good one if they are developed through local collaboration and partnership and build long-term business confidence. To be game changers they need to be properly rooted in the vision and opportunity of their towns and cities with strong connections to their communities, good quality jobs, great placemaking and with long-term investors from both public and private sector.

Investment zones ‘will inevitably create winners and losers’

Cllr John Merry, deputy mayor of Salford and chair of Key Cities, said: “We welcome the government’s ambition to level up the country by incentivising investment and stimulating growth, but the Prime Minister needs to prioritise the economic performance of the UK’s cities and regions by investing appropriately in skills, innovation and infrastructure…

“The allocation of new investment zones – many of which are in Key Cities’ membership – will inevitably create winners and losers, so it is important that the government also considers the impact on locations that are not afforded such status.

“It is vital that planning and environmental deregulation in these areas does not lead to lower quality outcomes for both people and planet in the long term, and scrapping requirements for affordable housing provision could make them inaccessible for many.”

Investment zones could be ‘hyper-freeports’

Stuart Tym, planning partner at Shoosmiths said: “The proposed local investment zones can be seen as hyper-freeports, eclipsing those announced by the previous administration in terms of deregulation. This is particularly the case for planning policy, with the zones subject to bespoke regulations and potentially scaling back environmental protections, Section 106 agreements and infrastructure levies.

“Changing planning policy can act as a lever for development. However, it’s critical that we avoid becoming tunnel-visioned in the pursuit of economic growth; ensuring that deregulation does not impact the environment and balances the delivery of much-needed market rate and affordable housing with the related required infrastructure.

“Government funding will be used to fill the void left by reducing developer contributions in these zones. The success of this system hinges on often under-resourced local planning authorities being not only able to demonstrate what they would have asked a developer to finance, but also obtain funding from a new government stream and deliver projects in a timely fashion to mitigate the impact of development…

“If the government is to accelerate wider planning reform by ‘unleashing the power of the private sector’, it must also empower the public sector by properly resourcing local planning authorities.”

Investment zones could be an ‘important tool’ for regeneration

Nick Graham, associate director for planning at Peel L&P, said: “The investment zones could also be an important tool to support regeneration and growth in the North. We have a number of major projects across key growth locations in Greater Manchester that could be well-suited to make use of these powers, and we look forward to exploring their potential with partners in national and local government.”

Investment zones could make UK a ‘science superpower’

Sir Roger Marsh, chair of the NP11 group of northern local enterprise partnerships, said: “We share the government’s ambition for a high-growth, high-productivity economy, and levelling up those parts of the country that aren’t yet realising their full potential will make that happen.

“The chancellor is right that unleashing the power of the private sector will be crucial to delivering on the levelling up promise. Also crucial is that business investment is matched by public sector investment to address infrastructure, R&D and SME support. Northern businesses already invest more in R&D than other parts of the country, for example, however they receive significantly less government investment than their counterparts in London, the South East and Scotland, leading to an innovation and productivity performance gap, which is currently a massive missed opportunity for UK plc, as recognised in the Levelling Up White Paper.

“We look forward to hearing more detail of the government’s proposals for investment zones and are encouraged to see the North strongly represented on the list of early identified sites. Targeting investment in those sites with the greatest potential for levelling up will ensure investment zones play their full part in making the UK a Science Superpower and realising a Global Britain.

“We also welcome the Growth Plan’s continued commitment to investment in new energy infrastructure. The North is already driving the UK’s green energy revolution and, with the right targeted investment, is ideally placed to help the government deliver resilient, secure and lower cost energy supply while also driving economic growth.”

Infrastructure changes are needed

Bruntwood’s Bowles said: “We also need faster infrastructure development to better connect our towns and cities more effectively, so we welcome the government’s plans to streamline the processes around this. Properly devolving decision-making and funding programmes would be a quick way to do this and inject new pace. We know infrastructure investment is critical to unlocking new opportunities. The publication of the 100 prioritised infrastructure projects will go some way to showing us what these plans look like and how quickly change might be achieved.

“All eyes will be on the budget proper later this autumn where we hope to hear more about long-term investment in our regional economies.”

The government could take ‘bolder steps’

Steve Beechey, public sector director at Wates, said: “At Wates, we are a proud partner of Government and stand ready to continue our work to support economic growth throughout the country. We are particularly pleased with the announcement of 12 new investment zones, which will allow businesses like Wates to deliver the much needed housing, schools and hospitals across these areas.

“While we support much of this programme, we believe the Government can take bolder steps to encourage the private sector to deliver growth through Net Zero projects, such as energy efficiency, which would further tackle the cost of living crisis we face today.”

More detail on housing plans is needed

Peel’s Graham said: “Whilst we welcome any proposals to simplify and speed-up the planning process and build more homes, the Growth Paper is short on detail and we await the further information that the government has promised to provide in the weeks ahead. In our view any reform must prioritise action to address the growing housing crisis, which is ultimately only possible through the release of new sources of land supply in sustainable locations.”

Proposed planning reforms don’t go far enough

Paul Smith, managing director of The Strategic Land Group, said: “There is no doubt that the planning system can be streamlined and made more efficient without diluting the important protections it provides. There is no reason, however, why planning applications inside investment zones should be treated any differently to those outside them. We have a growth crisis, and a reformed planning system that focuses on what really matters is needed across the country.

“The reality is that the key obstacle to building homes is that insufficient land is allocated for development in the first place – when all the local plans in England are aiming to deliver around 190,000 new homes a year, it’s no surprise that delivery falls far short of the 300,000 target.

“If the government is serious about encouraging development and stimulating economic growth, the single biggest difference it can make would be to ensure the planning system sets out to deliver more homes in the first place – that means ensuring we have well-resourced planning departments delivering up-to-date Local Plans with ambitious growth targets.

What about affordable housing?

Nick Fell, partner at Rapleys, said: “The events of the last years have shown more than ever that the planning system is far too slow and inflexible to react to major issues. So further delays caused by not tackling these situations now are increasingly frustrating, despite the high level commitment today in the budget to make infrastructure projects simpler and quicker to bring forward.

“What about affordable housing however? Affordable housing quotas are based on local plans which were devised over 10 years ago. While they have good intentions, the reality is that by being inflexible and not pushing viable development forward, we are not delivering any new housing in some authorities because, for example, 30% of nothing is nothing.

“We must be looking to incentivise or empower local authorities to be more commercially minded. Similarly, there are so many processes and stipulations that hold development back and we would like to see a streamlining for affordable housing so that each time a challenge is overcome, there isn’t a new one to grapple with. CIL, Section 106, building regulations, carbon – all are important but were created separately without competing challenges that have converged on us today.”

Stamp Duty cut won’t solve housing crisis

Iain McKenzie, chief executive of The Guild of Property Professionals said: “The cut to Stamp Duty announced today will be welcomed by people currently buying a house, but this will not solve the wider issue of affordability in the property market.

“As we saw during the pandemic, when you create incentives to buy, you see demand soar. As demand increases, the number of available properties falls, pushing house prices up. An increase in demand now would come at a time when the supply of housing is already low, with house prices already inflated beyond the budgets of many buyers.

“The housing market is intrinsically tied to the health of the economy. Home-movers spend an average of £12 billion a year on home-related purchases such as furnishings and renovation. Moving can benefit other aspects of the economy, so it is good to see action taken to energise the property market.

“The government needs to address the issue of housing supply by making home-building a priority. The review on planning systems for infrastructure announced today could go some way towards easing the supply issue, but it relies on the chancellor’s pledge to ‘get Britain building’.”

Stamp Duty cuts demonstrate government’s housebuilding vision

Stewart Lynes, chief executive of Miller Homes, said: “We welcome the chancellor’s changes to Stamp Duty today, the increase in threshold in particular for first time buyers to £425k is significant and I’m sure will benefit many individuals across England looking to get onto the property ladder.

“The strategy introduced is a real shot in the arm for purchasers and particularity first time buyers and demonstrates the Government’s vision to unlock homeownership for a new generation.”

Stamp Duty changes will have minimal effect

James Hyman, head of residential at Cluttons, said: “The changes to stamp duty the chancellor has made today are of course positive for first-time buyers most importantly to counterbalance the increase in interest rates made yesterday. However, the increase in the stamp duty threshold to £250k will have minimal effect given it is well below the UK’s average house price.

“It is disappointing that the chancellor has done nothing to encourage private landlords back to the market. What would really help the UK’s current housing crisis is a reduction of the 3% levy on second home purchases and reintroduction of tax relief for landlords especially on improvements to their properties.  The main reason why rents have escalated so quickly over the last two years has been lack of supply, which has been driven by so many landlords being forced to exit the market due to the government no longer making it viable to be a private landlord.”

Stamp Duty cuts are good news for Cheshire

Peter Higham, managing director of estate agency Gascoigne Halman, said: “Today’s announcement is very much welcomed by our industry and brings some much-needed continuity to the property market…

“In Cheshire, it’s good news for the area in bringing continuity to the market and highlighting pockets of the region where there are opportunities for first time buyers to get on the property ladder.  I expect to see an increase in activity in areas such a Macclesfield, Cheadle, and Holmes Chapel where there is a supply of property suiting first time buyers.

“I believe this cut will also bring more people to the market throughout the autumn and winter to both sell and buy homes.  Those that were perhaps planning to ‘wait and see’ or hold off until the spring, may well decide to get moving now instead.”

Stamp Duty cuts could create ‘mini-boom’

Catherine Williams, partner and head of living at Shoosmiths, said: “Today’s changes to the Stamp Duty Land Tax will increase demand and not deal with residential supply.

“While creating an uptick in activity, these concessions are unlikely to ease the pressures the UK housing market currently faces. This risks creating another mini-boom and furthering the lack of affordability loop.”

A ‘broader approach’ is needed than just Stamp Duty cuts

Matthew Townson, director of development and projects at Casa by Moda, said: “It’s clear from the chancellor’s announcement today that the government sees stimulating housing demand through stamp duty cuts as an important part of its growth agenda. However, if we are to tackle the shortages of quality housing across the North West, a broader approach involving supply-side policies which incentivise the building of more homes remains crucial.

“One of the key problems the North West faces when it comes to addressing a lack of quality housing relates to its record on planning approvals. A recent report released this summer by the Home Builders Federation showed that approvals in the North West actually declined by 12% during the fourth quarter of 2021. This was in stark contrast to the considerable increases seen by regions such as London (78%) and the West Midlands (61%).

“Clearly, securing approval for new developments is central to delivering more quality housing. However, to help overcome these challenges in the near term we regularly work with housebuilders and partners on forward funding opportunities which enable us to take over and operate housebuilders’ sites once they complete.

“Looking to the future, we see an important role for the growing single family rental sector in helping deliver high quality, sustainable homes across the region.”

Awaiting planning reforms ‘with bated breath’

Matt Dugdale, associate director of Nexus Planning, said: “We welcome the chancellor’s plans to accelerate the delivery of homes, but as always, further detail of these plans will be imperative – we await the successor to the ‘mutant algorithm’ and a revised NPPF with bated breath.

“There will always be opportunities to streamline the planning system, but it still needs to be a good system that delivers for communities and joins up public infrastructure and private sector investment, to maximise the benefits and the prospects for sustainable growth. Promoting the disposal of surplus public sector land is all very well and good, but we need the right policies in place to enable that land to be developed.

“Ensuring that any form of planning deregulation (such as ‘Investment Zones’) does not detract away from the importance of ensuring that development balances the importance of environmental protection, sufficient infrastructure, and the delivery of much needed affordable homes, will be key. The basis of this will be to ensure that there is sufficient additional funding for local authorities across the North West, and also nationally, to help deliver the plans.”

The devil is in the detail

Paul Cherpeau, chief executive of Liverpool Chamber, said: “The chancellor’s package of planning reforms and tax cuts is clearly aimed at encouraging investment and growth, but the devil will be in the detail and many questions remain about how quickly the measures will have an impact…

“Investment Zones offer perhaps the largest signal of the government’s new direction, with the opportunity for businesses to pay lower taxes and business rates in specific areas. Details on the exact locations and the rationale for choosing them have yet to be released but we hope the Liverpool City Region will benefit from any further opportunities to support growth and investment.”

This budget will help us out of a recession

Sean Keyes, managing director at Sutcliffe, said: “I thought it was a good budget for both businesses and individuals, and I think it will help us climb out of this potential recession…

“In terms of the construction industry, cutting stamp duty will be very good for the sector because it’ll encourage people to move house; this will also kickstart first time buyers and boost first-time ownership. In doing so, this also encourages people to buy new furniture and undertake vital home improvements, thus creating wealth for the economy.

“Reversing the plan to raise corporation tax also means we can now employ another person next year.”

More is needed to see real green energy change

Ian Paton, partner in building consultancy at Cluttons said: “The energy package must be swiftly followed by longer-term fast-paced legislation that will increase the UK’s renewable programme and decrease our reliance on foreign imports which is ultimately the cause of the situation we are in currently. It’s not good enough to put much needed reforms to electricity, gas and carbon finance into the Levelling Up Bill, which is already incredibly overweight…

“I would like to see a real focus on grants, subsidies or a fund set up to support businesses to invest in energy infrastructure such as battery storage, solar PV and ground source heat pumps, while some sort of planning fast track for green roofs which maintain heat and increase biodiversity would also be sensible, particularly as perhaps 30% of London viewed from above is rooftop.

“In addition, investment in water and plant engineering, EV infrastructure, upgrading affordable housing and making EPCs and building regulations more fit for purpose will also be sensible measures with real long-term rewards.

“Removing the ban so quickly on fracking was non-sensical and has increased concerns about the government’s ability to deal with the energy crisis properly, rather than responding with actions that mean a stay of execution for the administration rather than solid plans such as these suggestions that will genuinely make a difference.”

Government is only interested in ‘short-term fixes’ on energy

Jeremy Hinds, director at Savills said: “The government has announced a raft of reactive emergency measures in response to our cost of living crisis. Whilst it’s of course a relief to hear that they are doing something to help people and businesses, yet again it seems like our political leaders are only interested in proposing short-term fixes rather than putting in place a proactive plan that would secure our energy supply and work towards a greener future.

“Ministers (a mere two weeks into their new roles) should be listening to energy experts who say we should be radically reforming the way our energy markets currently work. We should be breaking the link between electricity and global gas prices, particularly when less than 20% of our electricity generation comes from gas, and non-gas sources of electricity should be capped at levels that will encourage investment in clean technologies and secure our energy supply.

“Isn’t now our golden opportunity to move away from finite resources such as gas, and use the current situation to think radically and propel infinitely (in both senses of the word) better sources like wind and solar?”

Mini-budget is ‘all-too-familiar pattern’ of underfunding public services

Gillian Worden, director of P4 Planning, said: “Today’s mini budget largely focuses on a series of one-off payments or tax reliefs in response to our current cost of living and energy crises. It’s the all-too-familiar pattern of persistently underfunding vital public services and then having to deliver emergency payments costing billions to stop people and businesses from going under.

“While we welcome help being given to businesses and households at this difficult time, wouldn’t it have been better to invest in our services and infrastructure properly so that our economy was better able to withstand difficult economic times?

“Our local planning authorities are desperately underfunded, and it’s having a knock-on effect on our ability as a nation to get on and build the homes and essential infrastructure that we need. We’d like to see bolder, strategic proposals from the top, rather than reactionary hand-outs.”

Additional funds for energy efficiency projects is ‘welcome news’

Fiona Fletcher Smith, chief executive of L&Q said: “We welcome the commitments in today’s budget for expanding home ownership, decarbonising homes, and simplifying the planning system.

“With the end of Help to Buy looming, cuts to stamp duty may help more first time buyers home ownership dreams become a reality. However, there remains a chronic shortage of affordable housing across the country, and more government support will be essential to ensuring the delivery of homes of all tenures, including social rent.

“Reducing our greenhouse gas emissions is a top priority for housing associations, who are keen to take a lead in tackling climate change. The additional £2.1bn for energy efficiency projects is welcome news and will support us in meeting our net zero ambitions.

“It is encouraging to hear the Government plans to simplify the planning system and free up public land for housing. We look forward to seeing further details, but it’s vital that reforms continue to deliver much needed affordable homes.”

Hynet is happy

David Parkin, project director at Hynet, said: “We are delighted that the chancellor, Kwasi Kwarteng, has named HyNet within the Growth Plan to be accelerated for ‘as fast as possible’ delivery.

“This includes the HyNet’s hydrogen pipeline, hydrogen storage and carbon capture and storage infrastructure.

“HyNet is at the centre of the UK’s low carbon hydrogen economy and will create over 6,000 jobs across the region, safeguarding highly skilled manufacturing jobs and bring investment work £31 billion into the UK economy, helping to level up across the country.

“The transition to a low carbon economy, through projects such as HyNet, provides the UK with a fantastic opportunity to protect and create highly skilled jobs, create a sustainable supply chain, and provide UK businesses with the ability to deliver the environmentally friendly products that consumers are increasingly demanding.”