BUDGET 2021 | Main takeaways, industry reaction

Chancellor Rishi Sunak has revealed the government’s autumn budget, which includes large investments in brownfield land developments, transport infrastructure and housing.

Sunak’s budget will increase government spending by £150bn by 2024-25.

Sunak said time will tell the success of the budget.

“Its success will be measured not by the billions we spend, but by the outcomes we achieve and the difference we make in peoples lives,” the chancellor told Parliament.

“The budget is set. The plans in place. The task is clear. Now we must deliver,” he continued. “Because it isn’t the government’s money, it’s taxpayers’ money.”

Here are the main points those involved in the built environment in the North West and North Wales need to know:

• Housing: Sunak said £24bn has been earmarked for housing, including £11.5bn for building up to 180,000 new affordable homes. The budget allocates 65% of the funding to be for homes outside of London.
• Brownfield land: £1.8bn has been set aside for investing in brownfield land, enough, Sunak said, to make 1,500 hectares of brownfield suitable for development. The money is split between £300m to “unlock” smaller brownfield sites for housing and £1.5n to help regenerate “underused land” to deliver transport links and community facilities.
• Planning: The budget sets aside £65m towards helping digitise the planning system.
• Cladding: The budget includes £5bn to remove unsafe cladding from the highest risk buildings in the country. Of that money, £3bn is over the spending review 2021 period. Sunak said the £5bn would come, in part, by a residential property developers tax which will be levied at a rate of 4% on developers with profits over £25m.
• Business rates: Sunak promised a 50% business rates discount for companies in the retail, hospitality and leisure sectors for one year – with businesses being able to claim a maximum of £110,000 off.
• Infrastructure: The government is going to spend more than £130bn a year on economic infrastructure throughout the country, including £21bn on roads and £46bn on railways. The budget also includes more than £5bn for cycling infrastructure, as well as the previously announced £5.7bn for London-style transport systems in the country. That money also involves mobile networks. Not mentioned? An overall verdict on HS2 – although he did say an integrated rail plan was due to be released “soon”.
• Levelling Up: Up to £200m will go towards delivering eight freeports in England, according to the budget. The document includes £9m in 2022-23 to create more than 100 green spaces on unused or derelict land. Sunak argued that Levelling Up involves more than just improving roads, it means investing in culture. To that end, he promised £800m to improve and restore museums, galleries and local culture spots.

Read the full budget and spending review document.

Here’s how the industry reacted to the announcement:

GENERAL REACTION

Paul Boyfield, group property director of Lexington

“This budget was about cementing the realignment in British politics. Johnson and Sunak now occupy political ground that Cameron and Osborne could never reach. They‘ve parked their tanks on Labour’s lawn and marked out their territory ahead of the next election, which now looks increasingly like it will come early in 2023. The losers are Tory Brexiteers who were hoping for a return to low tax, small state Thatcherism.”

Kevin Whitmore, director of BECG

“Today’s budget and spending review has cemented the government’s view of what levelling up means: spreading opportunity, improving public services, boosting living standards, restoring local pride and empowering local leaders and communities across the UK.

“Each of these themes is borne out in many of the announcements targeted in North West, many of which just happen to be located behind the ‘red wall’.

“But the devil of much announced will be in the detail. It looks like much of the money announced to help unlock new housing and remove unsafe cladding for example is recycled cash.

“Nevertheless, for many first-time Conservative voters in places like Burnley, Middleton & Heywood and Warrington South, today’s announcements will be a down payment on the promises made at the last election.”

Rachel Engwell, head of tax in the North for Grant Thornton UK

“A mixed bag for North West businesses today. While we naturally welcome the £1.7bn investment in transport in Greater Manchester and Liverpool City Region, there was however little to help with businesses facing a hike in corporation tax next year and currently suffering from a huge uptick in energy prices and other supply chain issues.

“It was pleasing to see some help for the sectors most impacted by the pandemic, retail, leisure and hospitality, who can now claim a 50% business rate reduction next year, up to a maximum of £110,000.

“We also welcome the government’s commitment to increase innovation spending to £22bn and the reforms to R&D tax reliefs to include cloud computing and data investments, which will be cheered by North’s fast-growing fin-tech and e-commerce sectors.”

Sean Keyes, managing director of Sutcliffe

“The £1.8bn pledged towards brownfield housing developments is closest to our hearts as engineers and will make a real impact in making the UK more sustainable, as it’ll not only stop us from using greenfield sites but also help us clean up brownfield land.

“The digitisation of the planning system is also something I’ve personally spoken to a lot of local planners about in the past and the general consensus is that most people are struggling to meet planning times at the moment, which means projects then start at a slower timescale, which then halts the economy. Investment in speeding up the planning system is well received across the construction and property sector and is something that has been a long time coming.

“The levelling up agenda needs to continue and needs to be pushed hard by the Conservative party – with levelling up all about creating equal job opportunities, higher life expectancies and a better way of life across the country and not just in the South, today’s budget will again go some way towards that, especially with the significant investment in transport links and stations in Liverpool, Runcorn and St Helens.

“As a company that has a long reputation for supporting the future generation, the £3bn pledge in post-16 education to fund the skills revolution will be a fantastic boost to the economy too. Every business needs to support those at the bottom rung of the ladder in order to nurture, inspire and up-skill, to ensure that those coming out of education at 16+ can flourish and build our future economies. This investment in the youth may not have an immediate impact, but if we don’t at least invest what our competitor nations are, then we will fall behind and I am delighted that programmes such as the Kickstart scheme are giving young people a chance to shine.”

Peter Tooher, executive director of Nexus Planning

“It’s great to hear the chancellor striking an optimistic tone, as well as looking ahead, he’s clearly not afraid of pledging to putting money where he thinks it’s needed – infrastructure, education, innovation and ‘levelling up’. I would have liked to hear more on the challenge of zero carbon. Sunak’s emphasis on delivery, and that is not just about spending announcements, underlines the real challenge.

“The investment in local transport and the prospect of London-style ticketing for Liverpool City Region and in Greater Manchester is great news. It is also good to hear areas like Burnley, Stoke-on-Trent, Bury and Ashton-under-Lyne getting a slice of the ‘levelling up’ fund. The continued business tax breaks for the retail, leisure and hospitality sectors and those investing in green tech are welcomed and will be a boost to many town centre businesses facing real challenges.

“As always, the devil is in the detail. We await to see how the announced £1.8bn brownfield land fund will be carved up after our local authorities were left with only a minuscule share of the £58m Brownfield Release Fund.

“The talk of levelling up is now being turned into action on the ground, but I remain of the view that we need to look deeper into the challenge – looking at health, education, investment – and a levelling up ‘plan for the North’ to join up the dots.”

Nigel Wilson, chair for the North and chief executive officer of Gentoo Group

“While there have been a number of headline-grabbing announcements today from the chancellor, there is so far a lack of detail on how housing can be the catalyst to deliver levelling up for the government. We will be examining the details that come out over the next day or so, but feel that we could have seen more from the chancellor on decarbonising homes and how housing investment and planning policy can be re-orientated to help rebalance the economic geography of the country.”

Kevin Tully, managing director of Tulway

“We’ve got to find a way out of this pandemic and having already spent hundreds of billions of pounds to support people and businesses, it goes without saying that taxes will increase in order for the government to claw back some of this output. I’m hoping for a higher wage economy going forward and today’s budget goes some way towards ensuring that.

“Employers need to be involved more in the training funding process, rather than simply giving large amounts of money to colleges and universities for them to up-skill and train. The £3bn post-16 education to fund the skills revolution is fantastic news for our sector and for Tulway, as we pledge to take on 20 more apprentices between now and 2025.

“The green agenda is also going to open up an incredible amount of opportunities for businesses across the Liverpool City Region. A lot of people don’t realise how heavily involved the engineering sector is in the process of transforming from fossil fuels to green energy, but Tulway and many other businesses like us are playing a huge role in the net zero agenda and long may it continue.”

Julian Broster, founding director of Civic Engineers

“It would be fair to say that we were pleased to see the chancellor’s commitment to billions in transport funding. The £5.7 billion commitment to transform local transport networks in eight English city regions over five years will be very welcome in those areas. More funding for zero-emission buses is a positive step also.

“As we look at further opportunities in active travel and improving public transport, it’s heartening to see a demonstrable commitment from the government to improving key transport infrastructure across the North.

“As we had anticipated there were some policy announcements designed to showcase the UK’s green credentials, and we were given confidence by increases in spending on research and development and particularly the £1.7bn earmarked for net zero R&D.

“We look forward to seeing the details of the £6.1bn Transport Decarbonisation Plan and the £3.9bn committed to decarbonise existing buildings, of which £1.8bn will support tens of thousands of low-income households to transition to net zero. It’s a step in the right direction as we move towards a greener economy.

“We would have liked to see more support for development with materials, such as graphene-enabled Concretene or timber, that are less carbon-intensive and very effective in modern construction.”

Paul Gibbons, chief executive officer of Decipher Consulting

“The announcement appears to include well over £2bn in commitments to the North West alone. Much of that is helpfully going into public transport infrastructure. And who doesn’t want a Beatles exhibition on Liverpool waterfront? Albeit some of the money was already committed, this can only be good for the region. As we’ve seen in Manchester, with good infrastructure comes good construction and economic growth.

“The national infrastructure strategy should support this. Notably, there’s more than double the investment in rail than in roads, which suggests a commitment to sustainable transportation. However, there’s no specific announcement on HS2’s Eastern leg, or ‘Northern Powerhouse’ rail. Both seem to have hit the buffers, which is disappointing.

“Whilst housing commitments are positive, will the £5bn for cladding be enough to make a dent in the cladding crisis faced by the sector? One contractor recently observed that to bring all the buildings that need remediating up to EWS1 will be more like somewhere between £50 and £90bn. £5bn may bring small comfort to those who’ve had tens of thousands wiped off the value of their homes.

“Something that is much needed and close to Decipher’s heart is education funding. Construction faces an almost unprecedented lack of qualified and educated resources. Increased education funding and spending on adult numeracy is heartening. But there appears to be little in the budget to tackle the skills crisis the industry faces.

“In conclusion, the spending directed towards the North West is very much welcomed. It is heartening to see some good investment in the region, particularly after such a difficult period. However, it remains to be seen if these commitments will achieve the Government’s much-vaunted ‘levelling up’ agenda.”

John Keyes, chair of public sector at Cushman & Wakefield

“This was undoubtedly a budget for economic recovery – at least when hearing the headlines. A number of measures aimed at the lower paid and small businesses, including those on the high street, will bring some important benefits to the communities in our North West region. The challenge of course is how this balances against inflationary increases and prior tax and benefit changes.

“The confirmation of investment in regional transport is clearly good news for Greater Manchester and the wider region. There is even the hint of an improving relationship between the PM and the GM Mayor following the falling out in summer 2020. The Mayor has long seen improved transport connections as key to productivity and spreading the benefits of economic activity. The reality is that places like the centre of Manchester are where new, high-value jobs are being created and public transport networks are essential to widening access to the opportunities there.

“Other support announced for levelling up, for affordable housing and for remediating brownfield land, should also bring proportionately higher benefits to our region. Our universities will have the opportunity to benefit from additional funding support for innovation. We need to also see which of the North West towns have benefitted from Levelling Up Round 1 Funding and how the allocation of funds compares with other regions.

“In focusing on the small print and other publications over the next few days, we need to understand the position on what was not mentioned in the chancellor’s speech. What was not said is often more revealing and we heard no mention of plans for High Speed 2 in the regions; nor news on investment in improvements for Northern Rail. We also await details on the next round of Levelling Up funding which many places in our region are preparing for.”

BROWNFIELD LAND

Gavin Taylor, executive director at Far East Consortium

“The government’s housing and levelling up ambitions cannot be realised without significant brownfield regeneration, so today’s near £2bn commitment will be welcomed by devolved powers and developers alike. That said, those authorities will still need to develop a strategic vision and proposition that attracts the investment – often inward – to transform and integrate what are often sprawling but disjointed landbanks for the benefit of local communities. This demands a long-term coordinated approach not just in relation to the delivery of housing numbers but also in ensuring regeneration addresses the climate emergency and societal inequality in the next decade.”

Joe Salt, senior associate at Base architects

“Coupled with this summer’s relaxation of permitted development rules, this will cut red tape for developers to bring much-needed new housing into areas that are often neglected and seen as being in decline. This will, in turn, breathe fresh life into the communities around these areas and also provide new transport links and community green spaces.

“We are really excited about the opportunities this will bring to Cheshire and the North West in rejuvenating sites and buildings that have fallen out of use. It shows the importance, now more than ever, of landowners proactively promoting their sites and ensuring that they are included on their local authority’s brownfield register as stipulated in paragraph 69 of the NPPF.

“Many of our clients are landowners looking to promote their sites or property developers who engage us to advance schemes from concept to completion so this is positive news for them.”

Frank Pennal, chief executive officer of Close Brothers Property Finance

“I am unconvinced that this investment will evoke the ‘build, build, build’ economic conditions we were promised at the start of the year, as the planning process risks being the fly in the ointment to delivery, and it is unlikely to be tackled until after elections next year.

“Planning aside, we must ensure this £1.8bn is ringfenced, so local and regional SME housebuilders deliver these homes. SME’s employ significant numbers of apprentices and trainees and, use locally sourced supply chains, which increases local spend. Their business models mean they can’t landbank, so they build out their sites as quickly as possible. SME housebuilders rarely feel the benefit of government support and we would hope that this funding remedies that precedent.”

Mark Vaughan, director of Hive Land & Planning

“Setting aside the old issue of whether this is new money or the rebadging and re-announcement of existing commitments, and taking the figures at face value, there is mixed news for the housing industry in the North West.

“The regeneration landscape over recent years has been characterised by uncoordinated and underfunded programmes, and so the £1.8bn investment in housing supply, of which £300m is grant funding to unlock brownfield sites and £1.5bn to regenerate underused land, unlocking 160,000 new homes, is a welcome announcement. Whilst it isn’t clear what the programme eligibility criteria might look like, at an average rate of £11,250 per plot, you have to question the impact that this level of funding will realistically have. In addition, the £1.5bn announcement also makes reference to the delivery of ‘transport links and community facilities’, which may further dilute the impact of the fund.

“As we know there is considerable detail that still needs to be understood, but in the meanwhile we can sup our (now cheaper) bottles of rose, on our derelict patches of urban land, dreaming of how far the £9m will go in delivering new ‘pocket parks’.”

TRANSPORT

Chris Oglesby, chief executive officer of Bruntwood

“The £6.9bn pot for regional transport infrastructure is mostly a collection of existing announcements reheated for today – just £1.5bn of it is new money. But we welcome the certainty this five-year funding will give to regional cities.

“We know that levelling up is bigger than transport investment but you could be forgiven for thinking the government sees it that way. In this light, such a meagre new sum is disappointing for its self-acclaimed ‘defining mission’.

“Worryingly, another budget has passed with no mention of funding to support Northern Powerhouse Rail nor the Eastern leg of HS2. These two transformational projects would turbo-charge economic growth in the North and Midlands.

“Alongside our local transport networks, we need to see investment in intercity links – connecting Liverpool, Manchester, Leeds, Bradford, Sheffield and Newcastle; the original agglomeration thesis that drove the whole Northern Powerhouse project. This combination is what will unlock the next generation of growth in the North and rebalance the economy.

“Not investing in an underground station at Manchester Piccadilly is a mistake we will come to regret and see as a major strategic error. Without this piece of the rail-jigsaw the opportunity to properly connect Manchester, Leeds and Liverpool – attracting investment and creating jobs – will never be fully realised.”

Debra Cooper, co-head of the Manchester office at Shoosmiths

“Manchester is a fast-growing, cosmopolitan and world-class city and needs a suitable public transport infrastructure to meet not only expected further population and business growth but its low-emissions targets.

“As such the £1.03bn commitment for Greater Manchester to invest in the Metrolink tram system and create new bus corridors in Bury and Tameside is great news and a step forward towards our hopes that everyone in Greater Manchester will soon be able to benefit from the same reliable and affordable public transport that their counterparts in London do.”

Chris Green, partner for infrastructure at Howgate Sable:

“A £7 bn investment into transport outside of London is clearly a good thing. However, I question if this is really enough and if it is new money.

“What’s lacking is the detail. We know that money will go to devolved metro regions to spend and hopefully, this will improve public transport within those conurbations. But without fast and efficient links across all these areas, how can the northern economy properly compete with the South? There are key areas across the North for example that desperately need efficient rail links, like a network across the Pennines. We don’t have any confirmation from Sunak if this Leeds to Manchester line will happen.

“If HS2 is to be cancelled north of Birmingham, or just the eastern leg, who benefits from the saving – does that cash go into the areas that will be losing the new line or will the Treasury just swallow that up? Is this where the £7bn is coming from? Equally, if HS2 goes ahead, is this budget coming from regional transport funds?

“But in reality, I don’t feel we actually know anything new, yet – this looks on the face of it that cash is just being moved around.

“How is the industry supposed to react, plan and make progress with very little detail and a lot of questions?”

PLANNING

Ellie Philcox, director at Euan Kellie Property Solutions

“Digitalisation of the planning system can only be positive in terms of ensuring consistency across local authorities. There are currently real variations in the information available online across authorities… greater consistency would provide certainty for anybody looking to engage in the planning system, whether that’s in applying for planning permission or communities wanting to engage with the process.”

BUSINESS RATES

• Read more: Key things to know from the business rates review final report

Richard Roberts, head of retail at Brabners

“It’s hugely disappointing that another budget is likely to go by without a dramatic overhaul of the business rates system, even if the ‘Amazon Tax’ has been mooted to land soon. High streets are a critical component of the levelling up agenda and, while transport connectivity was a major focus in today’s announcements, under pressure retailers are ultimately being neglected as soaring shipping costs, staff shortages and growing supply chain challenges continue to hamper trading.

“While a phased reintroduction of business rates is currently in place, it needs to be staggered further. As it stands, retail, hospitality and leisure businesses are paying a third of rates until 31st March 2022, after the 100% holiday ended in summer. But without further tapering or additional support, businesses will face a cliff edge of repayments in the spring, to coincide with the end of retailers’ toughest trading period – when the festive trading rush has ended but the Christmas bills roll in.

“The chancellor must put in place a fairer system of taxation to enable both physical and online retailers to survive and thrive. Despite the surge in demand for virtual retail, e-commerce sales are still less than 30% of the retail market. Bricks and mortar stores continue to play a central role in our economy, and are in need of a fair chance to succeed.”

Miles Gibson, executive director of CBRE UK Research

“This continued support is welcome, but as with most recent business rates announcements these are one-off handouts, not structural changes. The discount is only for one year, and does not assist office occupiers hit by the government’s decision not to allow the pandemic to be treated as a ‘material change of circumstance’ for ratepayers.”

LEVELLING UP

Stephen Church, North West managing partner and North markets leader for EY

“Here in the North West, the Levelling Up Fund has identified 12 places including Salford and Pendle, to benefit from over £232 million in local infrastructure improvements. Yet it is crucial that we continue to focus on our smaller towns and that levelling-up reaches all corners across the UK so, it was reassuring to see that Leigh, Marple and Clayton-le-Moors have been selected as projects within the Community Ownership Fund, with over £600,000 pledged investment.

“Further, the £5.7 bn announcement for London style transport settlements – of which £1bn and £710m will fund integrated transport system’s in Manchester and Liverpool respectively – and the early-stage proposals to reinstate passenger rail links between Ashton and Stockport; Middlewich and Gadbrook Park; and Buckley Wells and Rawtenstall, celebrate that true ‘levelling-up’ momentum is building.

“It is clear that levelling up must be delivered in close conjunction with the UK’s green economic recovery and across the North we are well placed to deliver this, with ‘Track 1’ status awarded to the first two carbon capture utilisation and storage (CCUS) developments in the North West and the North East.

“Despite all the positive announcements around transport, which are truly welcomed, HS2 and the Northern Powerhouse Rail were notably absent. Here’s hoping we see fast-tracked action and further detail in the white paper later this year.”

Chris Oglesby, chief executive officer of Bruntwood

“With the publication of its long-awaited Levelling Up white paper still pending, today’s budget and comprehensive spending review, which sets the course for departmental spending for at least the next three years, have been done without a strategy. This is not a good omen for, in this government’s own words, its ‘defining mission’. It’s hard to escape the feeling that, a few welcome initiatives aside, levelling up continues to amount to little more than a slogan.”

CLADDING

Lucy Brown, End Our Cladding Scandal campaign

“Boris Johnson’s government seems to be operating in a time warp. Today’s budget marks the fourth time that Ministers have recycled their announcement of a £5bn commitment to help fix defective buildings affected by the cladding scandal. The chancellor has also now confirmed what we always knew – that the new developer tax, which is expected to raise £2bn, will repay current funding, rather than be additional help for innocent leaseholders.

“This £2bn developer tax spread over ten years may sound like a lot until you realise that the estimates to fix this crisis could be between £15bn and £50bn – and that ultimately it will be homeowners who will be left to pick up the can.

“This levy is a slap on the wrist for developers – and they know it. Developers have received billions in government subsidies – £20.1bn alone via the Help to Buy loan scheme. Since the Grenfell Tower tragedy, just seven developers have recorded profits of more than £15bn and ten executives of these firms have been personally ‘rewarded’ an astonishing £708m.

“This government knows full well that its faulty regulations, along with developers’ shoddy building practices and manufacturers’ malfeasance are the causes of this crisis. Yet it appears totally content for hard-working, tax-paying leaseholders to shoulder most of the burden. We have already witnessed the start of bankruptcy filings and repossessions, not to mention warnings from the Bank of England and the mental health crisis brought about by the stress of financial ruin and living in flammable flats. It’s time for this government to end a scandal that is ruining so many lives.”

Ian Magenis, partner with Scanlans

“It’s a shame that, four years on from the Grenfell Tower tragedy, plans are still being talked about for making buildings safe when the need is immediate and urgent.

“The government is still not addressing buildings under 18 metres in height nor other vital issues such as internal compartmentation, internal fire doors, timber balconies or walkways, which are causing great concern. External cladding is only one aspect which requires action.”