BUDGET 2014
BUILT ENVIRONMENT EDITION
With exclusive polling and insights on infrastructure and property OVERVIEW While the Chancellor presented radical new approaches to pensions and savings this week, his offer for property and infrastructure offered little which was fresh or surprising. A £100m package of support projects in the Cambridge area was a rare initiative in a Budget which offered little substance to advance the UK’s £375bn infrastructure plan. The City’s response to the radical pensions reforms has also hit pension funds’ share prices, potentially undermining their appetite for institutional infrastructure investment. Government financial guarantees to support the building of the Mersey Gateway river crossing and plans to invest £200m around Ebbsfleet to help kick-start the first garden city since 1920 were confirmations of previous announcements. While the decision to extend the £1,000 business rate relief into next year amounts to a £750m injection into the high street, there was little for the wider commercial property market such as a wholesale review of business rates. Committing £200m to repair potholes and £140m to rebuild battered flood defences will not stem the tide of industry frustration.
THE HEADLINES
Sarah Richardson Director
At an Edelman event yesterday, Skills Minister Matthew Hancock talked up Lord Deighton’s appointment as evidence of a structured Government approach to delivering infrastructure. Fellow panellist and Shadow Infrastructure Minister Andrew Adonis countered that a “plan which has 600 priorities is not a plan – it’s a shopping list.” Nevertheless, this week’s headlines demonstrate that George Osborne is the political winner. And by extending Help to Buy to 2020 and scrapping compulsory annuities (which could fuel a new buy-to-let boom as pension pots are used to buy property for retirement income), there could be longer-term wins for the construction and property sectors, after all.
WHAT IT MEANS
Help to Buy extended to 2020
A popular policy (see overleaf), aimed at young and low-earners. Osborne is giving demand certainty to housebuilders with long lead-in times.
£200m to fix potholes and £140m for flood defences
Very political – potholes will be a big issue ahead of May’s local elections. Flood defences are an obvious issue in the all-important Lib-Con West Country battleground.
A £100m Greater Cambridge City Deal
Cambridge is a symbol for exporting the British cutting edge. And, like Manchester’s, this ‘earn back’ scheme is a trailblazer for other areas.
A bill for Wales, devolving borrowing powers to fund infrastructure
Fits with a wider devolution to the regions. Conservatives see Wales as a growth area votes-wise. But if the Welsh Assembly gets it wrong, it’s Labour’s fault.
Liberalisation of pensions – compulsory annuities scrapped
Could fuel new buy-to-let boom as pension pots are used to buy property for retirement income. But radical and a difficult issue for Labour.
Imposing Annual Tax on Enveloped Dwellings (ATED) on resi properties above £500k
Aimed at tax avoiders, especially foreigners. And the earlier ATED on property above £2m has proved more lucrative for the Treasury than expected.
Ebbsfleet garden city – 15,000 homes in Thames Estuary
Good move. But a figleaf – we need 16 of these every year to meet estimated demand. The garden cities prospectus before Easter will be more interesting/significant.
£270m UK Guarantee for Mersey Gateway Bridge
Not quite a re-announcement, but not much more than a confirmation. This budget was short on big projects.
Government to set out ten-year pipeline of support in Autumn Statement 2014
Very significant – we’ll see far more detail on the famed £375bn infrastructure pipeline.
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