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.
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 020 3047 2159 | @EdelmanUK | 1
BUDGET 2014
BUILT ENVIRONMENT EDITION
REACTION AND COMMENT EXCLUSIVE BUDGET POLLING FROM EDELMAN Edelman’s research team polled 1630 members of the general public about their attitudes and priorities regarding property and infrastructure.
PROPERTY IF YOU DON’T ALREADY, WHEN DO YOU THINK YOU’LL BE ABLE TO OWN YOUR OWN HOME?
28%
In 1 to 5 years’ time
12% In 5 to 10 years’ time
WHICH MEASURES SHOULD BE USED TO BUILD MORE HOUSING?
1%
29%
6% In the next 12 months
HOW DO YOU FEEL ABOUT HELP TO BUY?
In 10 to 20 years’ time
Force developers to put more of their profits into affordable housing
Don’t know
25%
18%
40%
Force developers to build on land with planning permission, or be forced to sell the land
Unfavourable
35%
Help banks to create more flexible financial products for people/groups who want to build homes
I don’t think I’ll ever be able to afford to
Allow councils to borrow more to build more council houses
59%
Favourable
7 in 10 want to own a house and a majority of them think they will be able to do so… but in the future. A surprisingly high 6% expect to buy their first home very soon. However, 25% of them have given up on that dream altogether.
33% 29%
Designate more places as housing zones or ‘garden cities’ for large housebuilding projects
Of those aware of the Help to Buy scheme, almost two thirds think highly of it – good news for the Chancellor.
22%
Respondents believe the Government should be more forceful with developers to build more housing, echoing Labour’s position.
INFRASTRUCTURE WHERE SHOULD GOVERNMENT PRIORITISE SPENDING?
IMPORTANCE OF INFRASTRUCTURE PROJECTS TO
BRITAIN
Investing in new energy infrastructure
52% 33% 11% Education
Welfare
45%
Defence
Infrastructure is seen as the second highest priority for government spending.
8% Don’t know
39%
Fixing the UK’s potholes Rolling out broadband across the country (including rural areas)
52%
50% 46%
Improving the railway network across the country
23%
Infrastructure
55% 55%
Building more flood defences
41%
NHS
YOU vs
50%
31% 34%
There is clear alignment between the infrastructure investments people believe are important to them and what they believe is good for Britain
HOW INDUSTRY REACTED CBI “Housebuilders of all sizes, in all regions, will welcome the Chancellor’s move. Extending Help to Buy will offer greater certainty to housebuilders looking to deliver new homes...” Institute of Civil Engineers “The additional £140m funding for flood defences repairs and £200m for road damage is welcome and signals a commitment to better protecting homes and businesses from flooding and building resilience into our transport networks.”
Royal Institute of Chartered Surveyors “Plans for regeneration and new homes in Barking, Brent Cross and the new garden ‘city’ at Ebbsfleet … are a drop in the ocean and do nothing to help others in the UK. More importantly, they don’t deliver the mix of homes we need across society…” House Building Federation “…we think the Budget is a missed opportunity. Measures like Help to Buy are likely to stimulate demand for housing but the Budget does not go far enough to boost the supply of homes needed to meet that demand.”
Sarah Richardson
Dominic Pendry
Sam Nash
Emily Brown
Benedict McAleenan
Director, London and Local Government Public Affairs
Director, Planning, Property and Infrastructure Public Affairs
Account Director, Property Transactions and Marketing
Account Director, Placemaking and Destination Marketing
Account Manager, Planning, Property and Infrastructure Public Affairs
elizabeth.tagge@edelman.com sarah.richardson@edelman.com dominic.pendry@edelman.com
samantha.nash@edelman.com
Elizabeth Tagge Director, Property Transactions and Marketing
emily.brown@edelman.com
benedict.mcaleenan@edelman.com
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 020 3047 2456 | @EdelmanUK | 2