Trick or treat? Reeves’ Budget spooks built environment sector
Holding your Budget the day before Halloween – the most significant moment yet of Labour’s return to power – was probably not the wisest of moves.
What a gift for headline writers across the country.
That said, Chancellor Reeves’ 76 minutes standing at the dispatch box was an assured performance and the first woman to deliver a Budget in UK political history.
It will take years to meaningfully judge whether the Budget can be deemed a true success, but for the built environment sector at least, many may be feeling subdued. Share prices of many of the leading housebuilder PLCs have dropped in the 24 hours since, with the policies announced sending chills down the spines of investors.
The anaemic growth projections by the Office for Budget Responsibility (OBR), which hover around 1.5% GDP growth over coming years, suggest there is work to be done for people across the UK to start feeling any real benefit.
So why was the built environment sector, which represents about 20% of the country’s GDP, offered very little in the way of Budget-shaped treats?
The treats
Supporters of affordable housing will be buoyed by a £500 million increase in the Affordable Homes Programme, set to support up to 5,000 additional affordable homes, alongside plans for future investment beyond the current programme to sustain affordable housing efforts throughout Parliament.
Likewise, the government is consulting on a five-year social housing rent settlement, capped at CPI+1%, to provide stability for social housing providers, aiming to build more social homes.
For the private sector, funding of £3 billion is being allocated for SMEs and the Build to Rent sector through housing guarantee schemes to stimulate private market growth and create more housing options. Finally, BTR is starting to get the recognition it deserves.
There were further welcome moves to accelerate grid connections and build new network infrastructure to ‘unblock’ private investment, delivering growth in clean energy industries and other growth sectors like AI, data centres, and manufacturing.
(Missing a) trick?
In the lead-up to the Budget, Labour gave every indication that tax rises would help to fund an extensive programme of capital investment, which the Budget revealed would amount to a £13bn increase next year.
This, according to the official 170-page Budget document, will include ‘investing in transport, kicking starting the delivery of 1.5m homes, supporting new industries and job creation, and protect record R&D funding’, while also giving a boon to the NHS.
Taking a closer look however, the decisions to extend HS2 back to Euston, a renewed focus on East-West rail between Oxford-to-Cambridge and a route upgrade between York and Manchester are all things reheated from before.
Meanwhile, the additional £46 million to be invested in local planning authorities to help the government meet its 1.5m new homes target is unlikely by itself to move the dial in unclogging England’s sclerotic planning system.
There have also been howls over proposals to cut business rates relief, which will impact small retail, hospitality and leisure companies all over the shop. This could lead to significant closures on high streets up and down the country. What growth will this generate?
A wave of a magic wand and hoping for the best?
Facing a difficult economic outlook, there’s little doubt Labour had some tough decisions to make for this year’s Budget. But, for now, at least, suspicion will remain whether the government is using all of its levers for the built environment to be the rocket which propels growth in the UK.
Have we got the right ingredients for a growth potion in the cauldron?
I think it’s a case of more work to be done before the spell can work its magic…