Quote of the Day:
“My friends, as I have discovered myself, there are no disasters, only opportunities. And indeed, opportunities for fresh disasters.”
Boris Johnson, Prime Minister of the UK
This was the ‘getting it done’ Budget, because apparently that slogan worked so well in the General Election, no one wants to deviate from it in case the façade slips. Although, Sunak needs to learn that when a slogan is over-used it actually becomes a parody.
First, a spoiler from BoJo who (with Priti Patel on his right), in PMQs immediately ahead of the Budget, announced in rambunctious fashion, that there was ‘about to be an infrastructure revolution’ across the country.
Fresh from a fairly tortuous (and highly environmentally questionable) car journey which took the Chancellor from HMT to No.11 for an obligatory photo (around 30 seconds on foot, 15 minutes by car) and subsequently to Parliament (around 2 minutes on foot, 15 minutes by car), Rishi Sunak rose to deliver the speech which had been carefully prepared and passed to him by Dominic Cummings just earlier today. Indeed, the contents of the Budget appeared to be as much as a surprise to him as everyone else.
Clearly we are all on a war footing with coronavirus featured heavily at the outset (could coronavirus be Boris Johnson’s Falklands??) on the back of a surprise 0.5% cut in interest rates this morning. However, never fear, Matt Hancock apparently is going to save us all – even if much of what he thinks he has discussed with supermarkets and others has clearly been based on conversations he has had in his head.
That said, Government is clearly determined to calm a concerned FTSE and demonstrate firm action in order to stabilise the economy, setting out some bold measures which perhaps go further than speculators were anticipating.
The Budget was ‘a temporary, timely and targeted response’ with a £30bn fiscal stimulus attached – ‘temporary’ likely being the key word, so don’t get too excited about the long-term impacts of measures or tax breaks. Unlimited resources are to be given to the NHS (clearly temporary will be key here, it may as well have been emblazoned on the side of a bus); temporarily removing minimum income level on Universal credit and removing the need for people to physically attend Job Centres; and a £500m hardship fund to be distributed by local authorities.
All businesses with fewer than 250 employees will have SSP refunded in full by the government for up to 14 days; tax payments to be deferred over a stretched period of time; a temporary Coronavirus business interruption scheme with loans of up to £1.25m with government covering up to 80% of costs.
Businesses with a rateable value of less than £51,000 will have business rates abolished for the coming 12 months. This will be followed by a review at the Autumn Budget of a long-term review of Business Rates. Any business eligible for SBR will receive a £3,000 cash grant.
Combined, this is a package of quite considerable investment and addresses some concerns of small businesses in particular. It is possible that further announcements will be announced as and when required but government will hope it has done enough to calm nerves.
The UK is already facing a slowdown with the OBR downgrading the economy; don’t even whisper recession though as no one is forecasting that – at least no one the Government is listening to. In fact, were it not for coronavirus, all would be rosy it seems as we are facing a ‘national jobs miracle’, much like Sunak’s own miraculous and meteoric rise, although arguably more stable.
The Chancellor announced that there was a broader need to consider questions over the Fiscal Framework which will be undertaken and reported back upon in the autumn – expect some loosening of fiscal rules which make it easier to manipulate, sorry, I mean, ‘set’ targets. Obviously, Sunak’s Budget obeys the current fiscal rules and with room to spare – funny how all Budgets seem to do that when they are announced but never seem to actually deliver on it? Is there, perhaps, a difference between Budget promises and real promises?
The government is getting it all done getting Brexit done, getting Green Growth done, getting Investment and trade done, getting the NHS done – in fact, it is getting so much done that the level of excitement in the chamber reached dizzying heights, even Priti Patel almost smiled.
- £600bn into the NHS (which is just a few weeks worth of what we were apparently sending to the EU)
- Increase in the NI threshold to £4,000 and an increase in the personal threshold.
- Increase in the National Living Wage.
- In a post-Brexit environment, government is keen to ‘unleash the power of business’ with new funding, reviews of tax systems and investment in ideas.
- Business rate discount for pubs will be £5,000 with planned rise in beer duty cancelled and cider and wine frozen – if there’s one thing BoJo does know how to do, it is to appeal to the populist agenda.
- An Entrepreneurs relief – not fully abolished but sensibly reformed with lifetime limit reduced to £1m from £10m.
- We are also all off to space with massive investment there (at least there probably isn’t coronavirus there yet).
Levelling Up – An Infrastructure Revolution
Build it and they will come… The government intends to level up with new industries and regions.
£640bn to be invested in roads, railway, schools, hospitals, communications and power networks. A National Infrastructure Strategy will be published in the spring, but this is massive public sector spending from a Tory Government, leaves little for the Labour side to attack (but they will, although Corbyn looked and sounded like his heart really wasn’t in it when it came to it).
Apparently the whole mindset of government is to be changed (not sure anyone has told Whitehall yet though) with offices across the country and a new economic campus in the north to reflect the economic geography of the country.
- £120m to repair damage to flood defences, £5.2bn invested in broader flood defences.
- £400m of new funding into high quality research going to universities around the country, not just London and the south.
- 22,000 civil servants to be moved outside London (and that’s just from those in the Home Office who have volunteered).
- £242m of funding for new City and Growth deals.
- New devolution deal in West Yorkshire for a directly elected mayor for the region.
- £4.2bn to be allocated across eight Combined Authorities for local transport projects with the Mayors required to put forward specific proposals and giving all new Metro Mayors London style transport settlements.
- The Metro Mayors will be able to access a £400m, fund for brownfield development, which is very timely given the Mayoral elections coming up, particularly for Andy Street (although I’m sure that timing wasn’t even a consideration).
- £5bn to get gigabit broadband into the homes that need it. The Culture Secretary will ‘get it done’ apparently, which is good as Sunak was getting so much done on his own I was a little worried about when he was planning to sleep.
- £20m to develop the Midlands Rail Hub and £27bn in the Road Investment Strategy
- Train stations across the regions to be upgraded – Grant Shapps on this one, expect to see him out in a Hi-Vis jacket at a station near you soon…
- Road will be massively upgraded (to the delight of environmental campaigners everywhere) although this is marginally balanced by the Green Gas Levy and the extension of the Climate Change Agreement Scheme by two years.
According to Sunak ‘Our ambition is truly national…’ As is ours at PLMR… www.levellingup.uk
Apparently the Planning White Paper will come out tomorrow – or at least some planning measures will be coming out. There had been speculation that the White Paper would be delated due to Jack Airey going into No.10 and wanting to put his imprint on it, perhaps he has already done so, tomorrow will reveal all…
As a trailer to the excitement of tomorrow, Sunak announced a series of measures which, on trying to disentangle the double-counting and confusing language in the Budget document itself, seems to amount to around a £10.9bn increase in housing investment (it would seem when combined with the regional commitments) to support the commitment to build at least 1 million new homes by the end of the Parliament
- A further £9.5bn in the affordable homes programme allocating a total of £12.2bn in grant funding to 2022 for affordable homes.
- Confirming £1.1bn of Housing Infrastructure Fund allocations to deliver up to 69,620 homes
- Interest rates for local authorities to be cut by 1% to facilitate greater borrowing to build homes
- Making an extra £1.15 billion of discounted loans available for local infrastructure projects.
- A Carbon Capture and Storage Infrastructure Fund to establish CCS in at least two UK sites
- A Natural Environment Impact Fund to encourage private sector support for environmental restoration including a fund to deliver £640m in tree planting and peatland restoration.
The government is also going “to examine and develop the case for up to four new development corporations in the OxCam Arc at Bedford, St Neots/Sandy, Cambourne and Cambridge (really much more on the ‘Cam’ bit than the ‘Ox’ bit which may be due to the current local difficulties in South Oxfordshire) which includes plans to explore the case for a new town at Cambridge, to accelerate new housing and infrastructure development.
As indicated in the manifesto the Government has introduced a 2% stamp duty surcharge on non domestic residents. This is down from the initial 3%. The view of the Government is that this affects mainly the super-prime market who will willingly pay and the broader impact across the sector is not so much that it cannot be absorbed. Furthermore, it doesn’t have an impact outside of London #levellingup.
Responding to ongoing – and high profile – concerns regarding buildings with combustible cladding in the post-Grenfell era, Sunak announced additional public funding to remove unsafe materials from high rise residential building. A Building Safety Fund worth £1bn will be set up, which goes beyond dealing with ACM to ensure all unsafe combustible cladding is removed from all buildings. The detail on precisely what this covers and how the fund can be accessed is to be announced.
And so, the Budget is done, but not dusted. There is more to come tomorrow with some sort of planning announcements, whether the full White Paper or interim measures and we all Keep Calm and Carry On…
For more information, please visit the PLMR website.