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March 2015 Budget: key construction announcements
Practical Law UK Legal Update 8-605-0829 (Approx. 7 pages)
March 2015 Budget: key construction announcements
| Published on 18 Mar 2015 • England, Wales |
The implications of the government's March 2015 Budget for the construction and engineering industry.
Speedread
On 18 March 2015, the Chancellor of the Exchequer, George Osborne, set out the government's sixth and final spending and taxation plans before the May general election.
In announcing the government's plans, the Chancellor repeatedly said "Britain is walking tall again" and that this was a budget that makes "investments in manufacturing and science and the northern powerhouse for a truly national recovery". However, although Britain is prospering, the Eurozone is not, with warnings of what the current position with Greece may do to the British economy. Consequently, Britain has been expanding its support for exports to China and is the first major western nation to be a prospective founding member of the new Asian Infrastructure Investment Bank.
From a construction industry perspective, whether "the sun is starting to shine - and we are fixing the roof" will depend in large part on the government's plans for infrastructure, about which the Chancellor said little, compared to recent past budgets.
In closing his speech, the Chancellor said it was "the budget for Britain, The Comeback Country". Only time will tell whether the incentives it contains are sufficient to ensure that it could read "the budget for George, The Comeback in May Chancellor".
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Defined terms
- March 2015 Budget: HM Treasury: Budget 2015 (18 March 2015).
- Budget Report: HM Treasury: Budget 2015 (18 March 2015)
- 2014 Budget: HM Treasury: Budget 2014.
The March 2015 Budget
On 18 March 2015, the Chancellor of the Exchequer, George Osborne, set out the government's sixth and final spending and taxation plans before the May general election.
In announcing the government's plans, the Chancellor repeatedly said "Britain is walking tall again" and that this was a budget that makes "investments in manufacturing and science and the northern powerhouse for a truly national recovery". However, although Britain is prospering, the Eurozone is not, with warnings of what the current position with Greece may do to the British economy. Consequently, Britain has been expanding its support for exports to China and is the first major western nation to be a prospective founding member of the new Asian Infrastructure Investment Bank.
From a construction industry perspective, whether "the sun is starting to shine - and we are fixing the roof" will depend in large part on the government's plans for infrastructure, about which the Chancellor said little, compared to recent past budgets.
In closing his speech, the Chancellor said it was "the budget for Britain, The Comeback Country". Only time will tell whether the incentives it contains are sufficient to ensure that it could read "the budget for George, The Comeback in May Chancellor".
Housing and planning
The 2014 Budget announced a number of measures aimed at increasing housing supply (see Legal update, 2014 Budget: key construction industry implications: Housing supply). The March 2015 Budget continues this, with announcements that:
- The government is designating the first 20 housing zones outside London, with eight more short listed. This could support up to 45,000 new homes (Budget Report, paragraphs 1.137 and 2.54).
- Money is allocated for the regeneration of Brent Cross (Budget Report, paragraphs 1.139 and 2.33).
- Support will continue for Ebbsfleet Garden City (Budget Report, paragraphs 1.139 and 1.140) and Bicester's ambition to become a garden town (Budget Report, paragraph 2.58).
- As part of the commitment to brownfield development, the government is consulting on the compulsory purchase regime, to make it clearer, faster and fairer (Budget Report, paragraph 1.142). The consultation, Improving the compulsory purchase process, closes on 9 June 2015.
- Public sector land will be released to build up to 150,000 homes between 2015 and 2020 (Budget Report, paragraph 2.59).
In addition, to date:
- Levels of planning approvals and housing starts are at seven-year highs.
- More than 537,000 new homes have been built over this Parliament.
(Budget Report, figure 1.)
Help to Buy: ISA
Help to Buy was launched in the 2013 Budget (see Legal update, 2013 Budget: construction industry implications: Help to buy). The March 2015 Budget announced a new Help to Buy: ISA scheme to support those saving to buy their first home, with a maximum government bonus of £3,000 for those who save £12,000 (Budget Report, paragraph 1.228).
In addition, to date almost 83,000 households have bought a home through the Help to Buy scheme (Budget Report, figure 1) and the scheme has helped 43,000 new-build completions (Budget Report, paragraph 1.136).
London
In February 2015, the government announced the creation of the London Land Commission to develop brownfield and public sector land, with a view to tackling London's housing crisis. The March 2015 Budget pledges £1 million to enable a database to be created (Budget Report, paragraph 2.49).
The government is also providing £7 million to support the Croydon Growth Zone. (Budget Report, paragraphs 1.171-1.173 and 2.31.)
Infrastructure projects
Unlike the 2014 Budget, the March 2015 Budget was not accompanied by a National Infrastructure Plan (see Practice note, National Infrastructure Plans: construction, environment and property implications).
The March 2015 Budget confirms that, to date:
- 2,650 infrastructure projects have been completed since 2010.
- To improve the strategic road network, 15 major schemes worth £3.4 billion have been completed with a further 16 schemes worth £2.3 billion underway.
- Network Rail has completed improvements to over 400 stations.
(Budget Report, figure 1.)
Details of the individual investment projects is provided in Budget Report, figure 2.
East England
The March 2015 Budget announced funding for transport infrastructure in East England, such as a further £16 million from Transport for London (TfL) to extend the Metropolitan Line to Watford Junction (Budget Report, paragraph 1.162) and greater investment in flood and coastal defences (Budget Report, paragraph 1.164).
Flood defence schemes
Funding for flood defences was brought forward in the 2014 Autumn Statement. As a result, the March 2015 Budget reports that 165 flood schemes will be delivered earlier than originally planned and a further 47 new schemes will be included in the six-year flood and coastal erosion programme. This represents more than £140 million of investment in accelerated and new projects (Budget Report, paragraph 2.248).
HS2
The March 2015 Budget confirms the government's commitment to HS2, with £50 billion already committed (Budget Report, paragraph 1.148), and funding for a "High Speed Rail Investment Summit" in Birmingham, to attract overseas investment into regeneration projects in the region (Budget Report, paragraphs 1.160 and 2.40).
South West
The March 2015 Budget announced funding for transport infrastructure, housing and brownfield generation in the South West (Budget Report, paragraphs 1.166-1.169). It will also reduce the Severn river tolls, post 2018 (Budget Report, paragraph 2.47).
In addition, the government is committed to the tidal lagoon project in Swansea Bay (Budget Report, paragraph 2.258).
Landfill tax and aggregates levy
The March 2015 Budget announced:
- The standard and lower rates of landfill tax will increase in line with the Retail Price Index (RPI), rounded to the nearest five pence, from 1 April 2016 (Budget Report, paragraph 2.172). (For more information, see Practice note, Landfill tax.)
- The rate of aggregates levy will remain at £2 per tonne in 2015-16 (Budget Report, paragraph 2.170). (For more information, see Practice note, Aggregates levy.)
Northern powerhouse
The 2014 Autumn Statement announced £7 billion to build a "northern powerhouse" to complement the strength of the capital (see Legal update, 2014 Autumn Statement: key construction announcements: Northern powerhouse).
The March 2015 Budget says the government is committed to the creation of a northern powerhouse (Budget Report, paragraph 1.148). This is supported by data that shows output per head in the North West, North East, West Midlands and Wales grew faster than London in 2013, and that in the year to the end of 2014, employment in the North East, North West and the East Midlands all grew faster than in London (Budget Report, paragraph 1.20.)
The March 2015 Budget gives details of further actions to build the northern powerhouse, such as drawing up a comprehensive Northern Transport Strategy, developing a high quality rail network across the north (the TransNorth vision), supporting innovative businesses through investment and by extending enterprise zones (Budget Report, paragraphs 1.150-1.159 and 2.34-2.39). It also refers to funding for northern powerhouse trade missions (Budget Report, paragraph 2.286).
Red Tape Challenge
In April 2011, the government launched its Red Tape Challenge, a wide-ranging project aimed at identifying unnecessary regulations. Since then, thousands of regulations have been under the spotlight, including many that affect the construction industry. For more information, see Practice note, Reforming the UK's health and safety laws: Governments "Red Tape Challenge".
The March 2015 Budget reports that over 3, 200 regulations will have been scrapped or improved, bringing over £1 billion in annual savings to business (Budget Report, figure 1).
Supporting growth in other ways
The March 2015 Budget announced ways the government will ensure growth. For example by:
- Supporting long-term investment in the UK's digital communications infrastructure, including superfast broadband, a new ultrafast broadband of at least 100 megabits per second to nearly all UK premises and the delivery of broadband in rural areas (Budget Report, paragraphs 1.121-1.126 and 2.231).Alongside the March 2015 Budget, the government published the digital communications infrastructure strategy (March 2015), which is its long-term digital communications infrastructure strategy.
- Securing investment in infrastructure, housing, science and innovation across the whole of the UK, and building a northern powerhouse.
- Developing a more highly-skilled UK labour market by strengthening support for postgraduate research and apprenticeships, and setting out plans for further investment in the UK’s world-leading science and innovation base.
(Budget Report, paragraph 1.103.)
For example, the government will invest an initial £60 million in a proposal by six Midlands universities for a new "Energy Research Accelerator", a major project to develop the energy technologies of the future (Budget Report, paragraph 1.161). It is also providing apprenticeship funding through an apprenticeship voucher scheme (Budget Report, paragraph 1.180).
Comment
In closing his speech, the Chancellor said it was "the budget for Britain, The Comeback Country". Only time will tell whether the incentives it contains are sufficient to ensure that it could read "the budget for George, The Comeback in May Chancellor".
Further reading
For more information on the:
- 2014 Autumn Statement, see Legal update, 2014 Autumn Statement: key construction announcements.
- 2014 Budget, see Legal update, 2014 Budget: key construction industry implications.