2015 Autumn Statement and Spending Review: key construction announcements | Practical Law

2015 Autumn Statement and Spending Review: key construction announcements | Practical Law

On 25 November 2015, the Chancellor of the Exchequer, George Osborne, gave his combined Autumn Statement and Spending Review, setting out the government's economic and fiscal plans to build a stronger economy.

2015 Autumn Statement and Spending Review: key construction announcements

Practical Law UK Legal Update 1-620-2553 (Approx. 6 pages)

2015 Autumn Statement and Spending Review: key construction announcements

by Practical Law Construction
Published on 25 Nov 2015 • England, Wales
On 25 November 2015, the Chancellor of the Exchequer, George Osborne, gave his combined Autumn Statement and Spending Review, setting out the government's economic and fiscal plans to build a stronger economy.
Speedread

Speedread

On 25 November 2015, the Chancellor of the Exchequer, George Osborne, gave his combined Autumn Statement and Spending Review (2015 Autumn Statement). It is the first Autumn Statement by a majority Conservative government since 1992.
The Chancellor started his speech by referring to his first Autumn Statement, which he said was presented when the "economy was in crisis and there was no money left". He said the job then was to rescue Britain. In contrast, today the government's job is to:
"...rebuild Britain. Build our finances. Build our defences. Build our society."
As we said at the time of the July 2015 Budget, there is little direct news for construction practitioners. The headlines are likely to centre on the government's "bold" plans to rebalance the economy and strengthen every part of the UK, including building up the Northern Powerhouse and investing in infrastructure projects across the country, together with its continuing support for affordable homes and increasing the housing budget. As the government cannot "rebuild" without the construction industry, this should be seen as good news for the industry.
However, there was no news on how the Construction Industry Training Board (CITB) levy will be affected by the new apprenticeship levy, and we still await the latest government construction strategy, which some reports suggested would be published today.
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Defined terms

2015 Autumn Statement and Spending Review

On 25 November 2015, the Chancellor of the Exchequer, George Osborne, gave his combined Autumn Statement and Spending Review (2015 Autumn Statement). It is the first Autumn Statement by a majority Conservative government since 1992.
The Chancellor started his speech by referring to his first Autumn Statement, which he said was presented when the "economy was in crisis and there was no money left". He said the job then was to rescue Britain. In contrast, today the government's job is to:
"...rebuild Britain. Build our finances. Build our defences. Build our society."
As we said at the time of the July 2015 Budget, there is little direct news for construction practitioners. The headlines are likely to centre on the government's "bold" plans to rebalance the economy and strengthen every part of the UK, including building up the Northern Powerhouse and investing in infrastructure projects across the country, together with its continuing support for affordable homes and increasing the housing budget. As the government cannot "rebuild" without the construction industry, this should be seen as good news for the industry.
However, there was no news on how the Construction Industry Training Board (CITB) levy will be affected by the new apprenticeship levy, and we still await the latest government construction strategy, which some reports suggested would be published today.

Apprenticeship Levy

The July 2015 Budget announced the government's commitment to significantly increase the quantity and quality of apprenticeships in England to three million by 2020, funded by a levy on large employers (see Legal update, July 2015 Budget: key construction announcements: Apprenticeships).
The 2015 Autumn Statement announced the apprenticeship levy will come into effect in April 2017, at a rate of 0.5% of an employer's pay bill. A £15,000 allowance for employers will mean that the levy will only be paid on employers' pay bills over £3 million. The government anticipates less than 2% of UK employers will pay the levy. It is anticipated that the levy will raise £3 billion a year.
The 2015 Autumn Statement also announced that the government will establish a new employer-led body to set apprenticeship standards and ensure quality. The body will be independent of government and will also advise on the level of levy funding each apprenticeship should receive.
(Autumn Statement and Spending Review 2015, paragraphs 1.172-175 and 3.56.)
The government also published its response to the consultation on the apprenticeship levy, Apprenticeship levy - employer owned apprenticeship training, government response. The response document states that the government is working with the CITB to decide how the CITB's existing arrangements will be affected by the new levy (paragraph 84, response document).

Home ownership and housing

The 2015 Autumn Statement identifies a "Five Point Plan" that is:
"...the most ambitious plan since the 1970s to build homes that support working people in their aim to buy their own home."
The plan for housing involves doubling the housing budget to over £2 billion, accelerating housing supply and building more homes through a number of measures, including:
  • Delivering 400,000 affordable new homes by the end of the decade. Almost 50% will be starter homes, sold at 20% discount to young first time buyers and 135,000 will be part of the new Help to Buy: Shared Ownership scheme.
  • Extending the right to buy to Housing Association tenants.
  • From early 2016, extending the Help to Buy scheme, with a new equity loan scheme for London, which will give buyers 40% of the home value, as opposed to 20%, as the current scheme offers. The Equity Loan will be available until 2021. Thus, Londoners with a 5% deposit will be able to get an interest-free loan worth up to 40% of the value of a newly-built home. (Help to Buy was launched in the 2013 Budget (see Legal update, 2013 Budget: construction industry implications: Help to buy.)
  • From 1 April 2016, an increase of 3% in stamp duty on homes bought as second homes or buy-to-let properties.
(Autumn Statement and Spending Review 2015, paragraphs 1.146, 1.147, 3.70 and 3.112 and HM Treasury and DCLG: Help to Buy: new announcements (25 November 2015).)
In addition, the government remains committed to releasing public sector land for building a 150,000 new homes (Autumn Statement and Spending Review 2015, paragraphs 1.296-301 and 3.107).

Infrastructure and transport

Infrastructure is identified as one of the government's "core priorities". The government has already established the National Infrastructure Commission (NIC) (see Legal updates, National Infrastructure Commission launched and National Infrastructure Commission's terms of reference).
The 2015 Autumn Statement announced more money for projects, including £100 billion for infrastructure and £61 billion for transport over this Parliament. This includes:
  • Constructing HS2, which will link the south to the Northern Powerhouse. In addition, there will be HS2 growth strategies to ensure the regeneration of areas around stations and the improvement of connections to HS2 stations (including stations at Old Oak Common and Birmingham Curzon Street) (Autumn Statement and Spending Review 2015, paragraphs 1.252 and 2.82).
  • Funding for transport for the North.
  • £13.4 billion on the Roads Investment Strategy.
  • Over £5 billion on roads maintenance, including a new pot hole fund.
  • £11 billion investment for London's transport infrastructure, including Crossrail.
  • Electrification of lines like the Trans-Pennine, Midland Main Line and Great Western.
(Autumn Statement and Spending Review 2015, paragraph 1.271.)
Further details of the government's road and rail transport plans are set out in paragraphs 1.195-200.
In addition, the 2015 Autumn Statement announced that the government will:
  • Publish a National Infrastructure Delivery Plan in spring 2016, setting out details of how it will deliver key projects and programmes over the next five years (Autumn Statement and Spending Review 2015, paragraph 1.192).
  • Extend the availability of the UK Guarantees Scheme to March 2021, to continue to help infrastructure projects raise finance from banks and the capital markets (Autumn Statement and Spending Review 2015, paragraphs 1.194 and 3.104).

Northern Powerhouse

The 2015 Autumn Statement announced that a £400 million investment fund will be created for the Northern Powerhouse to help small businesses to grow. In addition:
  • £5 million will go to Manchester museum to create a new South Asia gallery in partnership with the British Museum (Autumn Statement and Spending Review 2015, paragraph 1.211).
  • £150 million to fund oyster-style ticketing across local transport and rail services in the North (Autumn Statement and Spending Review 2015, paragraph 1.254).
  • The government will support the UK's 2021 Rugby League World Cup bid, so matches can be held across the North (Autumn Statement and Spending Review 2015, paragraph 1.212).
  • £1 million will go towards the Hull City of Culture programme for 2017.
Further details of the government's Northern Powerhouse plans are set out in paragraphs 1.253-259. In addition, details of the government's "Engine for Growth in the Midlands" are set out at paragraphs 1.260 and 1.261, the south west is addressed at paragraphs 1.262-268, the south east at paragraph 1.269, the east of England at paragraph 1.270 and London in paragraphs 1.271-273.
While not strictly announced as part of the 2015 Autumn Statement, as part of the government's plans to address the imbalance between the North and South, a number of metropolitan areas have agreed to create elected mayors in return for far-reaching new powers over transport, skills and the local economy. This affects Sheffield, Liverpool, the Tees Valley, the North East, the West Midlands and Greater Manchester (Autumn Statement and Spending Review 2015, paragraph 1.258).
In addition, councils will be given the power to cut rates and make their area more attractive to business, while elected mayors will be able to raise rates, provided they are used to fund specific infrastructure projects supported by the local business community.

Comment

As we said at the time of the July 2015 Budget, there is little direct news for construction practitioners. The headlines are likely to centre on the government's "bold" plans to rebalance the economy and strengthen every part of the UK, including building up the Northern Powerhouse and investing in infrastructure projects across the country, together with its continuing support for affordable homes and increasing the housing budget. As the government cannot "rebuild" without the construction industry, this should be seen as good news for the industry.
However, there was no news on how the CITB levy will be affected by the new apprenticeship levy (see Blog post, CITB Levy changes ahead), and we still await the latest government construction strategy, which some reports suggested would be published today.

Further reading

For more information on the:

Sources