Against the background of the growing Coronavirus epidemic, the new Chancellor, Risha Sunak, delivered an ambitious £600bn capital spending programme for the current Parliament in his first budget statement, triggering a substantial increase in Government borrowing.
Coming hot on the heels of the OBR's decision to reduce the interest rate by 0.5% to 0.25% earlier in the day, the Chancellor committed the Government to tripling infrastructure spending and ‘changing the mindset of Government’ by reviewing the ‘Green Book’ which assesses value for money in capital spending as part of the ‘levelling up agenda’.
There was a generous programme of spending on roads and railways announced, with over £27 billion on new roads between 2020 and 2025, with ‘unprecedented investment’ in urban transport, with £4.2 billion for five-year, integrated transport settlements for eight city regions on top of the £1 billion allocated to shovel-ready transport schemes. In addition, flood defence spending is being doubled to £5.2bn and a £1bn Building Safety Fund for removing cladding from tall buildings was also announced.
The Budget included an extra £12bn for the affordable housing programme and further allocations announced from the Housing Infrastructure Fund totalling £1.1 billion for nine different areas, including Manchester, South Sunderland and South Lancaster. In addition, there was a pledge that the government will, as part of July’s comprehensive spending review, "launch a new long-term Single Housing Infrastructure Fund".
The manifesto commitment of 1 million homes in the Parliament appears to have been dropped, with an announcement that a "£10.9 billion increase in housing investment to support the commitment to build at least 1 million new homes by the end of the Parliament, and an average of 300,000 homes a year by the mid-2020s”. Significantly the Chancellor indicated there would be an announcement from the Communities Secretary on planning tomorrow. The ‘Red Book’ which accompanies the Budget, states that:
‘Land availability, as constrained by the planning system, is the most significant barrier to building more houses. The Secretary of State for Housing, Communities and Local Government will shortly set out comprehensive reforms to bring the planning system into the 21st century, followed by a Planning White Paper in the spring. These reforms will aim to create a simpler planning system and improve the capacity, capability and performance of Local Planning Authorities (LPAs) to accelerate the development process. Where LPAs fail to meet their local housing need, there will be firm consequences, including a stricter approach taken to the release of land for development and greater government intervention. The government will also explore long-term reforms to the planning system, rethinking planning from first principles, to ensure the system is providing more certainty to the public, LPAs and developers’. (para 1.154 of the Red Book)