THE BUDGET 2013 – What it means to the property sectorDigital Manager
Earlier today Chancellor of the Exchequer, George Osborne unveiled the Government’s Spring Budget, which detailed the UK’s economic forecasts, strategy and legislative agenda.
George Osborne conceded that the economy’s forecasted growth has been revised from 1.2% to 0.6% in 2013 and that the annual deficit will not be eliminated until 2018. In response the Government will cut expenditure by 1% for the next two years in most Whitehall departments. Schools and health budgets will remain protected.
To help generate economic growth the Budget unveiled a number of key policies that are of interest for the Property Retail sector.
Arguably the biggest winners of the Budget were Britain’s house builders, as the Chancellor announced a number of significant policies to help home-buyers and boost the construction industry.
The Budget introduced a major new housing scheme, “Help to Buy”, which includes two key elements. Firstly, from April 2013, the Government will extend “First Buy” to aspiring first time home-buyers. The Government will invest £3.5bn providing equity loans worth up to 20% of the value of the new home, repayable once the home is sold, and also increase the maximum home value for this scheme to £600,000.
Secondly and most significantly, the Government will launch a new £130bn mortgage guarantee scheme for lenders who offer mortgages to people with a deposit of between 5% and 20% on homes with a value of up to £600,000.
George Osborne also announced that the Government will double the existing affordable homes guarantee programme, providing up to an additional £225m to support a further 15,000 affordable homes in England by 2015.
Disappointingly for retailers the reform of Business Rates was not included in the Budget, which the sector had been strongly campaigning for.
Household budgets have now been slightly eased as the Government has brought forward Income Tax threshold lift to £10,000 by a year to 2014. This will mean no one will have to pay income tax on the first £10,000 of their salary, which will ensure the typical basic rate taxpayer pays £705 less income tax a year. This should provide a shot in the arm for consumer spending.
The Budget also included one of the British Retail Consortium’s key recommendations – to scrap the planned fuel duty increase in September. The Government also announced in the budget that they will consult on re-designing the Retail Export Scheme to make it easier to use and understand, reduce the scope for error, improve compliance and protect revenue.
Small businesses will now benefit from a new Employment Allowance. This will ensure businesses are entitled to £2,000 a year towards their National Insurance Contributions bill. In addition, the Chancellor revealed a second 1% cut to Corporation Tax, which will reduce it to 20% from April 2015. It follows the 1% cut scheduled for next year announced in last year’s Autumn Statement.
Struggling retail landlords will also be pleased that plans to consult on proposals to relax rules governing changes of use from retail to residential purposes was included in the Budget Statement.
The Budget announced that capital spending for infrastructure will be increased by £3bn a year from 2015/16, funded by the public spending cuts issued in this budget. This will allow for an additional £18bn of capital spending over the next Parliament. The details of what infrastructure projects the spending will support will be included in the 2015/2016 Spending Round to be announced on the 26th June 2013.
It was also announced that the Government will implement a series of reforms, to be led by Lord Deighton and supported by Infrastructure UK, to improve the Government’s approach to infrastructure delivery. Government will also consider options for making more use of independent expertise in shaping its infrastructure strategy.
In an effort to improve investor confidence in UK energy infrastructure, George Osborne announced from April 2013 the carbon price ﬂoor, firstly unveiled in the 2011 Budget, will come into effect and also launched a consultation on a generous new tax scheme and planning guidelines for shale gas developments.
The Budget confirmed that the Government has accepted 81 out of 89 of the Heseltine Review recommendations. This includes the creation of a competitive Single Local Growth Fund, devolved to local level through new Local Growth Deals. The fund is intended to encourage LEPs to focus on generating growth.
The Government will publish ‘signiﬁcantly’ reduced planning guidance by this summer, in line with Lord Matthew Taylor’s recommendations. The guidance will strengthen the focus on using market signals to ensure land is allocated to support development.
The Budget statement confirmed that the Government will develop and announce further measures to streamline the process for planning judicial reviews by summer 2013.
The Media Leak
You may have also heard that the Evening Standard got themselves in hot water for publishing details of the Budget online before George Osborne delivered his statement. The front page of the newspaper gave details of some of the Chancellor’s major announcements including market sensitive fiscal forecasts, his scrapping of the annual alcohol duty escalator and the rise in the personal tax allowance to £10,000 by April 2014.
The full BBC article on the leak and the industry response can be viewed by clicking here.
Andrew Todd, Senior Account Executive