Budget 2021: big changes coming

Budget 2021 caught the attention of the nation. With government borrowing this year expected to be the highest since World War II, we were all keen to understand how the deficit would be handled and what part we must play to climb out of this economic hole and get on the road to recovery. There was much good news for the development industry: £12bn for green infrastructure; 45 new town deals; eight new freeports in England alone; business investment tax breaks; and substantial support for the retail, leisure and residential sectors, not to mention increased funding for upskilling and digitalisation. Rishi on resi The chancellor announced two key measures to boost housing development and increase activity in the residential sector. As expected, he extended the stamp duty holiday until the end of June, with a gradual return to the 2019 thresholds by April 2022. It is hoped that this will boost confidence, increasing the number of housing completions next quarter. Also aimed at encouraging home ownership is the return of 95% mortgages backed by government. Particularly attractive for first-time buyers, this builds on the age-old Tory ambition for more people to own their own home. There was no mention, though, of the next round of consultation on the First Homes requirement for 25% of all affordable housing to be made available to first-time buyers at a minimum discount of 30%. Following the last government consultation in the summer, everything appears to have gone quiet on the First Homes front. The good cheer was reflected in the stock market, with listed housebuilders seeing rises of up to 7% that day. Help the high street Already under threat, the bricks and mortar retail and leisure industries have been one of the biggest casualties of the pandemic. In an attempt to get them open again in April, £5bn has been pledged. This generous gesture builds on the flexibility afforded to town centre uses by the recent changes to the use class order – in particular the new Class E which allows many changes of use without planning permission, such as gym to office, or shop to crèche. While these measures have been welcomed by many, others are concerned about the proposed move to allow any Class E use to change to residential use, believing this to be a step too far. No mention of this was made on Wednesday, so we continue to wait and see whether this will be brought in at all. One of the most significant announcements in the Budget was the use of the £1bn Towns Fund for 45 new town deals across England. The funds can be used to help these towns design and implement a bespoke growth strategy for their area; improve connectivity; revamp the town centre; create new buildings and services and/or rebranding to attract new visitors and investment. Whatever each town decides to do, the funds should make a real difference to jobs, the local environment and the health and wellbeing of workers and residents. Freeports and levelling up Eight new freeports will be created in England. The chancellor spoke passionately about how this will boost business by: providing tax reliefs (no stamp duty or business rates until September 2026); simplifying customs procedures; and generating investment, trade and jobs. He also said that freeports will have simplified planning requirements, although no further detail was given. This could be anything from extended permitted development rights (where planning permission is “deemed” to have been given for certain development) to trialling the new zoning-type system mooted by the Planning for the Future White Paper. It will be interesting to see how this works in practice and, if successful, whether it could be extended to other areas. Located across England, the new freeports will make a significant contribution to the levelling-up agenda and we are told that discussions continue between Westminster and the devolved administrations on new freeports in Scotland, Wales and Northern Ireland. £4.8bn has been pledged for the Levelling Up Fund, which will invest in infrastructure that “improves everyday life across the UK”, this will include town centre and high street improvements; local transport projects; and support to cultural and heritage assets. Green light to recovery There was certainly a green hue over this year’s Budget. As part of the government’s build back greener campaign, it will establish a modern methods of construction task force to assist with modular building and greener development. In addition to a number of new green finance products, a new £12bn infrastructure bank will be created to fund net zero and regional economic growth. A raft of green energy initiatives will be also launched, such as the £20m floating offshore wind programme; the £68m energy storage competition; and investment into green infrastructure projects in Wales and Scotland. Build, build, build Budget 2021 marks a vital turning point in our recovery and it is clear that the development sector has an important part to play. Boris Johnson’s promise to “build, build, build” our way back is clearly supported by the chancellor, who understands the need to do so in a sustainable way. Some may feel that the measures don’t go far enough, particularly on the green agenda, but there may be other ways that this can be achieved, such as via the Environment Bill due later this year. What is very clear is that for the short term, and until we find the magic money tree, we must handle our fragile economy with care. Claire Dutch is co-head of planning and Kathryn Hampton is a senior expertise lawyer at Ashurst