Real estate is central to levelling up – did Rishi get the memo?

COMMENT: The contents of the Budget were heavily trailed this year, leaving relatively little to the imagination for businesses eager to understand and be part of the government’s vision for building back better. It was always going to be a balancing act – and the chancellor was keen to stress his desire to be honest about the required tax hikes to halt the government’s record-breaking borrowing. For real estate, however, it leaves us still uncertain as to whether the government really understands the sector’s centrality to levelling up and inclusive economic recovery. The speech was longer on the vision for the next few months, and on continuing to support our tenants, than it was on how in practice the government intends to incentivise and unleash the private sector investment in real estate that will rebuild and repurpose our town centres. Even one of the chancellor’s rabbits out of the hat – the new super deduction tax relief aimed at stimulating business investment – looks like a huge missed opportunity if it remains focused on plant and machinery and does not apply to new investment in the structure of buildings, which will be much-needed for town centre regeneration and to support our net-zero carbon goals for the built environment. Stop the raid I don’t want to be churlish – our sector’s fate is inextricably bound up with that of our customers and the chancellor was right to unveil such a significant further package of support for high street businesses in non-essential retail, hospitality and leisure. This should give the minority of businesses that have not yet engaged with their property owners a platform to do so and to forge an economic partnership in which they can agree how to manage rental debt fairly. Rational property owners will not want to evict – empty properties generate no income and are a blight on our high streets. The Budget should also signal the end of the road for those well-capitalised businesses that have been withholding rent they can afford to pay. Property owners – local authorities, pensions and savings funds – are owed more than £5bn. That cannot continue and those funds are urgently needed to invest in the recovery of our town centres. While further short-term relief is welcome, the chancellor again ignored the case for empty rates relief for property owners whose support has been critical to saving as many businesses and their stores as possible throughout this pandemic. We can’t have a serious discussion about long-term recovery if the government does not fix the business rates system. It has had long enough – and I hope that on tax day later this month we will see real evidence of commitment to deliver necessary reform even if the review has been kicked down the road again to the autumn. Without it, high street businesses cannot see beyond the end of their nose, never mind plan for a more positive future.    COP(26) out? The chancellor failed to convince many people that the environment is truly at the heart of economic planning. For real estate this is fundamental – and we should have seen much more, for example, on how the government is going to incentivise the greening of our housing stock. The existing Green Homes Grant Scheme is failing to deliver the impact that the government had promised, with as little as 6.3% of the £1.5bn budget having been spent, and so the chancellor has missed a trick by ignoring calls to zero-rate VAT on repairs and maintenance, supporting the improvement of both the energy efficiency and health and safety standards of our homes. Overall then, for a long-term industry, a Budget light on a coherent long-term vision and strategy for a fair and sustainable economic and social recovery will inevitably be a disappointment. But the chancellor had an unenviable task and – alongside the roadmap for unlocking – at least gave a route through the next few months for most sectors and a starting point for what will need to be a much more significant levelling-up agenda in the years ahead. Melanie Leech is chief executive of the British Property Federation