What the Autumn Statement means for the industry

Planning reform, greater devolution and business tax breaks have all been promised in the chancellor’s “Autumn Statement for growth”. As the industry picks over the detail of yesterday’s announcement, including the “110 growth measures” intended to “back business”, it is apparent that what one hand has given, the other is taking away. Planning Central to the speech, but given very little detail in the supporting documents, were the reforms to the planning system, including a paid-for “premium service for commercial developers. Other pledges included “£32m to bust the planning backlog and develop fantastic new housing quarters in Cambridge, London and Leeds”, as well as £450m for the Local Authority Housing Fund to deliver 2,400 new homes. A new permitted development right – the eleventh planning consultation in 12 months – will allow any house to be converted into two flats, provided the exterior remains unaffected. And then there is the commitment to speed up infrastructure planning and make it easier for energy schemes to connect to the grid, worth, Jeremy Hunt said, £90bn of additional business investment over the decade. What is not clear is whether any of this is supported by new money, or if it will be taken from existing pots. On that score, the Department for Levelling Up’s budget has been cut in half, from £4bn to £2.2bn. Devolution The government has also confirmed new “level three” devolution deals, for Greater Lincolnshire, Hull and East Yorkshire, and “level two” deals, which do not include mayors, for Cornwall and Lancashire. It also said level two deals would be extended to cover more counties. The trailblazer deals for Greater Manchester and West Midlands have now been formalised as “level four”, making them technically accessible but other areas. The government is also in advanced talks for a level two deal for Devon and Torbay. Freeports and investment zones The chancellor also confirmed that the tax reliefs and financial incentives available in investment zones and freeports will be extended to 2033. They had been due to expire in 2028. And there will be more investment zones. On Monday, the Treasury confirmed a new zone in West Yorkshire. Yesterday, Hunt confirmed new zones, focused on advanced manufacturing, in the West Midlands, East Midlands and Greater Manchester, which he said would “catalyse over £3.4bn of private investment”. In addition, there will be a second investment zone in Wales, in Wrexham and Flintshire. The Greater Manchester Investment Zone will focus on advanced manufacturing and materials, and is expected to help bring in an additional £1.1bn in private investment over the next 10 years. The West Midlands Investment Zone will focus on advanced manufacturing and is expected it to help to leverage £2bn in private investment. The East Midlands Investment Zone, with a focus on green industries and advanced manufacturing, is expected to help to leverage £383m. The government has now confirmed details of six of the 13 investment zones and has pledged to confirm details of all of them by the summer of 2024. Full expensing In what the chancellor badged “the biggest business tax cut in modern British history”, full expensing of capital investment has been made permanent. “This means that for every million pounds a company invests, they get £250,000 off their tax bill in the very same year,” Hunt said.. British Property Federation chief executive Melanie Leech said the confirmation was welcome, “but the chancellor missed an opportunity to go further and incentivise investment to upgrade older commercial and residential buildings to make them more energy efficient”. She said the chancellor should have delivered “above the line” measures, such as tax credits for green plant and a zero VAT rating for residential refurbishments. FDI and concierge service Hunt also said plans to boost foreign direct investment, which the property industry has been lobbying for, would be pushed forward. “I am extremely grateful to Lord Harrington for his excellent report on how to increase foreign direct investment,” he said. “We accept all his headline recommendations. In particular, we will put in place a concierge service for large international investors, modelled on the best such services offered by our competitors, and will increase funding for the Office for Investment to deliver it.” Additional investment in Life Sciences and AI In addition, the chancellor promised significant sums of funding for growth sectors, including Life Sciences, AI and film studios.Hunt said £500m over the next two years has been pledged to fund “further innovation centres” to help make the UK an AI powerhouse. A further £520m has been pledged for life sciences, and £975m for aerospace. Business rates But there was mixed news for business rates. While any increases will be frozen for properties with a rateable value below £51,000, any above will be hit with a 6.7% hike, in line with the rate of inflation in September. As inflation is now only 4.6% and expected to fall, this has been seen by many in the industry has unfair and unwise. Colliers’ business rates expert John Webber said it would prove to be “the final nail in the coffin for the high street”. To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews