All the news as it breaks from the chancellor’s Spending Review and Autumn Statement
“Elected as a one nation government, today we deliver a spending review for a one nation government, the builders of a better Britain.” Osborne sits down to cheers.
An interesting intial reaction from developer Hub residential: “With the government promising to subsidise homeownership for the masses, the Chancellor has effectively admitted that it can’t get the housing market under control. It appears that the housing policies of the past few decades have been an utter failure.”
Osborne vows to protect the police, to huge cheers from the Tory benches. He’s winding up now
Osborne confirms the 400,000 homes figure trailed this morning in the press. “For we are the builders,” he says.
Another shock: Big stamp duty rise on buy to let property – a 3% additional charge fr those buying additional homes to let. He says “corporate” intestors will avoid this, though I’m sure the PRS lobby will be concerned.
Now on to housing: “We haven’t done nearly enough yet.” Bold plan to back familes that aspire to own their own home. Says he will double the housing budget to £2bn a year. Not just affordable to rent, but affordable to buy as well. Including a whole new policy: 135,000 homes under a new scheme, Help to Buy shared ownership, to be announced today – removing the restrictions on current shared ownership sales.
There will also be furhter reforms to planning system, releasing public land land for 160,000 homes. Also finance for small builders - no details given.
Also, another new policy: London Help to Buy. Londoners with 5% deposit will be able to get an interest free loan of up to 40% to help purchase of a house.
“We will close old Victorian prison in our cities, means we can spend over £1bn building nine modern prisons,” he says. Holloway will close. In the future women will serve their sentences in more humane conditions.
Now on to apprenticeships and the large employer levy – “Today I’m setting the rate at 0.5% of employer’s pay bill,” he says. 98% of all employers will pay no levy at all, because of the way set up, he says. “This will address one of the enduring weaknesses of the UK economy,” he says.
We’re still waiting for a really big political gambit – beyond the huge backtrack on tax credits. Suspect Osborne to use housebuilding money as his set piece
This is significant – Osborne says he will spend £23bn on school building over the course of the parliament. This is £2bn more than the £21bn figure promised at the 2013 spending review. It’s not clear if the increase simply reflects an uprating according to inflation, or if it reflects a bigger real terms investment, or just reflects higher construction costs for new schools.
“We will be even bolder in our reform of public services in the next five years.” Free child care previously promised will have significant restrictions on it, he announces.
“Tampon Tax” is not a phrase I ever thought I’d hear Osborne say. He promises to spend £20m VAT raised on sanitary products on women’s charities, following a campaign to remove it.
Talking of a Labour MP’s contribution, Osborne has a fairly crude joke at Corbyn’s expense: “His campaign contributes to Arts, while his front bench contributes to comedy.” Gets a big laugh.
Two big announcement here that will worry many contractors working in energy: Firstly, “reform” of the Renewable Heat Incentive to save £700m, and secondly a replacement for ECO – a new scheme that will save £30 off the bills of energy customers. “Going green should not cost the earth,” says Osborne. Building trailed the cancellation of the RHI in a web story yesterday.
Osborn’e announces a doubling spend on energy research – small modular nuclear reactors in particular. Support for low carbon electricity and renewables will also double. “We are increasing our support for climate finance by 50% over the next five years.”
Economic infrastructure. Investment in new roads, railways, flood investments this nation needs. DfT operation budget fall by 37%, but capital spending increase by 51%. Funds the largest roads investment programme since the 1970, “because we are the builders”.
Construction of HS2 can begin. Electrification can begin. London will get £11bn investment in transport infrastructure. £250bn for roads in Kent to address “operation stack”. Britain will also have a permanent pot-hole fund.
Flood investment - £250m.
City deals due for Glasgow, Aberdeen and Inverness, Osborne says.
Here’s the section on devolution. Osborne says: “In recent weeks great metropolitan areas have joined Manchester in agreeing to Metropolitan elected mayors.” Today setting aside £12bn we promised for a local growth fund.
He also pledges 26 Enterprise zones – new or extended.
As trailed in Osborne’s conference speech, he says: “We will abolish the uniform business rate – by the end of the parliament councils will have full control of business rates. And be able to levy additional rates on specific infrastructure projects where supported by the local business community.”
“This anount to a big package of new powers. It’s a revolution,” he says. Adds that councils will have as much in cash terms at the end of the parliament as they do today.
In recent weeks great metorploitan areas have joined Manchester in agreeing to Metroplotian eelected mayors. Today setting aside £12bn we promised local growth fund.
26 Enterprise zones – new or extended.
We will abolish the uniform business rate – by the end of the parliamenet councils will have full control of business rates. And be able to levy additional rates on specific infrastructure projects where supported by the local business community.
Another surprise: A “social care precept” of 2% on council tax for local authorities that want to spend more on social care. Interesting after the coalition made much in the last parliament of keeping Council Tax down.
Osborne is now outlining the changes to NHS funding, which has been widely trailed. He says nothing about investment in NHS estate and infrastructure.
One of these priorities, he says, is “A devolution revolution and investment in our nation’s infrastructure.”
The decisions required to make these savings are not easy. “Our approach to reform and rebuild”
The proportion of the economy which is public sector will be 36.5% by end of spending review. Osborne says the “structural level of this spending is the right level for a well managed economy, and it’s the level the British people have shown they are willing to afford.” That’s a deeply political point as most on the left think anything below 40% implies very limited public services.
Osborne will now outline taxation plans - but the changes seem mainly technical, beyond a huge cut to HMRC’s own budget for tax administration. The Treasury itself will have a 24% cut to its administration costs.
Osborne makes a technical point about social housing rents – but doesn’t spell out what it means. Rumours prior to the speech suggests this will mean a further reduction in the rents they can charge, to inflation minus 2% each year of the parliament. If so it will have a major impact on the number of homes they can build. We’ll have to wait for the documents to be published before knowing for sure.
Wow – first big political bombshell – Osborne effectively abandons tax credit changes. Says it will not matter, because the move to Universal Credit will see tax credits phased out anyway
Says the government will spend £12bn more on capital spending than forecast over the parliament – this is a key figure for the industry
On public debt, Osborne reveals the impact of the ONS’s reclassification of housing associationHousing associations in England have been brought on to the public balance sheet, and therefore the OBR has recalculated its previous forecast. Forecast to be 83% of national income, now forecast to be 82.5%
Osborne says 1 million jobs to be created over the next five years, and living standard to rise every year
Osborne says OBR has revised world growth down. Economy grow 2.4% this year, and has been revised up (up!) in the next two years – before returning back to long term trend growth
“Determined this will be an economic recovery for all.” Says the north recovering quicker than the south; the midlands is creating jobs three times more quickly than in London.
Osborne is ramping up the expectation on his measures: “Far-reaching changes to what the state does and how it does it.” Says this will include in providing homes for families. “This is a big spending review for a government that does big things.”
He says “This year our debt will fall.” “The £12bn of welfare savings will be delivered in full, in a way that helps families.”
Osborne rises. “Delivers on promise to put security first. To live within our means and bring down our debt.”
“Opportunity for all, aspirations for families. Today our job is to rebuild Britain. So it becomes the most prosperous and secure of all the major nations of the world.”
We’re already getting reaction to the housing briefings in this morning’s papers – and there is already a common theme emerging. Adam Challis – Head of Residential Research at JLL says: “The chancellor’s support for 400,000 new affordable homes is welcomed at a time when there is a dire need to expand housing construction right across the country. This Government’s narrow focus on home ownership is a serious concern however.”
Jeremy Blackburn, RICS Head of Policy, says: “A push towards affordable home ownership should not come at the expense of affordable homes for rent. If cities such as London are to thrive, we need to ensure that housing can be provided for all of its workforce - home ownership can only go so far and even shared ownership may prove too expensive for some.
We already know a fair bit about broadly what he is going to say, but very few details. The FT today is leading with a £6.9bn splash by the chancellor on housebuilding to be unveiled, in order to build 400,000 “affordable” houses, mostly for sale. However, as there is no time-frame put on this announcement or sense of the scope of this figure, it is very hard to see how it compares to the current £1.1bn run-rate for affordable housing.
Osborne has also said he will announce £100bn of infrastructure spending today, though again, the timeframe is so unclear it is hard to know what this really means – and whether any of it is money that has already been pencilled in for spending.
He will also give an update on the “large employers levy” for apprenticeships, which has been causing so much consternation at the CITB. The latest rumours suggest we will see Osborne define what he means by a “large employer” today, and whether there will be variable rates of levy depending upon size of business. However, it remains unclear whether the issue of how the levy interacts with the current construction industry levy will be addressed.
Welcome to Building’s live coverage of the Autumn Statement and Comprehensive Spending Review.
Chancellor George Osborne has, in the words of Cherie Blair, got a lot of balls in the air this afternoon. Technically he has got to do two important things to do today – the announcement will include both the bi-annual update on the state of the UK’s economy and finances provided in the Autumn Statement as well as the much more important plan for departmental spending for the coming parliament. This obviously, will have to include the much-trailed £12bn of cuts he has to make to meet his own election pledges.
But of course his life has been made much harder by two significant issues: firstly, his plan for cutting tax credits has been mauled by many critics and voted against in the House of Lords. This was supposed to save him £4bn of spending and changes will have to be addressed. Secondly, public finances have worsened since his summer Budget, in part because of the technicality that £60bn of housing association borrowing will now have to be included on the public debt, and in part because of greater than expected deficits being run up by UK hospitals.
Here is our analysis, from a couple of weeks ago, on the challenges he faces.
Building deputy editor Joey Gardiner will be updating this as we go along today – so keep refreshing for the most up-to-date
news and analysis of today’s speech, which kicks off at 12.30.
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