1. A day of long knives
The easy media narrative is that the Prime Minister’s chief of staff Dominic Cummings is the man to blame for the brutal cull of top names and the reshuffle unexpectedly going off track. Losing a Chancellor who was yet to deliver a Budget Statement is significant and for this to happen owing to personalities not policies is clumsy. But while there is no doubt Mr Cummings played a role in the saga, the buck stops with the Prime Minister. (more…)
In one of his most important announcements as Secretary of State, Robert Jenrick has launched a consultation on allowing first-time buyers to purchase new homes with a 30% discount.
Tackling the housing crisis, the proposals will focus on young first-time buyers, key workers and veterans and will apply to a proportion of new homes. The discount will have to be passed onto future buyers, and it will all be funded by contributions already paid by housing developers through the planning system.
However, questions remain, such as: does this mean less shared ownership or social rent homes? Will the money allocated to First Homes be taken away from provision for key infrastructure in local areas already provided by CIL and S106 obligations? Also, will the Government’s commitment to build infrastructure before new homes affect delivery of these homes? Will the rigidity of the system to preserve the one-third discount in perpetuity really work?
All these nagging questions may be be addressed by the consultation which runs until 3rd April and asks:
- What are First Homes and who should be eligible for them?
- How the scheme should work in practice?
- How to deliver more of these homes through developer contributions
- The requirements for delivering these homes through planning or legislation
- How to maintain the discounted element in perpetuity
Following the failure of the Governments Starter Homes scheme, it’s crucial for them to get this right second time around.
Schemes such as this and Building Better, Building Beautiful design initiative could be a legacy of Robert Jenrick’s tenure as Housing Secretary and Boris Johnson’s first term in Government.
And with the Government’s Help to Buy scheme set to end in 2023, this scheme could be part of a wider shift in the planning system, as developer contributions are used to target benefits for key demographics and political priorities.
The Chancellor of the Exchequer made his Spring Financial Statement to a half empty parliamentary chamber on what would – in normal times – be one of the set piece positive news stories for any government. But these are far from normal times. Last night’s TV news bulletins and today’s papers relegated the Statement to ‘and in other news…’ That included even the august Financial Times, which shifted coverage of the Statement to pages 4 and 5 in severely truncated reporting compared to its usual voluminous special supplement coverage of any Chancellor’s Budget or Autumn/Spring Statement.
So what might you have missed from the Statement delivered by ‘steady as he goes’ Spreadsheet Phil? Unfortunately, in the troubling trend begun in the days of Gordon Brown, most of the headline spending figures were reannouncements or not quite what they seemed on closer inspection of the small print.
Take this chestnut – “releasing” £717 million from the £5.5 billion Housing Infrastructure Fund for up to 37,000 homes, from the pre-existing commitment to spend money.
From the Transforming Cities Fund, an announcement that £60 million will be invested in 10 cities from the fund announced in the 2017 Budget.
The government is offering ‘loan guarantees’ worth £3 billion to Housing Associations so that they will find it easier to borrow their own money to deliver affordable homes. Again, joy to be announcing up to 30,000 new homes when someone else will borrow the money!
Not to detract from the progress itself, but none of this is new spending.
Likewise, it’s reassuring that the Chancellor “reiterated the government’s commitment” to publish a comprehensive National Infrastructure Strategy. This will now appear alongside the 2019 Spending Review document, with both likely to be issued with the Budget Statement this autumn. Both are contingent on a Brexit deal being achieved and in the meantime all work on either document is on hold.
A “joint declaration of intent” between government and all the local authorities in the Oxford-Cambridge arc has been published. Hammond described this in his speech as “a new vision statement” which is maximum spin for a dull but important document setting out the reality of how complex this all is. Meanwhile, the route options for the East-West highway and new rail line inch forward at snail’s pace, still no more than broad-brush indications rather than anything definite.
Something of genuine substance announced yesterday is an industry consultation as part of the government’s review of infrastructure finance. This follows the Chancellor’s surprising decision in the Autumn Budget to ditch PFI going forward. Peak PFI was under the heyday of New Labour’s ‘jam today / don’t worry about tomorrow’ years. Then grandly known as Public-Public Partnership, these deals have turned out to be shocking value for money compared to the traditional method of pay-as-you-go capital investment and ultra-low government borrowing rates.
Change is needed anyway as the current reliance on the European Investment Bank will have to end. This matters as the UK has a very high level of private investment in infrastructure in the public utilities such as water – far higher than in the predominately publicly owned assets in United States for example. Access to such funds needs to continue if these regulated private utilities are to continue to deliver vital infrastructure projects such as London’s Tideway tunnel.
Without a doubt, post Brexit, the UK must get it right on investment in the infrastructure needed to meet the challenges ahead.