GVA reacts to the Autumn Statement

Wednesday, 23 November 2016

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Key spokespeople from across GVA give their reactions to today's Autumn Statement:

Housing: Policy broadly welcomed

Gerry Hughes, Chief Executive of GVA, comments: “The Chancellor clearly had very little room to manoeuvre today. He is constrained by wider economic, and even political circumstances, beyond his own control. Government has tried to address the housing crisis via the measures presented today including a £1.4bn cash injection to deliver some 40,000 new affordable homes. This is to be welcomed as is the £2.3bn Housing Infrastructure Fund to enable the delivery of around 100,000 homes. What is disappointing is that he has failed to abandon the right to buy policy completely. This is a major impediment to delivering new homes and facilitating much needed regeneration.”

Northern Powerhouse: Government has committed

Nicola Rigby, Director in Planning, Development and Regeneration at GVA, comments: “The Chancellor has put to bed the question of whether this Government supports the idea of the Northern Powerhouse. Clearly recognising the significant contribution that the UK’s regions make and can contribute to UK Plc, Hammond has put the money where his mouth is with additional infrastructure spending and Local Growth Fund allocations to LEPs. He has also strengthened the role of Mayors in Combined Authorities through greater access to funding. More is needed, but equally we recognise The Chancellor is constrained by wider economic, and even political circumstances, beyond his own control. Ultimately we asked for Government commitment and I believe we have it.

“Focus remains on us, as an industry, to identify those projects across the Northern Powerhouse which will address the challenges and opportunities ahead. These projects, many of which we identified in our Spring research are in many cases blocked as a result of infrastructure requirements and/or the need for true public-private partnerships to be established. We must identify and progress delivery of these projects to start to deliver higher value and higher productivity growth in the north.”

Infrastructure: UK plc needs funding now, not later

Gerry Hughes, Chief Executive at GVA, comments: “Physical Infrastructure investment into roads and rail formed a large part of the Chancellor‘s announcement today, partly designed to ease commuter gridlock. But funding this and other ambitious “high value infrastructure” presents a challenge as tax-revenue is reduced. We fear the Chancellor will therefore use one of the Treasury’s older tricks having announced the funding today, by deferring its availability until 2019 or even later. We would urge Government to avoid this, be bold and press on. Investment follows investment, and if an example can be set with larger scale infrastructure, then this will assist in ensuring that the smaller quick-win projects can commit and follow.”

Broadband: Long overdue rate holiday for fibre infrastructure welcome but funding only addresses “tip of the iceberg”

Colin Sharp, Senior Director and Head of Telecoms at GVA, comments: “Today’s announcement on the five year rate holiday for new fibre infrastructure is very welcome news indeed. It is something GVA has been fighting for 25 years. In the early 1990’s we ran a court case on whether fibre was rateable. The Government relented before the hearing only to use their legislative powers to change the law at their next opportunity in 1995. We lobbied against the change but were not listened to. Ever since there has been enormous tension between wanting to encourage investment in fibre and taxing it out of existence. Many investors went bankrupt in the early 2000’s and fibre tax will have played its part in that. The Government has now realised the scale of that tension and this buys them five years to come up with a more workable solution.

“We also welcome the Chancellor‘s proposal to invest more than £1 billion in broadband infrastructure. But unfortunately we believe this only addresses the tip of the iceberg. Significantly larger funds and a smarter allocation, geographically, of faster broadband remains an urgent requirement.

“Internet speeds at 30 megabytes in UK cities are some of the slowest in Europe, and for an economy that purports to be one of the world’s largest, unless we are running closer to 100 mb, this will continue to present problems for the UK. The real challenge however is how to address broadband speed in rural areas where there remain multiple “not spots”. Giving businesses of all sizes the ability to work remotely in an effective and agile way should remain one of the Government’s absolute priorities, if it claims to support entrepreneurialism and business start-ups. We would go further to suggest that investment in broadband should be treated as ‘high value infrastructure’, just as roads and rail are. Logic would suggest that increased internet access and speed would reduce commuter congestion.”

Housing: “Deeper policy” urgently needed to drive forward Estate Renewal outside of London

Stephen Hollowood, Senior Director and Head of Public Sector at GVA, comments: “We welcome the Chancellor‘s announcement to help address the housing supply shortfall, including a £1.4m cash injection for housing to help deliver some 40,000 new homes and the £2.3 billion Housing Infrastructure Fund to deliver a further 100,000. However his announcement does not go far enough we feel in other areas. Nor is there much evidence yet from today’s announcement, and we are yet to see the small print in the wider report, that any deeper policy is in situ to address the long term structural issues of housing supply, and to drive forward housing and estates renewal outside of London.

“We have witnessed major investment into large scale estates renewal projects in central London via successful public and private sector partnerships. That success has been built largely on what remain attractive long-term income streams for investors, developers and local government in the capital. Central government needs to look at placing a greater emphasis on ensuring that those same fundamentals that have proved such a significant pull for private sector in London are recreated in our regional core cities. In the meantime, the rudiments of attracting a greater volume of private sector money will not happen overnight. Therefore we would also urge that Government looks at ways to plug that gap by committing greater public sector investment. Whilst Government has committed £140m to support estates renewal throughout the UK, this I’m afraid, is the tip of the iceberg given the challenges regional cities face in upgrading many estates and increasing the delivery of housing more generally.”

Housing: Government must now champion Private Rented Sector in order to alleviate housing crisis and unlock wider development

Alastair Carmichael, Head of Real Estate Finance at GVA comments: “Whilst we welcome the Chancellor’s commitment today of providing an extra £1.4bn to build 40,000 new affordable homes and £2.3 billion for a Housing Infrastructure Fund to deliver 100,000 further homes, we need a much more balanced approach to the emerging professionally managed Private Rented Sector and starter-homes.

“Following the referendum, now more than ever, it is crucial that we address the issue of affordable housing and student debt as this is significantly hampering employers from finding the best candidates, which in turn is negatively affecting the capital and the UK economy. In order for the capital and UK economy to thrive, it is crucial that the Chancellor’s promise to increase the Home Building Fund from £3bn to £5bn follows through and that the private rented sector is championed as a central means of alleviating the housing crisis.

“The Government must also further consider local level funding mechanisms including rolling out the HCA affordable homes guarantee programme, and powers for Local Authorities to respond to local needs. Private Rented Sector schemes and infrastructure funding can help unlock wider development and indeed housing delivery.”

Business Rates: Disappointment in Government’s anti-competitive scheme

David Jones, Senior Director in GVA’s London Business Rates team comments: “Government has merely tinkered with their initial proposals and continue to apply a very aggressive transitional relief scheme to phase in Liability increases from next April’s revaluation.

“We continue to question whether it is appropriate to so clearly distinguish the capacity of a business to face significant increases in liability simply because they are assessed at RV £100,000 plus. Below this level ratepayers only face a maximum 12.5% increase from 2017 and then 17.5% from 2018. This compares with businesses assessed over RV £100,000 who will experience dramatic uplifts with a maximum liability increase of 42% from April 2017 and 32% from 2018. We estimate this change costs 40,000 businesses across the UK well over £2 billion. Larger business facing only marginal decreases in liability are again targeted with only marginal decreases if assessed for assessments at £100,000 plus.

“We note from Government’s summary response to the consultation on transitional relief that they make the point, ‘the type of transitional relief we can provide for the 2017 rating list depends on how individual rate bills are changing at the 2017 revaluation. As such, it is not possible to replicate the 2010 transitional relief scheme for the 2017 rating list and still meet the legal requirement for the scheme to be revenue neutral.’

“GVA can find no evidence that the 2010 list scheme was revenue neutral, always being provided at a cost to government. The new 2017 list proposals are directly targeted at ‘larger businesses’, who by some considerable margin pay the majority of business rates. We consider the new scheme to be anti-competitive, particularly where the RV is just above £100,000.”

Read our Autumn Statement wish list comments here: