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Budget 2018: key policy decisions

Housebuilding iStock 000008203889XSmall 146x219Local Government Lawyer sets out some of the key policy decisions in the Autumn 2018 Budget.

Source: Budget 2018, policy paper published by HM Treasury

Housing

  • Delivering housing investment: measures include £291 million from the Housing Infrastructure Fund, funded by the National Productivity Investment Fund (NPIF), to unlock 18,000 new homes in East London through improvements to the Docklands Light Railway; the British Business Bank will deliver a new scheme providing guarantees to support up to £1 billion of lending to SME housebuilders; providing £653 million to 2021-22 for strategic partnerships with nine housing associations to deliver over 13,000 homes; £75 million from the Home Building Fund for St Modwen plc, to fund infrastructure to build over 13,000 new homes; and a new five-year strategic business plan for Homes England, to be published on 30 October 2018
  • Housing investment for the long term: the Housing Revenue Account cap that controls local authority borrowing for house building will be abolished from 29 October 2018 in England, “enabling councils to increase house building to around 10,000 homes per year”. The Welsh Government is taking immediate steps to lift the cap in Wales; the Housing Infrastructure Fund, funded by the NPIF, will increase by £500 million to a total £5.5 billion, unlocking up to 650,000 new homes
  • Accelerating housing delivery: The government will respond to the Letwin review (of the gap between housing completions and the amount of land allocated or permissioned) in full in February 2019. “In order to minimise uncertainty for housebuilders, the government confirms that Help to Buy Equity Loan funding will not be made contingent on large sites with existing outline permission being developed in conformity with any new planning policy on differentiation. The government will honour any funding commitments made to sites with existing outline planning permission, regardless of any new planning policy on differentiation.”
  • Planning reform: “The government has already revised the National Planning Policy Framework, implementing 85 of the proposals set out in the Housing White Paper and Autumn Budget 2017, ensuring that more land in the right places is available for housing. The Budget announces that the government has launched a consultation on new permitted development rights to allow upwards extensions above commercial premises and residential properties, including blocks of flats, and to allow commercial buildings to be demolished and replaced with homes.”
  • Land value uplift: The government will introduce a simpler system of developer contributions “that provides more certainty for developers and local authorities, while enabling local areas to capture a greater share of uplift in land values for infrastructure and affordable housing”. The reforms include simplifying the process for setting a higher zonal Community Infrastructure Levy in areas of high land value uplift, and removing all restrictions on Section 106 pooling towards a single piece of infrastructure. The government will also introduce a Strategic Infrastructure Tariff for Combined Authorities and joint planning committees with strategic planning powers.
  • Strategic housing deals: The government will make £10 million capacity funding available “to support ambitious housing deals with authorities in areas of high housing demand to deliver above their Local Housing Need”.
  • New discounted homes in up to 500 neighbourhoods: The government will provide £8.5 million of resource support so that up to 500 parishes can allocate or permission land for homes sold at a discount. “Neighbourhood plans and orders are approved by local referendums, and the government will update planning guidance to ensure that these cannot be unfairly overruled by local planning authorities.” The government will also explore how it can empower neighbourhood groups to offer these homes first to people with a direct connection to the local area.
  • Infrastructure finance review: The government will review its existing support for infrastructure finance, to ensure that it continues to meet market needs as the UK leaves the EU.

Business rates/High streets

  • Business rates: To provide upfront support through the business rates system, the government is cutting bills by one-third for retail properties with a rateable value below £51,000, benefiting up to 90% of retail properties, for 2 years from April 2019, subject to state aid limits.
  • Plan for the High Street: In the longer term, to support a sustainable transformation of high streets, the government’s Plan for the High Street includes a £675 million Future High Streets Fund, planning reform, a High Streets Task Force to support local leadership, and funding to strengthen community assets, including the restoration of historic buildings on high streets.
  • Business rates public lavatories relief: The government will introduce 100% business rates relief for all public lavatories “to help keep these important local amenities open.”
  • Business rates local newspaper discount: The government will continue the £1,500 business rates discount for office space occupied by local newspapers in 2019-20.
  • Compensating local authorities for loss of income: Local authorities will be fully compensated for the loss of income as a result of these business rates measures.

Social care

  • Additional funding: In the short term, the Budget provides an additional £240 million in 2018-19 and £240 million in 2019-20 for adult social care. “This will make sure people can leave hospital when they are ready, into a care setting that best meets their needs. This will help the NHS to free up the beds it needs over winter.” The Budget also provides a further £410 million in 2019-20 for adults and children’s social care. “Where necessary, local councils should use this funding to ensure that adult social care pressures do not create additional demand on the NHS. Local councils can also use it to improve their social care offer for older people, people with disabilities and children.”
  • Disabled Facilities Grant: The Budget provides councils with an additional £55 million in 2018-19 for the grant to provide home aids and adaptations for disabled children and adults on low incomes.
  • Children’s social care improvement: The Budget provides £84 million over 5 years for up to 20 local authorities, “to help more children to stay at home safely with their families”. This investment builds on the lessons learned from programmes in Hertfordshire, Leeds and North Yorkshire.

Projects

  • Private Finance II (PF2): The government has considered the Private Finance Initiative (PFI) and its successor PF2, in light of experience since 2012, “and found the model to be inflexible and overly complex”. The Office for Budget Responsibility's FRR also identified private finance initiatives as a source of significant fiscal risk to government. PF2 has not been used since 2016. The Budget announces government will no longer use PF2 for new projects. A new centre of best practice in the Department of Health and Social Care (DHSC) will improve the management of existing PFI contracts.

Transport

  • National Roads Fund: The National Roads Fund will be £28.8 billion between 2020-25. “The Fund will provide long-term certainty for roads investment, including the new major roads network and large local major roads schemes, such as the North Devon Link Road.”
  • Roads Investment Strategy 2: The draft Roads Investment Strategy 2 will be the largest ever investment in England’s strategic roads and will enable the government to build on the successes of Roads Investment Strategy 1, such as the A1(M) link to Newcastle, and progress transformative projects like the A66 Trans-Pennine, the Oxford‑Cambridge Expressway, and the Lower Thames Crossing. The government expects to spend £25.3 billion on this strategy, funded by the National Roads Fund, between 2020-25.
  • Local roads: The government will allocate £420 million to local authorities in 2018‑19 to tackle potholes, repair damaged roads, and invest in keeping bridges open and safe. To support projects across England that ease congestion on local routes, the government will also make £150 million of the NPIF funding available to local authorities for small improvement projects such as roundabouts.
  • Transforming Cities Fund extension: As part of the NPIF, the government is extending the Transforming Cities Fund by a year to 2022-23. This will provide an extra £240 million to the six metro mayors for significant transport investment in their areas: £21 million for Cambridgeshire and Peterborough, £69.5 million for Greater Manchester, £38.5 million for Liverpool City Region, £23 million for West of England, £71.5 million for the West Midlands, and £16.5 million for Tees Valley. In addition, a further £440 million will be made available to the city regions shortlisted for competitive funding. Ten city regions are eligible for this funding, and the government will shortly be announcing a further two.
  • Transforming Cities Fund: Future Mobility Zones: To support the Industrial Strategy Future of Mobility Grand Challenge, £90 million from the NPIF will be allocated to the Transforming Cities Fund to create Future Mobility Zones. This will trial new transport modes, services, and digital payments and ticketing. £20 million of this will be allocated to the West Midlands.

Infrastructure strategy

  • National Infrastructure Strategy: The government will respond in full to the National Infrastructure Commission’s (NIC) ‘National Infrastructure Assessment’ through a National Infrastructure Strategy that will be published in 2019. Alongside the Budget, the government has published an interim response setting out its investment record and progress in the priority areas identified in the NIC’s report.
  • NIC study: infrastructure resilience: The government has commissioned a new NIC study, to be published in Spring 2020, on how to improve the resilience of the UK’s infrastructure in light of technological advances and future challenges such as climate change.

Schools, children and young people

  • School equipment and maintenance uplift: The Budget provides schools across England with £400 million this year to spend on their equipment and facilities.

The NHS 

  • NHS funding: The cash settlement that the government promised in June 2018 (of £20.5 billion more a year in real terms by 2023-24) is fully funded at this Budget. The NHS will deliver a long-term plan by the end of the year, and the government will confirm the final settlement consistent with that plan, and the £20.5 billion real terms increase by 2023-24, by Spending Review 2019.
  • NHS plan: The government has set five financial tests for the NHS to meet in producing the plan, to ensure that it does its part in putting the health service onto a more sustainable footing. The plan must set out how: the NHS (including providers) will return to financial balance; the NHS will achieve cash-releasing productivity growth of at least 1.1% a year (with a final number to be confirmed in the plan), with all savings reinvested in frontline care; the NHS will reduce the growth in demand for care through better integration and prevention (with a final number to be confirmed in the plan); the NHS will reduce variation across the health system, improving providers’ financial and operational performance; the NHS will make better use of capital investment and its existing assets to drive transformation.
  • NHS capital plan: As also set out in June 2018, the government will consider proposals from the NHS for a multi-year capital plan to support transformation, and a multi-year funding plan for clinical training places. “The government will also ensure that public health services help people live longer healthier lives.” Budgets in these areas will be confirmed at Spending Review 2019.
  • Mental health funding: Funding for mental health services will grow as a share of the overall NHS budget over the next 5 years. “These services will take pressure off Accident and Emergency (A&E) departments and other public services such as the police, probation and social services. They will also ensure that people with mental illness can return to, and stay in, work, boosting employment and productivity.” The NHS will invest up to £250 million a year by 2023-24 into new crisis services, including: 24/7 support via NHS 111; children and young people’s crisis teams in every part of the country; comprehensive mental health support in every major A&E by 2023-24; more mental health specialist ambulances; and more community services such as crisis cafes. The NHS will also prioritise services for children and young people, with schools-based mental health support teams and specialist crisis teams for young people across the country. For adults, the NHS will expand access to the Individual Placement Support programme to help those with severe mental illness find and retain employment, benefitting 55,000 people by 2023-24.
  • Support for air ambulance trusts: The government is making available £10 million of capital funding in England to back them in this work.

Miscellaneous

  • Centre for Public Service Leadership: The government welcomes the recommendations of the Public Service Leadership Taskforce chaired by Sir Gerry Grimstone, published alongside the Budget. The Budget will provide £21 million to establish and run a new Centre for Public Service Leadership as a home for the development of public service leaders. The Centre will support leaders to improve productivity and transform the outcomes of the services they run.
  • Promoting greater choice of wedding venues: “England and Wales have outdated laws about how and where couples can marry.” The government has asked the Law Commission to propose options for a simpler and fairer system to give modern couples meaningful choice. “This will include looking at reducing unnecessary red tape and lowering the cost of wedding venues for couples.”