Budget 2017: key policy decisions

November 22, 2017

Local Government Lawyer sets out a number of the key policy decisions contained in the Chancellor of the Exchequer’s 2017 Budget.

Source: Autumn Budget 2017, HM Treasury.

HOUSING, PLANNING

Policy: the Government will "implement a comprehensive package of new policy which will raise housing supply by the end of this Parliament to its highest level since 1970, on track to reach 300,000 per year". This will be achieved through: making available £15.3 billion of new financial support for housing over the next five years; bringing total support for housing to at least £44 billion over this period; introducing planning reforms that will ensure more land is available for housing and that better use is made of underused land in our cities and towns; providing £204 million of funding for innovation and skills in the construction sector, including to train a workforce to build new homes.
Deallocating sites from plans: The Government will consult on strengthening policy to be clear that allocated land should be taken out of a plan if there is no prospect of a planning application being made.
Intervention where there is a failure to progress Local Plans: The Department for Communities and Local Government has begun the formal process of considering intervention in 15 areas where the local authority has failed to put an up‑to‑date plan in place. The Government will shortly activate powers that will enable it to direct local planning authorities to produce joint statutory plans and undertake an assessment of where they should be used.
First-time buyer led developments: The Government will consult on a new policy whereby local authorities will be expected to permission land outside their plan on the condition that a high proportion of the homes are offered for discounted sale for first‑time buyers, or for affordable rent. This will exclude land in the Green Belt.
Increasing housing density in urban areas: To ensure that brownfield and scarce urban land is used as efficiently as possible, the Government will consult on introducing: minimum densities for housing development in city centres and around transport hubs, with greater support for the use of compulsory purchase powers for site assembly; policy changes to support the conversion of empty space above high street shops; policy changes to make it easier to convert retail and employment land into housing; a permitted development right to allow commercial buildings to be demolished and replaced with homes.
Ensuring planning permissions are built out faster: The Government is "determined to ensure that land released for housing is put to the best use". It will consult on: strengthening the Housing Delivery Test with tougher consequences where planned homes are not being built, by setting the threshold at which the presumption in favour of development applies at 75% of housing delivery by 2020; expecting local authorities to bring forward 20% of their housing supply as small sites; speeding up the development process by removing the exemptions from the deemed discharge rules. "This will get builders on site more quickly, ensuring that development is not held back by delays in discharging planning conditions."
Review of build out: The Government will set up a review panel, chaired by Sir Oliver Letwin, to explain the significant gap between housing completions and the amount of land allocated or permissioned, and make recommendations for closing it. The review will provide an interim report in time for Spring Statement 2018 and a full report at Budget 2018.
Register of planning permissions: The Government will develop a central register of residential planning permissions from local authorities to improve information on where permissions are held and progress towards them being built out.
Developer contributions: land value uplift: the DCLG will launch a consultation with detailed proposals on the following measures: removing restriction of Section 106 pooling towards a single piece of infrastructure where the local authority has adopted CIL (the Community Infrastructure Levy), in certain circumstances such as where the authority is in a low viability area or where significant development is planned on several large strategic sites; speeding up the process of setting and revising CIL to make it easier to respond to changes to the market (this will include allowing a more proportionate approach than the requirement for two stages of consultation and providing greater clarity on the appropriate evidence base); allowing authorities to set rates which better reflect the uplift in land values between a proposed and existing use; changing indexation of CIL rates to house price inflation, rather than build costs; giving combined authorities and planning joint committees with statutory plan-making functions the option to levy a Strategic Infrastructure Tariff (SIT) in future, in the same way that the London Mayoral CIL is providing funding towards Crossrail (the SIT would be additional to CIL and viability would be examined in public. DCLG will consult on whether it should be used to fund both strategic and local infrastructure).
Housing investment – general: The Government’s reforms will "ensure that there is more land for housing, but the private sector and local authorities will need support to ensure homes get built on that land as soon as possible". The Government will strengthen the ability of the Homes and Communities Agency (to be renamed Homes England) to use investment and planning powers to intervene more actively in the land market.
Land Assembly Fund: The Government will provide £1.1 billion for a new Land Assembly Fund, funded from the NPIF (National Productivity Investment Fund). The new fund will enable Homes England to work alongside private developers to develop strategic sites, including new settlements and urban regeneration schemes.
New garden towns: The Government will bring together public and private capital to build five new garden towns, using appropriate delivery vehicles such as development corporations, including in areas of high demand such as the South East.
Increasing the Housing Infrastructure Fund: The Government will invest further in infrastructure through the NPIF to support new housing in high‑demand areas. The Budget commits a further £2.7 billion to the competitively allocated Housing Infrastructure Fund (HIF) in England.
Strategic planning in the South East: "To ensure that this investment is well‑targeted and helps grow the economy, the Government will support more strategic and zonal planning approaches through housing deals in the South East, where housing need is at its most acute." As a first step, the Government has agreed a housing deal with Oxfordshire, part of its wider strategic investment in the Cambridge‑Milton Keynes‑Oxford corridor. Oxfordshire has agreed to bring forward for adoption a joint statutory spatial plan and commit to a stretching target of 100,000 homes in the county by 2031, in return for a package of government support over the next five years, including £30 million a year for infrastructure and further support for affordable housing and local capacity. The Government is also continuing housing deal negotiations with Greater Manchester, the West Midlands, Leeds and the West of England.
Small sites: infrastructure and remediation: The Government will provide a further £630 million through the NPIF to accelerate the building of homes on small, stalled sites, by funding on‑site infrastructure and land remediation.
Home Building Fund: SMEs: The Budget announces a further £1.5 billion for the Home Building Fund, providing loans specifically targeted at supporting SMEs who cannot access the finance they need to build.
Housing guarantees: The Government will explore options with industry to create £8 billion worth of new guarantees to support housebuilding, including SMEs and purpose built rented housing.
Affordable housing: funding: The Budget confirms the further £2 billion of funding for affordable housing announced in October, including funding for social rented homes. This takes the total budget for the Affordable Homes Programme from £7.1 billion to £9.1 billion to 2020‑21. It is expected that this will provide at least 25,000 new affordable homes.
Affordable housing: HRA: The Budget will also lift Housing Revenue Account borrowing caps for councils in areas of high affordability pressure, so they can build more council homes. Local authorities will be invited to bid for increases in their caps from 2019‑20, up to a total of £1 billion by the end of 2021‑22. The Government will monitor how authorities respond to this opportunity, and consider whether any further action is needed.
Estate regeneration: The Budget provides £400 million of loan funding for estate regeneration to transform run‑down neighbourhoods and provide new homes in high‑demand areas.
Construction skills: The Government will support industry to help ensure that there is a workforce fit to build these homes, providing £34 million to scale up innovative training models across the country, including a programme in the West Midlands. The Government is working with industry to finalise a Construction Sector Deal that will support innovation and skills in the sector, including £170 million of investment through the Industrial Strategy Challenge Fund. Construction skills will also be a focus for the National Retraining Scheme.
Grenfell Tower: Following the tragedy at Grenfell Tower, the Government is "determined to ensure that those affected receive the support they need." The Budget re‑confirms that, where measures are essential to make a building fire safe, the Government will make sure that current restrictions on the use of local authority financial resources will not prevent them going ahead. The Government awaits the findings of the Hackitt Review and will respond to the recommendations when they are published. The Budget also commits £28 million additional community support to victims, including new mental health services, regeneration support for the Lancaster West estate, and a new community space.
Empty homes premium: The Government is "keen to encourage owners of empty homes to bring their properties back into use." To help achieve this, local authorities will be able to increase the council tax premium from 50% to 100%.
Right to Buy pilot: The Budget confirms that the Government will proceed with a £200 million large‑scale regional pilot of the Right to Buy for housing association tenants in the Midlands.
Rough sleeping: The Budget sets out the Government’s first steps towards its commitment to halve rough sleeping by 2022, and to eliminate it by 2027, including the launch of the Homelessness Reduction Taskforce, which will develop a cross‑government strategy to work towards this commitment.
Housing First pilots: The Government will invest £28 million in three Housing First pilots in Manchester, Liverpool and the West Midlands, to support rough sleepers with the most complex needs to turn their lives around.
Private rented sector access schemes: support for households at risk of homelessness: The Government will provide £20 million of funding for schemes to support people at risk of homelessness to access and sustain tenancies in the private rented sector.

PROJECTS, TRANSPORT

Transforming Cities Fund: A £1.7 billion fund from the NPIF to support intra-city transport, will target projects which drive productivity by improving connectivity, reducing congestion and utilising new mobility services and technology. Half will be allocated via competition for transport projects in cities and the other half will be allocated on a per capita basis to the six combined authorities with elected metro mayors
Pothole fund: The Government is investing an additional £45 million in 2017-18 to tackle around 900,000 potholes across England.
North of Tyne devolution deal: The Government has agreed a ‘minded to’ devolution deal with the North of Tyne authorities, which will be subject to the consent of local partners. This will see £600 million of investment in the region over 30 years and create a new mayor elected in 2019 with powers over important economic levers including planning and skills.
Greater Manchester: Greater Manchester and the Government will work in partnership to develop a local Industrial Strategy. The Government will provide a £243 million allocation from the Transforming Cities Fund and will continue to work with Transport for Greater Manchester to explore options for the future beyond the Fund, including land value capture.
Liverpool City Region and Tees Valley: The Government will enter into discussions with the Liverpool City Region and Tees Valley to explore scope for further devolution to these areas, to promote local growth.
West Midlands: The Government has agreed a second devolution deal in principle with the West Midlands Mayor and Combined Authority to address local productivity barriers. This includes £6 million for a housing delivery taskforce, £5 million for a construction skills training scheme and a £250 million allocation from the Transforming Cities fund to be spent on local intra-city transport priorities.
Manufacturing zone: The Government will pilot a manufacturing zone in the East Midlands. This will reduce planning restrictions to allow land to be used more productively, providing certainty for business investment, and boosting local productivity and growth.
Cambridge – Milton Keynes – Oxford corridor: The corridor between Cambridge and Oxford "has the potential to be a globally significant economy". Following the National Infrastructure Commission’s report, the Budget sets out an integrated programme of infrastructure, housing, business investment and development. This includes the Government’s recognition, highlighted by the National Infrastructure Commission’s report, to build up to one million new homes in the area by 2050 to maximise its economic potential, starting with a housing deal with Oxfordshire for 100,000 homes by 2031, and working with Central and Eastern sections on commitments in 2018. The Government will also consider significant new settlements and the potential role of development corporations to deliver these using private finance. On governance, the Government is setting out its vision for the future, and inviting local partners to contribute. The Government has agreed with Oxfordshire that it will work toward the adoption of a new joint statutory plan (JSP), and will seek further JSPs in central and eastern sections.
Capacity funding for Mayoral Combined Authorities: The Government will make available to Mayoral Combined Authorities with elected mayors a £12 million fund for 2018-19 and 2019-20, to boost the new mayors’ capacity and resources.
Local infrastructure rate: Following a consultation earlier this year, the Government confrms that it will lend local authorities in England up to £1 billion at a new discounted interest rate of gilts + 60 basis points accessible for three years to support infrastructure projects that are high value for money. Details of the bidding process will be published in December 2017, and corresponding shares will be made available to local authorities in Scotland and Wales.
Business rates retention: The Government will continue to pilot additional business rates retention for councils across England. In addition to the London pilot announced in the Budget, new pilots for 2018-19 will be announced following the Department for Communities and Local Government’s (DCLG) assessment of recent applications to its scheme.

HEALTH

NHS funding: the Government will provide the NHS with £6.3 billion of additional funding in England.
NHS pay: To protect frontline services in the NHS, the Government is also committing to fund pay awards as part of a pay deal for NHS staff on the Agenda for Change contract, including nurses, midwives and paramedics. Any pay deal will be on the condition that the pay award enables improved productivity in the NHS, and is justified on recruitment and retention grounds. "This does not prejudge the role of the independent NHS Pay Review Body in recommending the level of pay award that these staff should receive."
NHS capital investment: A further £3.5 billion of new capital funding will be provided for the NHS in England – on top of the £425 million already provided at Spring Budget 2017. This will be allocated as follows: £2.6 billion will be for local groups of NHS organisations (Sustainability and Transformation Partnerships) to deliver transformation schemes that improve their ability to meet demand for local services; £700 million will support turnaround plans in the individual trusts facing the biggest performance challenges, and tackle the most urgent and critical maintenance issues that trusts are facing; £200 million will support efficiency programmes that will, for example, help reduce NHS spending on energy, and fund technology that will allow more money and staff time to be directed towards treating patients.
NHS land: The £3.5 billion will allow the NHS to increase the proceeds from selling surplus NHS land and buildings to at least £3.3 billion, almost doubling the scale of investment available to the NHS, and unlocking land for housing. It will also be accompanied by private finance investment in the health estate where this provides good value for money. "And it will be complemented by work to review and improve the rules that inform trusts’ use of capital funding, to help make sure that they can maintain their facilities most effectively."
Mental health: the Government is committed to parity of esteem between mental health and physical health. In December, a green paper will be published setting out the government’s plans to transform mental health services for children and young people.
Disabled Facilities Grant: The Budget also provides £42 million of additional funding for the Disabled Facilities Grant in 2017-18, supporting people to stay in their own homes. This will increase the total budget for this year to £473 million.

EDUCATION

Maths: The Budget announces support for maths, "given its crucial role in preparing the next generation for jobs in the new economy." The Government will: provide £27 million to expand the Teaching for Mastery maths programme into a further 3,000 schools; reward schools and colleges who support their students to study maths by giving them £600 for every extra pupil who decides to take Maths or Further Maths A levels or Core Maths – with over £80 million available initially, and no cap on numbers; nurture top mathematical talent by delivering its commitment to open maths schools across the country (the Budget commits £18 million to fund an annual £350,000 for every maths school under the specialist maths school model, which includes outreach work); and test innovative approaches to improve GCSE Maths resit outcomes by launching a £8.5 million pilot, alongside £40 million to establish Further Education Centres of Excellence across the country to train maths teachers and spread best practice.
Computer science: The Budget will ensure that every secondary school has a fully qualified computer science GCSE teacher, by committing £84 million to upskill 8,000 computer science teachers by the end of this Parliament. The Government will also work with industry to set up a new National Centre for Computing to produce training material and support schools.
T levels: The Government announced T levels at Spring Budget 2017. As implementation gets underway, the Government will invest up to £20 million to help teachers prepare for this change.
Apprenticeship levy: The Government will continue to work with employers on how the apprenticeship levy can be spent so that the levy works effectively and flexibly for industry, and supports productivity across the country.
Gender disparity in STEM: "Girls are disproportionately less likely to study most STEM subjects at A level, hindering progress into higher education and careers in STEM." To deepen the understanding of the gender disparity in subject choices at age 16, the Government will explore how to improve the accessibility and transparency of data on this issue by institution and subject.
Teacher Development Premium: The Government will invest £42 million to pilot a Teacher Development Premium. This will test the impact of a £1,000 budget for high-quality professional development for teachers working in areas that have fallen behind. This will support the Government’s ambition to address regional productivity disparities through reducing the regional skills gap.
Reducing student loan overpayments: The Government will tackle the problem of graduates overpaying their student loans. The Student Loans Company and HMRC will update their processes by April 2019, in order to share data more frequently and stop payments after a borrower has fully repaid.

REGULATORY

Tackling waste crime: From 1 April 2018, operators of illegal waste sites will become liable for Landfll Tax, and those who continue to fout the rules will face tough civil and criminal sanctions. This follows a positive response to the consultation announced at Spring Budget 2017. In addition, the Government is providing £30 million extra funding over the next four years to help the Environment Agency tackle waste crime and reduce the harm caused to the environment and to legitimate operators.