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Chancellors Spring Statement 14/03/2018 Labelled as Finance

Chancellor Phillip Hammond gave his Spring Statement on 13 March 2018. In line with the new practice of announcing major changes to tax and spending plans in an Autumn Budget, the statement provided an update on tax and spending plans already announced, including for housing, but no major changes.

 

Key points of his statement were:

 

  • The UK economy is expected to grow slightly faster in 2018 (1.5%, up from 1.4%) than forecast last November at the Budget, but slightly more slowly in 2021 and 2022.

 

  • Government borrowing is continuing to fall; the Government expects debt to start falling as a share of GDP next year.

 

  • No major changes to spending plans were announced, but the Chancellor's statement included an update on housing plans announced at Autumn Budget 2017.

 

  • £100 million has been allocated to the West Midlands for a housing package to support the delivery of 215,000 homes by 2030.

 

  • The Government will announce next week the 44 areas to receive allocations from the Housing Infrastructure Fund.

 

  • The Housing Growth Partnership, which provides financial support for small housebuilders, will receive an additional £60 million, matched by an equivalent amount from Lloyds Bank.

 

  • London will receive £1.6 billion to start building a further 27,000 affordable homes by the end of 2021-22; this will include homes for social rent, London Affordable Rent, shared ownership and rent-to-buy.

 

  • Sir Oliver Letwin has published initial findings of his review of the rate of build-out on sites granted planning permission for housing. His preliminary view is that the primary determinant of build-out speed on large sites is the rate at which the house-builder believes newly constructed homes can be sold without disturbing market prices. 

 

The economy is forecast to grow slightly faster in 2018 than expected in November.  Forecast growth in 2018 will be 1.5%, 1% more than forecast in November.  Growth forecasts for 2019 (1.3%) and 2020 (1.3%) remain unchanged, but the forecasts for 2021 and 2022 have been downgraded to 1.4% (from 1.5), and 1.5% (from 1.6%) respectively.

 

Government borrowing is falling; total debt is expected to start falling as a share of GDP next year.

 

In terms of housing the Chancellor's Spring Statement included:

 

An announcement that £100 million has been allocated to the West Midlands from the Housing Infrastructure Fund for a West Midlands Housing Package to support the delivery of 215,000 homes by 2030. The Government will also announce next week a further 44 areas to receive allocations from the Housing Infrastructure Fund.

 

The Housing Growth Partnership, which provides financial support for small housebuilders, will receive an additional £60 million, matched by an equivalent amount from Lloyds Bank.  This will double the total size of this fund.

 

London will receive £1.6 billion to start building a further 27,000 affordable homes by the end of 2021-22; this will include homes for social rent, London Affordable Rent, shared ownership and rent-to-buy.

 

Sir Oliver Letwin has published initial findings of his Independent Review of the Rate of Build-out on sites granted planning permission for housing. His initial focus will be on the reasons why build-out rates are as they are on large sites owned by major housebuilders, leaving for later consideration of smaller sites and builders, and recommendations for improvements.  Full results of this work will be published in June.

 

Work so far has identified two stages in the development of a large site:

 

Stage 1 (the 'regulatory' stage) consists of securing all the necessary approvals to allow development to commence.

 

Stage 2 (the 'build out' stage) starts once all necessary consents have been given.

 

Witnesses have given evidence that build-out can be delayed by a variety of factors including shortage of labour or building materials, site logistics or slow provision of infrastructure of utilities by third parties.  However, Sir Oliver's preliminary view is that these are not primary factors: the primary determinant of build-out speed is the rate at which the house-builder believes newly constructed homes can be sold without disturbing market prices.  The rate of completion of affordable and social rented homes is also subject to this constraint because of the need for cross-subsidy.

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