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Budget 2010 - RTPI responds

24 March 2010

Sue Percy, Director of Professional Services, RTPI commented:

'Today's Budget contains a number of announcements that will be of interest to planners. Many of our planning consultant members will benefit from Government initiatives that will help small businesses, such as more time to pay tax bills, and the increases in Small Business Rate Relief and the VAT registration threshold.

Whilst we continue to support initiatives to secure a sustainable long-term energy supply, it is disappointing that we are promised yet another White Paper on the issue, when tackling climate change is so urgent.

The Budget announces that from 2010-11 the Government will withhold the relevant elements of the Housing and Planning Delivery Grant from local authorities that fail to produce satisfactory five-year land supply assessments.

Whilst this may provide an impetus for councils to complete their development plans, of which the assessments form part of the evidence, it is important to remember that this grant provides a significant funding stream for planning authorities to support their planning function and so it will be vital to ensure that this does not further impede council's capabilities to deliver these key strategies.

The RTPI agrees with the Government that regulation needs to be proportionate, transparent and predictable and recognises that in certain circumstances, the planning system is not yet operating as well as it could be. However we must point out that there are a number of important processes that inevitably incur costs within the planning system, such as environmental impact assessments, which are crucial for longer term benefits.

While we support reducing regulatory costs which can help the economy recover from recession, it should not be done so at the expense of delivering sustainable communities through the watering-down of sound regulations.

The RTPI supports the introduction of the Community Infrastructure Levy and the subsequent scaling back of the Section 106 process for collecting funds for infrastructure. This will be important to provide certainty for local councils and facilitate the development sector to deliver local infrastructure.'

We have highlighted below announcements that will be of specific interest to planners.

Extracts from the Budget 2010 - all documents are available at the Treasury micro-site.

Housing

1.19 Stamp duty

• a two-year stamp duty land tax relief for first-time buyers, for residential property purchasers up to £250,000, to be paid for by the introduction of an additional 5 per cent of stamp duty land tax for residential property over £1 million from 2011-12;

Environment and climate change

1.27 Securing low carbon growth

a commitment to reform the energy market to provide clean, secure and affordable energy in the long term. The Government will bring forward proposals this autumn, with a White Paper by spring 2011; and in the shorter term, a summer consultation on mechanisms to provide greater certainty for low-carbon investment;

•to address emerging equity finance gaps, the Government intends to create a Green Investment Bank, with a mandate to invest low-carbon infrastructure. The Government will start by investing up to £1 billion from the sale of infrastructure-related assets and will seek to match this with at least £1 billion of private sector investment;

• a commitment to reduce government departments' carbon emissions by at least 30 per cent by 2020, and enabling energy efficiency finance to help millions of homes save money energy by developing Pay As You Save arrangements;

7.24 Household energy saving

In order to meet the UK's 2020 objectives for reducing emissions, households will need support to install insulation and energy generation systems that may have higher upfront costs. The Government's Household Energy Management Strategy, published on 2 March 2010, proposes the development of Pay As You Save financing arrangements. This will enable millions of households to finance the cost of installations from the savings they make on their energy bills. Budget 2010 announces that the Government and the financial services industry will undertake detailed work through a joint Pay As You Save forum to develop such financing arrangements.

7.52 Climate change adaptation

Cutting carbon emissions will prevent the most dangerous impacts of climate change, but individuals, businesses and public authorities will also need to adapt to a changing climate. Over recent years, the Government has increased investment in managing flooding and coastal erosion, including the provision of defences. In his review of the 2007 floods, Sir Michael Pitt noted the private as well as public benefits of defence, and argued that long-term investment plans should not assume all costs would be met by central government. In the context of the next Spending Review, the Government will give further consideration to new ways of funding flood and coastal erosion risk management.

Small businesses

4.2 Helping small businesses

As the economy recovers, the Government recognises that some viable businesses will still struggle to pay their tax bills. For these businesses it is important that the support received through 'Time to Pay remains in place (see Box 4.1), so HMRC will continue to offer 'Time to Pay', as part of its support for all viable businesses having difficulty in meeting their tax obligations. In addition, to ensure that all requests continue to be assessed on a consistent basis, businesses that need to use the service more than once will be directed to a specialist team.

4.14 Increase to Annual Investment Allowance

The temporary 40 per cent first year capital allowance has supported business investment during the recession. This will end as planned in April 2010. Businesses continue to benefit from the Annual Investment Allowance (AIA), which allows the first £50,000 of capital expenditure in a given year to be fully offset against taxable profits. In order to provide further cashflow support and an incentive to increase business investment, the Government will increase the threshold of the AIA to £100,000 for expenditure incurred from April 2010.
Capital expenditure above this threshold will continue to be eligible for standard capital allowances against taxable profits. The Government will introduce a targeted anti-avoidance rule from 24 March 2010 to ensure this measure is focused on support for genuine business
investment.

4.19 Small business rate relief

To provide help with the fixed costs of starting and running a small business, the Government will fund a temporary increase in the level of small business rate relief, so that eligible small businesses occupying properties with rateable values up to £6,000 will pay no business rates for one year from October. In addition, small businesses benefiting from the rate relief taper (rateable values up to £12,000) will receive significant reductions. It is estimated that over half a million businesses across England will benefit, many by well over £1,000. Around three quarters of all small business units, two thirds of smaller shops and over half of offices and smaller industrial premises will qualify if occupied by an eligible business.

4.57 VAT registration threshold

From 1 April 2010, the Government will increase the VAT registration threshold in line with inflation from £68,000 to £70,000, keeping more small businesses from having to join the VAT system.

Local, regional and national government

1.25 Public sector pay and investment

• confirmation of a one per cent cap on basic pay uplifts for 2011-12 and 2012-13 and a new Code of Practice on senior pay-setting, with greater use of independent Remuneration Committees and escalation of decisions to ministers, or audit and regulatory bodies, where there is a proposal to pay above agreed norms
• The Government will also relocate 15,000 civil service jobs out of central London within five years.

4.64 Reforming the regional tier of Government

An enhanced role for Regional Ministers to promote growth and inclusion and champion public service reform. To support this new role, a regional growth fund will be established by the Regional Development Agences (RDAs) within their capital budgets for 2011-12, to promote high-value investment in support of regional and national growth and industrial policy. To simplify the regional tier, the Government will also act to co-locate the RDAs, Homes and Communities Agency and Government Offices, saving £255 million from 2012-13.

Making local government more efficient (this section from here)

The Total Place report, to be published on the 25th of March will demonstrate how greater collaboration and flexibility at a local level can eliminate waste and duplication and substantially improve outcomes. In responding to the pilots Government has acted quickly by freeing up £1.3bn of previously ring-fenced funding, streamlining the number of funding streams from 110 to 94, and reducing the number of performance indicators by 18, with further measures to come.

Letting local areas set priorities and guide resources will free up frontline organisations to better meet the unique needs of their areas. The Government is reducing the number of national indicators by 18 and, at the next Spending Review, will take further action to align performance frameworks, including agreeing a set of principles to govern the performance management of local services. This action will ensure greater consistency for local partnerships. A more aligned central-local performance framework will be an important feature of the next Spending Review with an emphasis on significantly fewer targets, complemented by a range of indicators published online, creating more accountability through transparency.
As a first step, CLG will work with the Local Public Data Panel to pilot the replacement of local authority data returns to central government with direct publication locally. This will initially cover returns to CLG, which could include housing, planning or local government finance data.

Reducing ring-fencing and the number of revenue streams to local government gives local authorities greater freedom to improve the targeting and effectiveness of local services. Budget 2010 announced that the Government will give local authorities new discretion over the use of £1.3bn as well as benefiting from a reduction in funding streams from 110 to 94. These actions will make it easier for local authorities to prioritise spending. Guidance for local authorities on pooling and aligning budgets in their area has already been published.

Enhancing commercial opportunities for local authorities can support innovation and economic development. The Treasury has published guidance on how local authorities can create innovative partnerships and joint ventures with private and third sector bodies. The Total Place report will further outline plans for local pathfinders to pursue such ventures.
Reducing centrally imposed burdens on the frontline from reporting, inspection and assessment frees-up staff to focus on delivering high-quality services. Budget 2010 sets out a commitment to ensure inspection and assessment is focused on services and areas at risk of underperforming. Details on how the data burdens on frontline staff will be reduced will be published in the Total Place report.

4.65 Empowering city-regions

Strong city-regions will be given more autonomy under new regional arrangements. The 2009 Pre-Budget Report announced city-region agreements with Manchester and Leeds. Greater Manchester is consulting on proposals to put city-region governance on a statutory footing, to oversee delegations and devolved powers agreed with the Government, including on skills, transport and housing. Leeds city-region is making progress towards similar powers as well as trialling new approaches to asset and capital management. This Budget announces that Birmingham city-region has been granted powers to set the adult skills strategy across its area.

4.66 Accelerated Development Zones

The Government will support investment in infrastructure in our cities and other centres of growth through an Accelerated Development Zone (ADZ) pilot programme. The pilot schemes will be introduced in locations across England in 2011-12. Combined authorities, as they are agreed, and selected local authorities, will receive capital grant funding to a total of £120 million to help support projects that deliver key infrastructure and commercial development to unlock growth. The Government will assess the impact of the investment on business rates growth within the defined ADZ area to further understand the case for introducing Tax Increment Financing.

5.50 Land supply

Ensuring local authorities bring forward a sufficient supply of viable land is essential to a recovery in the house building industry. The Government is publishing results from comprehensive checks of local land supply strategies alongside the Budget. Budget 2010 announces the Planning Inspectorate will continue to report on the position across the country, and from 2010-11 the Government will withhold the relevant elements of the Housing and Planning Delivery Grant from local authorities that fail to produce satisfactory five-year land supply assessments.

Building on the success of the Public Land Initiative, the Government will lead the way by bringing forward more surplus public sector land and will consider further measures in this area such as introducing targets across government for the number of homes that will be built on public land.

5.51 Regulation

Regulation needs to be proportionate, transparent and predictable. The Government is working closely with industry to finalise a national baseline of regulatory costs, which will enable better management of the cumulative impact of regulation. The Government will reduce the regulatory costs on the house building industry as part of the indicative £1 to £1.25 billion savings to be achieved through the Built Environment theme of the 2010-2015 Simplification Target, and intends to set out progress at Budget 2011.

Furthermore, the Government will limit the consideration of new regulations to fixed intervals. The Government will work with local authorities to ensure that local requirements are proportionate, respond flexibly to economic conditions and do not unduly constrain development. The Government will shortly consult on how a scaled back Section 106 will operate. The Government has prioritised zero carbon homes and will continue to work with industry on the best way of delivering the policy.

6.26 Public Value Programme
The Public Value Programme, launched at Budget 2008, has been conducting demanding value for money reviews across at least 50 per cent of each department's budget.

On the basis of the early findings of the programme, the 2009 Pre-Budget Report announced £5 billion of savings by 2012-13 through cutting lower value or lower priority spend. Budget 2010 announces further details of these savings, including:

• improved targeting of housing growth and regeneration funding, saving £340 million: including £40 million by concluding the New Deal for Communities, and a further £300 million from rationalising Regional Development Agency regeneration spending and programmes, including the Working
Neighbourhoods Fund, the Local Enterprise Growth Initiative, and the Housing and Planning Delivery Grant.

Rationalising and reforming arm's lengths bodies (ALBs) will ensure better value for money while preserving their independence and technical expertise. Plans to reduce ALBs by over 140 have been announced.The Government has published 'Reforming Arms Lengths Bodies', setting out tough requirements for the creation and operation of ALBs in future. Taken together, these measures will deliver at least £500m of savings.

6.51 Opening up data

The Government has delivered on its 'Smarter Government' commitments to open up data, promoting transparent and effective government and improving services through empowering citizens and supporting innovative enterprise. For example, the data.gov.uk site was launched in January 2010, making over 3,000 data sets available from a single access point, and the Met Office has released a new open access weather application. The Government will also continue to develop the new national crime mapping sevice, which enables anyone to type in their postcode and get accessible, regular and user-friendly information about crime in their area, what action police are taking and what is happening to criminals who are caught.

The Government's response to a consultation on the release of Ordnance Survey data will be published by the end of March 2010, and from 1 April, a substantial package of data will be freely available to the public without restrictions on re-use. In addition, the Local Public Data Panel is working with leading local authorities (Local Data Exemplars) to make their data available via the data.gov.uk website, with the first set of data expected to be available by the end of April 2010.