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Budget: infrastructure & social care investment welcomed, caution on council funding squeeze

08 March 2017

RTPI welcomes further detail, to provide clarity, on how the £23bn investment for infrastructure will be spent in the Spring Budget announced today by Chancellor Philip Hammond. It includes £690m to local authorities to tackle urban congestion and ‘get local transport moving again’. We look forward to the publication of the Midlands Engine strategy.

Planners will need to be at the heart of delivering major infrastructure investment,  housing and in creating places to ensure that the UK’s productivity gap improves. We urge Government departments to work together to ensure infrastructure investment, including transport networks are considered in tandem with location of housing and in the context of the recently announced Industrial Strategy green paper.  

The attention paid to adult social care is long overdue, with additional grant funding of £2bn to local authorities over the next three years, of which with £1bn will be available in 2017/18. We look forward to a promised green paper later in the year to set out a more strategic approach to the challenges of an ageing population and the rapidly growing costs of social care. The RTPI is about to publish a research paper as part of our ‘Location of Development’ work stream which examines the important role of urban form in this debate. The Institute recently published its paper on creating better environments for people living with dementia. 

Stephen Wilkinson, RTPI President said:  

“Despite some welcome detail in this budget and announcements on social care investment, there was no shift in direction on existing plans to reduce public sector borrowing, which is forecast to decrease from £51.7bn in 2016/17 to £16.8bn in 2021/22. This will reduce funding to both DCLG and local government, and it remains unclear how this continued squeeze on local authority budgets will interact with the measure in the Housing White Paper to allow for a 20% increase in planning fees, which must be reinvested into planning departments. While this was a welcome announcement, there is a risk that this could be offset by reductions in the subsidy paid to planning departments by increasingly cash-strapped councils, which could hamper planners’ abilities to adequately support the infrastructure and housing development this country needs.”

Detailed summary for planners

Concern about squeeze on public sector spending

There was no shift in direction on existing plans to reduce public sector borrowing, which is forecast to decrease from £51.7bn in 2016/17 to £16.8bn in 2021/22. It remains unclear how this continued squeeze on local authority budgets will interact with the measure in the Housing White Paper to allow for a 20% increase in planning fees, which must be reinvested into planning departments. While this was a welcome announcement, there is a risk that this could be offset by reductions in the subsidy paid to planning departments by increasingly cash-strapped councils.

While the Spring Budget was absent on measures related to housing – perhaps understandable given the recent Housing White Paper – there were several announcements with relevance to planning:

Productivity funding detail will provide clarity

The Chancellor continued to focus on need for investment in skills training and infrastructure to close the productivity gap between UK and Europe. He provided some further details on how the £23bn National Productivity and Infrastructure Fund, announced in autumn budget, would be spent. This included:

  • £270m to keep the UK at the forefront of disruptive technologies, including driverless cars
  • £200m to local projects that leverage private investment in full fibre broadband
  • £690m to local authorities to tackle urban congestion and ‘get local transport moving again’
  • £220m to address pinch points on the Strategic Road Network
  • £300m allocated to support PhDs in cutting-edge research

Devolution momentum continues

The Chancellor expressed continued support for devolution, announcing the imminent publication of a strategy for the Midlands Engine, a deal with Mayor of London for further devolution – including collaborative efforts to tackle congestion and develop innovative models for funding infrastructure. 

The devolved administrations were allocated additional funding: £350m for Scotland, £200m for Wales, and almost £120m for the incoming Northern Ireland Executive.

Business Rate revaluation

In response to sustained criticism from the business community, the Chancellor set out measures to ease the process of transition. These included a capped monthly increase of £50 for businesses coming out of the Business Rate Relief, and a £1,000 discount on Business Rate bills for around 90% of English pubs in 2017. Local authorities will be provided with a £300m fund to deliver relief for local businesses on a discretionary basis, although the formula used to determine these allocations was not announced. As the current revaluation disproportionately hits London businesses, while easing the tax burden (and lowering revenues) in other cities, it remains to be seen how these spatial impacts will be taken into account. 

For the longer-term, the Chancellor signalled an intention to reform the current approach to revaluation and examine new ways to tax businesses in the digital economy which have a lower spatial footprint. These will be consulted on in due course.

Pressure mounts on adult social care

Here the Chancellor announced additional grant funding of £2bn to local authorities over the next three years, with £1bn available in 2017/18. Of interest to planners is the announcement that the government will publish a green paper later in the year which sets out a more strategic approach to the challenges of an ageing population and the rapidly growing costs of social care. The RTPI is about to publish a research paper as part of our ‘Location of Development’ work stream which examines the important role of urban form in this debate – click here to find out more.

Soft drinks levy, could it fund active travel for schools?

The Chancellor predicted a lower revenue from this tax than originally forecast, but committed to providing the Department for Education with the originally expected £1bn fund for sports activities and measures that support healthy living. This could provide a source of revenue for active travel measures related to schools.

Other transport measures

The Budget announced two calls for evidence, one on updating the existing HGV Road User Levy to incentivise the efficient use of road space and improve air quality, and one on the use and impact of red diesel (particularly in urban areas).

The Chancellor also announced an extension of free school transport to include all those on free school meals at selective schools.

Further detail on energy needed

Support for the transfer of late-life oil and gas assets, coupled with an intention to maximise the exploitation of the UK’s remaining reserves of oil and gas. A formal discussion paper from government will follow on this topic, as will the government’s long-awaited Emissions Reduction Plan from the Department for Business, Energy and Industrial Strategy.