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Budget 2009: The RTPI responds

23 April 2009

RTPI responses to the 2009 budget have addressed:

  •     Supporting Business
  •     Helping people fairly
  •     Preparing for a strong recovery
  •     Improving public services
  •     Department for Communities and Local Government (CLG) savings
  •     Building a low-carbon recovery

Supporting Business

The Red Book says

Amongst a range of taxation measures, the Government proposes a £750 million Strategic Investment Fund to support advanced industrial projects of strategic importance, of which a third of the funding will be earmarked specifically for low carbon projects.

Investment in energy and infrastructure
The Government announces a package of measures to encourage the economic recovery of the UK's oil and gas reserves. This package will include the introduction of incentives to encourage investment in small and technically challenging fields.

Road and rail networks
Budget 2009 confirms investment that will improve rail services for passengers and freight customers. Over £15 billion of Government investment in the rail industry has been confirmed for the next 5 years as well as around £200 million will fund the development of a Strategic Freight Network.

Low carbon
About £250 million will be allocated from the new Strategic Investment Fund to help UK industry benefit from low-carbon investment opportunities. Combined with further funding set out in Chapter 7, this will mean £405 million to support the development of the low-carbon energy and advanced green manufacturing sector in the UK.

Investment across the regions
Recognising the importance of city-regions to future growth, the Government announces new pilot city-regions in Greater Manchester and Leeds.

The Government will work with interested local authorities and city-regions to assess the scope for accelerating development by allowing investment in infrastructure to be financed from the increased property tax base that could be enabled by the existence of improved infrastructure.

The RTPI says

The RTPI supports investment in strategic infrastructure to efficiently serve planned new growth. It is encouraging to see a commitment to low carbon and energy efficient measures to contribute to the adaptation and mitigation of climate change, but it is not fully clear that the budget commitments consistently reduce carbon emissions.

The proposed city region pilots are consistent with the RTPI's responses to the Sub National Review in which we supported means of enabling better sub-regional/city-regional co-operation. Click here to view the RTPI's SNR response. (PDF)

Helping people fairly

The Red Book says

Helping homeowners and housing
The Government's objective for housing continues to be to ensure everyone has access to a decent home at a price they can afford. The financial market disruption and global economic downturn are continuing to impact on the housing market. House prices have fallen by around 20 per cent since their peak in late 2007, and unemployment and other economic factors are putting some households under financial pressure. The availability of credit remains constrained and, not withstanding recent increases, mortgage approvals for house purchases are close to historic lows. Low levels of effective demand have also had a negative effect on the house building industry.

Existing support for homeowners, homebuyers and housing supply
The Government announced a £1 billion housing package on 2 September 2008, which included HomeBuy Direct, a new shared equity scheme, helping eligible first-time buyers get on the property ladder and bringing forward £400 million of spending to deliver new social housing.

The 2008 Pre-Budget Report announced:

The bringing forward of £775 million spending on housing investment and regeneration as part of the fiscal stimulus, including £150 million on new social housing;

New Support for housing supply
Alongside the need to support homeowners and homebuyers in current conditions, the long-term challenges for housing supply remain, as set out in the Barker Review of Housing Supply. That is why the Government has set an ambitious target of providing an additional 240,000 homes per year by 2016. It remains important to maintain momentum on improving the responsiveness of housing supply, both to meet the needs of a growing population in the future, and to support economic recovery, by reducing housing market volatility, helping macroeconomic stability, and supporting growth through increasing labour market flexibility. The Government is therefore focused on action to retain capacity and skills in the house building industry, and to promote conditions for a robust supply response as the housing market recovers.

Budget 2009 announces a £600 million fund to stimulate housing development in the short-term and boost capacity in the house building industry. In England this will deliver up to an additional 10,000 new homes through £400 million to unlock currently stalled housing developments, including supporting viability with an expansion in the provision of HomeBuy Direct, and increased funding for affordable housing; and £100 million of new funding for local authorities to deliver new social housing at higher energy efficiency standards.

The RTPI says

The RTPI supports the principle of the proposed housing package as an important measure to provide much needed housing and stimulate economic recovery by maintaining capacity and jobs in the development sector.

If the government wants to see its housing package planned for and delivered, it must ring-fence its planning and housing delivery grant to ensure that vital plan and decision-making capacity is not lost.

The RTPI is also concerned that whilst £1bn housing package sounds large, spread nationwide this will only generate a relatively small addition to the housing and particularly affordable housing stock. Serious issues about access to housing will remain unresolved.

Preparing for a strong recovery

The Red Book says

Building on the package to support housing supply in the short term, the Budget reaffirms the Government's long-term commitments on housing supply and looks to prepare the housing market to respond post-recovery.

The Government will report at the 2009 Pre-Budget Report on progress and set out its strategy to support a timely and effective housing supply response through the recovery, in order to maximise delivery of high quality, energy efficient homes, supporting our long term housing supply and environmental objectives (Note: Whilst this quote is taken directly from the budget publication, this it is obviously a miss print and intended for a previous document). This will cover measures to:

  •     ensure sufficient land for development, through housing allocations in local plans and further action on public sector land, supported by a responsive and efficient planning system;
  •     deliver effective and coordinated infrastructure provision;
  •     promote a strong and diverse house building sector;
  •     continue to ensure the increased long-term supply of social and affordable housing; and
  •     ensure a proportionate approach to land-value capture and cumulative regulation.

As part of this, the Government will identify, working with industry and other partners, the best regulatory and policy framework to support the Government's long-term housing objectives.

As a first step, the Government will assist industry by delaying the introduction of the community infrastructure levy until 6 April 2010.

The RTPI says

The RTPI supports the commitment from Government to increase housing supply through the measures outlined above. The RTPI has long taken the view that the effective coordination and delivery of essential housing and infrastructure is key to ongoing sustainable growth.

The RTPI is concerned at the possible implications of paragraph 5.79. Whilst we clearly support the ongoing improvement of the policy framework for housing, the government is still implementing significant reforms emerging from its Barker 1, Barker 2, Calcutt and Killian Pretty reviews. The RTPI would not support an additional review, without ceraful reflection on the direction of travel in recent and ongoing reform.

The revised timetable for CIL responds to concerns in some quarters of the planning and development sector that it is not appropriate to introduce a new tariff-based funding mechanism whilst land and property values are still declining or unstable. The proposed delay is not particularly significant in real terms. Authorities should not be discouraged from investing time and resources in developing underlying infrastructure plans.

Improving public services

The Red Book says

At the same time, the Government is determined to do more to prepare Britain for the economic recovery, building the wealth and jobs of the future. Budget 2009 announces:

  •     a new £750 million Strategic Investment Fund to support advanced industrial projects of strategic importance, £250 million of this will be earmarked for low-carbon investment;
  •     £500 million of additional spending as part of an overall £1.4 billion package of targeted support to boost Britain's low-carbon sectors; and
  •     a further £600 million to increase housing supply, including through an extension to the shared equity scheme Homebuy Direct and additional social housing investment.

Housing and regeneration
A total of £775 million of housing and regeneration investment is being brought forward from 2010-11 into 2008-09 and 2009-10. In 2009-10, the housing fiscal stimulus will include a further £120 million to bring an estimated 12,000 properties up to the Decent Homes standard; £180 million to be spent on critical regeneration through the Homes and Communities Agency and the Regional Development Agencies (RDAs); and £150 million to fund additional investment in homes for social rent which, combined with £400 million brought forward in the September housing package for 2008-09 and 2009-10, will deliver 7,500 new social rented homes earlier than planned. A further £50 million is earmarked for Armed Forces accommodation.

The 2008 Pre-Budget Report announced that £700 million of transport spending would be brought forward from 2010-11 into 2009-10. £400 million of this will be used by the Highways Agency to accelerate high value schemes on the strategic roads network.

Over £800 million will be brought forward from 2010-11 into 2009-10 in the priority schools capital programmes.

The 2008 Pre-Budget Report announced that £100 million would be brought forward from 2010-11 into 2009-10 to advance the upgrading of 600 GP surgeries to training practices, targeting funding to those areas that historically have had a lower provision of doctors.

Warm Front
The 2008 Pre-Budget Report announced that £50 million of investment in the Warm Front programme, which supplies insulation and heating measures to vulnerable households, would be brought forward from 2010-11 into 2009-10, and that the programme would also receive £100 million of additional funding in 2008-09 and 2009-10. As a result, 35,000 additional households have already received assistance, saving them up to £300 in energy bills every year.

Building schools for the future
The Government remains committed to delivering educational transformation through the Building Schools for the Future (BSF) programme. Following the consultation last year on the future delivery of BSF, local authorities who are currently discussing new BSF projects with Partnerships for Schools can join the programme on a rolling basis, in line with available resources and only if Partnership for Schools assesses that they are ready.

Preparing the economy for the upturn
Alongside temporary spending measures to support the economy in the short term, the Government is determined to take action to help the economy to emerge stronger and faster from the downturn, supporting jobs and ensuring that the country is better able to compete in the global economy of the future. Budget 2009 announces a number of spending measures that will create the conditions for future growth including a new £750 million Strategic Investment Fund, ensuring that the UK remains well positioned to emerge from the downturn in a globally competitive position. £250 million of this will be earmarked for low-carbon investment. Further details can be found in Chapter 4; a further £500 million to boost Britain's low-carbon sectors and lay the foundations for green growth, as part of an overall £1.4 billion package. This will support investment in energy and resource efficiency and low-carbon energy generation by business, public sector and households over the next two years; and support low-carbon industries and green manufacturing in the UK. In addition, and subject to consultation, Budget 2009 announces a £525 million uplift in investment support over the period 2011 to 2014, through the Renewables Obligation, for offshore wind projects reaching financial close in the next two years. Further details can be found in Chapter 7; and £600 million to stimulate housing development in the short term and boost capacity in the house building industry in the long term, which will deliver up to 10,000 homes in England within the next two years. Further details can be found in Chapter 5.

The RTPI says

The RTPI welcomes the government's tangible commitment to sustaining activity in the construction sector and highlights the key role that planning is playing and must continue to play to ensure that the anticipated development is well located, well designed and delivered to quality.

In terms of transport funding, from a climate change perspective, there is an argument that the balance of funding in favour of road as opposed to other transport modes is not appropriate.

Department for Communities and Local Government (CLG) savings
The Red Book says

  •     £987 million (including £100m of additional savings in 2010-11);
  •     £110 million from continuing modernisation of the Fire and Rescue Service;
  •     Authorities through revision of shift patterns, crewing arrangements and Human Resource savings;
  •     £65 million of savings through more effective use of funds to tackle the problems of the most difficult housing estates, focusing on supporting local authorities in their work with communities, local and regional partners;
  •     £43 million by reducing overheads and ending the lease on a London premises; and
  •     £20 million through a more focused Housing and Planning Delivery Grant, supporting local authorities to deliver more housing and to build planning capacity.

The RTPI says

The planning sector needs reassurance that reduced spending does not equate to a reduction in service and support for planning, which could slow government's capacity to deliver the economic stimulus investments that it has proposed above.

Building a low-carbon recovery

The Red Book says

Existing policies are already enabling £50 billion of low-carbon investment over the three years to 2011, and helping to support 900,000 jobs.

To strengthen the long-term policy framework and give UK industry the confidence to invest in low-carbon technologies, Budget 2009 sets the world's first carbon budgets, as required by the new Climate Change Act. These set a legally binding 34 per cent reduction in emissions by 2020, a new level of ambition for UK climate policy.

Building on the one million homes insulated last year, Budget 2009 announces an additional £375 million to support energy and resource efficiency in businesses, public buildings and households over the next two years, and £70 million for decentralised small-scale and community low-carbon energy. Together, these measures will support employment, and save 380,000 tCO2 and around £60 million in energy bills each year.

Additionally, Budget 2009 announces £405 million to support low-carbon industries and advanced green manufacturing, to help make the UK a worldwide leader, £4 billion of new capital from the European Investment Bank, removing blockages in project financing; an uplift in support for offshore wind investments that reach financial close between now and 2011 through the Renewables Obligation. This is expected to support £9 billion of investment and power up to 2.8 million homes; extending support for combined heat and power through climate change levy exemptions, helping bring forward £2.5 billion of investment and 3 GW of capacity by 2015, and supporting employment; and a new funding mechanism to support up to four carbon capture and storage demonstration projects, and £90 million to fund detailed preparatory studies.

To support the public finances, while also driving the move to a low-carbon and resource-efficient economy, Budget 2009 announces an increase in fuel duty of 2 pence per litre on 1 September 2009, and of 1 penny per litre in real terms each year from 2010 to 2013. This will contribute to medium-term fiscal consolidation, and save 2 MtCO2 per year by 2013-14 and a continued increase in the standard rate of landfill tax by £8 per tonne on 1 April each year from 2011 to 2013, to reduce landfill in a sustainable way by encouraging further investment into alternative waste management options.

£50 billion of low-carbon investment
Box 7.1:
Including Energy efficiency (£8.9 billion) measures to help households, businesses and the public sector use less energy, Renewables support (£6 billion) to help to deliver a ten-fold increase in renewable energy to meet the UK 2020 renewables target, Technology support (£1.7 billion) to develop and deploy new low-carbon technologies, reducing greenhouse gas emissions from waste (£2.4 billion), Transmission and electricity distribution infrastructure (£7.6 billion), Public transport and low-carbon and electric vehicles (£23.2 billion) including spending on rail and public transport, as well as spending on ultra-low carbon vehicles.

Targeting low-carbon and energy investment
Box 7.2:
Budget 2009 announces over £1.4 billion additional targeted support for the low-carbon sector over the forecast period including £525 million support to offshore wind through reform of the Renewables Obligation, £375 million for energy and resource efficiency in business, public buildings and households, including £10 million for waste infrastructure, £405 million to support the development of a world-leading low-carbon and advanced green manufacturing sector in the UK, £60 million to fund engineering and design studies for carbon capture and storage, £70 million to support decentralised small-scale and community low-carbon energy.

Renewables financing
A banding review with the intention of increasing the banding of Renewables Obligation Certificates (ROCs) from 1.5 to 2.0 for offshore wind projects meeting specified completion criteria if they place new orders in 2009-10, and then 1.75 in 2010-11.

Investing in the UK low-carbon sector
The Government will allocate £405 million to support the development of a world-leading low-carbon energy and advanced green manufacturing sector in the UK.

Carbon capture and storage
The Government intends to put in place a mechanism to deliver up to four CCS demonstration projects, including both pre- and post-combustion coal projects.

Combined heat and power
The Government will extend the climate change levy exemption for indirect sales of CHP electricity to 2023, subject to State aid approval. The Government will also commit to continuing other existing levy exemptions for CHP and that climate change levy rates will remain at the current levels in 2010-11.

Climate change adaptation
Flooding is one of the most significant risks of climate change facing the UK. The Government has provided substantial uplifts in spending reviews to fund flood defences and adaptation measures. £20 million of investment will be brought forward to 2009-10, delivering earlier protection for 27,000 homes. The draft Floods and Water Bill, published on 21 April 2009, will deliver improved management of flood risk and streamline current legislation.

The RTPI says

The RTPI views timely and effective responses to climate change processes and risks as being of high importance. It is valuable to see the practical outcomes of carbon budgeting emerging in this year's budget.

The RTPI supports the increase in funding and support for increasing energy and water efficiency, developing low-carbon industries, and measures to adapt to rising sea levels and increased flood risk. It is important that with the focus on the economy, the Government, local authorities, private industry and the community maintain and develop their commitments on mitigating and adapting to climate change.

Planning will have a key role in delivering related development, making it critical that capacity is retained.