Delivered against a backdrop of lower growth, higher borrowing and with the spectre of Brexit negotiations in the background, chancellor Philip Hammond’s second Budget of 2017 was mooted by some political hacks as potentially his last.
But for Britain’s housebuilders, from SMEs to local councils, the chancellor’s financial statement has been welcomed as arguably the first major Budget that took on the challenge of the housing crisis.
The £44bn on offer from the chancellor to help stimulate housebuilding and allow the next generation the dream of being a homeowner certainly went further than any recent Budget.
However, how much of that £44bn will actually make it onto the drawing board for new homes is up for debate.
The Budget documents themselves reveal a less exciting figure, stating that the government will be making available £15.3bn of new financial support for housing over the next five years.
This, together with previous announcements, brings total support to £44bn.
Re-announcing old money as new policy has become so commonplace that it’s almost rude not to keep tradition.
But despite the figures being less than originally hoped, there was still a lot to take from the Budget. In particular the plan to lift the HRA borrowing cap for local councils is a measure that has long been called for but had until now fell on deaf ears.
Now, councils in high-demand areas at least, will be able to borrow in order to invest in new homes, which will unlock a significant amount of spending.
In a statement, the London Assembly’s housing committee welcomed the plans, saying: “It was clear that in a severe housing shortage, placing artificial caps on council borrowing to build homes was harming efforts to help people find lower-cost homes.”
The cash for training and skills should also begin to address the skills shortage; however, the sector has a long way to go before it can claim anything like a victory in the battle to train a new generation of builders.
The chancellor also specifically mentioned that the new housing will be targeted to where it is needed, which in future may have implications for local authorities across the whole of England and Wales – both expected to now fulfil five-year housing targets.
SMEs, which in housebuilding have been particularly hard hit since the financial crisis a decade ago, could also come back from the dead.
This is crucial, as the share of housebuilding by small firms has dropped off a cliff, and research has shown that small builders had been key to providing extra home delivery that the Barratts and Persimmons of this world were loathe to do.
Tackling productivity in the construction industry also featured within Mr Hammond’s Budget, with proposals that will see the government use its clout as a major client to push the adoption of offsite manufacturing.
Budget documents note that the Department for Transport, the Ministry of Justice and the Ministry of Defence will adopt a “presumption in favour of offsite construction” by 2019 across suitable capital programmes, where it represents best value for money.
As industry expert Mark Farmer notes, this is “extremely significant”.
Another welcome measure was the passing mention by Mr Hammond that the government would “step in” to replace European investment funding if needed.
Inward investment, and in particular the swathe of projects that have previously relied on the European Investment Bank, had been particularly affected by uncertainty caused by the Brexit negotiations.
If Mr Hammond can steady the ship and provide certainty, then hopefully investment will follow.