23 Nov 2017
This was a tight budget set against the backdrop of tough political and economic circumstances for the Chancellor and the UK Government. The downward revisions for growth and the OBR’s productivity forecasts made it clear that the Chancellor had very little room for manoeuvre.
What is more, Brexit continues to dominate the Government’s bandwidth with the changes, challenges and opportunities associated with our leaving of the European Union remaining unclear.
For Scotland an additional £2bn (over three years) in the form of Barnett ‘consequentials’ will be welcome. We will know more about how this money will be used when Derek Mackay delivers his Scottish Budget in December. Of course, we will continue to champion the need for investment in vital infrastructure across Scotland, including real estate. We also welcome the continued commitment from the Chancellor to progress the City Deals in Tayside and Stirling which we believe will be strong drivers for growth in those areas.
From a policy perspective, this was very much a housebuilding budget and the Chancellor has certainly upped the ante in terms of housing delivery in England, further supporting the new Build to Rent sector and proposing a council tax premium on empty homes. With some promising moves in the Scottish market for build to rent in Dundee and Glasgow, Edinburgh will want to make sure it is not left behind by this exciting new form of tenure.
The Chancellor is right to acknowledge the complexity of the long running challenge of housing delivery. We welcome the Government’s commitment to look at measures to increase the supply of new homes including more support for build to rent, and crucially to support the SME housebuilding sector which was decimated in the recession but previously delivered some 20% of new homes in the UK. If we can get this vital part of the housebuilding sector growing again then it can go a long way to delivering the new homes we need here in Scotland. This might be an area where the proposed Scottish National Investment Bank can play a role.
The Chancellor also introduced some reforms of business rates for England. The Scottish Government has arguably been ahead of the curve on business rates reform, for example by already accepting the need for more regular three-yearly revaluations and seeking to boost economic growth through rates incentives for new build and occupation.
Today’s decision by the UK to shift to Consumer Price Index (CPI) as the measure for annual increases may be of particular interest in the context of the recent Barclay review, which considered this move but felt it to be beyond their mandate to make a recommendation. In our view and against the backdrop of an economy growing at less than a third of the (reduced) UK rate then a much lower uplift than the current rate of CPI would be welcomed by hard-pressed ratepayers.
The decision by the Chancellor to abolish stamp duty in England for first time buyers purchasing properties valued at £300k or less is welcome news for those trying to get on the property ladder. Whilst this policy does not apply in Scotland it begins to draw uncomfortable comparisons with our existing LBTT structures. In areas of Edinburgh and elsewhere in Scotland, the current £325,000 threshold for beginning to apply 10% LBTT is simply too low and the UK stamp duty exemption for first-time buyers may give further cause for review before Mr Mackay rises for his Budget statement on the 14th of December.