The Budget 2020—infrastructure, housebuilding and planning announcements

The Budget 2020—infrastructure, housebuilding and planning announcements

Chancellor of the Exchequer, Rishi Sunak MP, delivered the Budget 2020 on 11 March 2020. We bring together the most important features for infrastructure, housebuilding and the planning regime.

The full text of the Budget 2020 is available here.

What are the Budget’s headlines for infrastructure?

The Budget commits the government to a total of £640bn of gross capital infrastructure investment, including:

  • investment of over £27bn in English strategic roads between 2020 and 2025, to be known as the second Road Investment Strategy (RIS2), to take forward schemes such as dualling the A66 Trans-Pennine road and upgrading the A46 Newark bypass, building a new dual carriageway and a two-mile tunnel in the South West to speed up journeys on the A303 and to remove traffic from the setting of Stonehenge, and building the Lower Thames Crossing
  • investment in urban transport of £4.2bn for five-year funding settlements for eight Mayoral Combined Authorities (in West Yorkshire, Greater Manchester, West Midlands, Liverpool City Region, Tyne and Wear, West of England, Sheffield City Region and Tees Valley), to support a range of schemes, to be determined by elected Mayors
  • £1bn for the Transforming Cities Fund, to deliver various local transport schemes by 2022–23, including a new Central Park Bridge in Plymouth, and a significant increase in the capacity of the Tyne and Wear Metro. It includes around £800m for bus and cycling infrastructure
  • funding of £5.2bn for flood defences between 2021 and 2027, and additional funding of £200m to help communities most at risk of flooding recover
  • investing £20m to develop the Midlands Rail Hub, progressing plans for a major programme of improvements to rail services across these regions
  • investment in electric vehicle charging infrastructure to ensure drivers are never more than 30 miles from a rapid charging station

A Carbon Capture and Storage (CCS) Infrastructure Fund is also announced, to establish CCS in at least two UK sites, one by the mid-2020s, a second by 2030.

Although the government has retired the PFI and PF2 models, there are still nearly 600 existing PFI/PF2 contracts in England. Accordingly, the government will focus on making sure they are well managed and represent value for money, allocating £2m in 2020–21 to carry out targeted contract reviews.

As previously announced, the National Infrastructure Strategy, which was to be published alongside the Budget 2020, is delayed until ‘later in the spring’. This will respond to the recommendations of the National Infrastructure Commission’s (NIC) National Infrastructure Assessment, and is likely to contain more detailed commitments on support for major infrastructure schemes. The Budget notes that the government is taking action to review the Green Book, which sets out how decisions on major investment programmes are appraised in order to make sure that government investment spreads opportunity across the UK.

What are the Budget’s headlines for housebuilding?

In terms of housebuilding, the Budget commits the government to:

  • a £10.9bn increase in housing investment to support the commitment to build at least one million new houses by the end of the parliament, and an average of 300,000 houses a year by the mid-2020s
  • an additional £9.5bn for the Affordable Homes Programme. In total, the programme will allocate £12.2bn of grant funding from 2021–22 to build affordable homes across England
  • a new £400m brownfield fund for ‘pro-development councils and ambitious Mayoral Combined Authorities’ with the aim of creating more homes by bringing more brownfield land into development. The Budget notes that the government will shortly invite bids ‘that are ambitious and represent a significant increase in housing supply on brownfield land’
  • allocations from the Housing Infrastructure Fund totalling £1.1bn for nine different areas, including Manchester, South Sunderland and South Lancaster to unlock up to 69,620 houses

The Budget also:

  • announces that the government will launch a new long-term ‘Single Housing Infrastructure Fund’ at the Comprehensive Spending Review (CSR), which will conclude in July and will set out detailed spending plans, to unlock new homes in areas of high demand across the country by funding the provision of strategic infrastructure and assembling land for development
  • restates the government’s commitment to reducing emissions from homes; committing that the government to announce plans to improve the standards of new built homes in the future
  • confirms an additional £1bn to the Building Safety Fund, established following the Grenfell Tower fire, available to remove unsafe cladding from residential buildings above 18 meters
  • announces plans to develop a long-term spatial framework to support strategic planning in the corridor of land connecting Oxford, Milton Keynes, Bedford and Cambridge, to deliver new housing, among other things. This will include exploring the case for a New Town at Cambridge

What about general planning reforms?

The Budget identifies land availability, as constrained by the planning system, as the most significant barrier to building more houses. It confirms that the Secretary of State for Housing, Communities and Local Government will ‘shortly’ publish comprehensive reforms to the planning system, followed by the long-awaited Planning White Paper ‘in the spring’. As expected, these reforms will ‘aim to create a simpler planning system and improve the capacity, capability and performance of Local Planning Authorities (LPAs) to accelerate the development process’, but will reportedly also rethink planning ‘from first principles, to ensure the system is providing more certainty to the public, LPAs and developers’. The Budgets states that where LPAs fail to meet their local housing need, there will be ‘firm consequences’, including a stricter approach taken to the release of land for development and greater government intervention.

Our overall verdict

Given that this fiscal event was pushed back from November 2019 due to the General Election, it is perhaps surprising that a number of announcements on spending, infrastructure commitments and planning reform have been pushed back, either to the CSR, publication of the National Infrastructure Strategy (expected in the spring) or the Planning White Paper (also expected in the spring).

Nevertheless, the first Budget since the UK’s exit from the EU announces a number of investments in regional infrastructure which will broadly be welcomed, particularly given that there is an apparent bias towards areas outside of London benefitting from investment. Similarly, continued funding for housebuilding to continue to reach the government’s target of building 300,000 houses a year will no doubt be well-received, as will the lack of inflammatory comments about land banking by developers which have featured in previous budgets.

There is a disappointing lack of detail on what wider planning reforms the government is proposing. A Housing White Paper was first announced by Theresa May in 2019, and at that stage was to include reforms to permitted development rights for upwards extensions and demolition. The mention in the Budget of the government ‘rethinking planning from first principles’ might be a reference to some of the controversial and far-reaching reforms, including ending detailed land use allocations and introducing a binary zonal system, set out in a report by the Policy Exchange in early 2020. The author of that report has since been appointed as the government’s new housing and planning special advisor

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About the author:
Sarah worked in planning departments at several city firms, including SJ Berwin, Wragge Lawrence Graham and Norton Rose Fulbright, before joining LexisNexis UK in January 2017. She has experience of planning and compulsory purchase law and regularly advised landowners, investors and developers on all planning law aspects, with a particular focus on large-scale development, regeneration and infrastructure schemes. Sarah also has considerable experience conducting planning-related legal proceedings.