Gráinne Gilmore is Director of Research at Cluttons, the real assets consultancy, examining all aspects of residential and commercial property markets, as well as digital connectivity and energy. Before this she held positions at Zoopla as Head of Research and at Knight Frank where she was Head of UK Residential Research, leading the team and producing insights on all aspects of UK sales, lettings, residential development and the specialist BTR, student and later living housing sectors.
Gráinne Gilmore, Director of Research & Insight at Cluttons, the real assets consultancy, examines what the Spring Forecast and recent policy changes mean for housebuilders, and the economy.
Given the high frequency of Budgets in recent years; Emergency Budgets, Post-Election Budgets, Mini-Budgets (the less said about October 2022 the better), everyone was braced for a full Budget in March.
The Chancellor has always said she only wants to have one Budget a year – and she stuck to her guns and delivered a Spring Statement in March. While she made some large decisions on welfare reform and Government spending allocations in order to balance the books and meet her fiscal targets, there were no widespread or detailed tax changes.
The Chancellor’s Statement was a response to the Office for Budget Responsibility’s (OBR) forecast for the UK’s public finances. The forecast showed that Ms Reeves would meet her fiscal targets, because after cutting the growth forecast for this year from 2% GDP growth to 1% growth, it revised up its growth forecasts every year from 2026 to 2030.
Why were the GDP growth forecasts uprated? In a large part due to housebuilding. Specifically, the future housebuilding activity that the Government says will come from its changes to the planning system outlined in the National Planning Policy Framework (NPPF) – including the release of Grey Belt land and the strengthened presumption in favour of sustainable development.
In her speech, the Chancellor said the planning reforms in the NPPF and the Planning & Infrastructure Bill, would boost housing delivery to 1.3 million over the term of the Parliament and deliver an additional £15.1 billion into the economy over a decade.
This recognition of the positive contribution a fully functioning housing market, with higher levels of delivery and the increased activity at every stage of the supply chain, will have on the economy is a welcome move by the Government. But now it all comes down to delivering a step change in housebuilding, and this will require other challenges to be addressed.
Firstly, there’s a significant skills gap in the industry. While the Government made a welcome announcement on a £600 million investment in skills for engineers, bricklayers, electricians and carpenters over the next four years – it estimates the programme will deliver an additional 60,000 high skilled workers by 2029, four years from now. Speeding this up as much as possible will be crucial. There are currently 35,000 job vacancies in the sector, and half of these cannot be filled due to a lack of skills.
Also, one key part of the Planning & Infrastructure bill is the proposal that local authorities can set their own planning fees. The idea is that the increased income would allow them to add more planning officers to help further speed up the system. This money should be officially ringfenced to make sure this happens, as increasing the cost of planning without speeding up the process would only increase the current challenges for housebuilders to deliver new homes.
The increased global economic uncertainty and pressure from US President Trump’s announcements on trade tariffs, means that the Chancellor’s Autumn Budget is likely to be much more fulsome. Early indicators suggest that the current 10% tariffs on UK goods exported to the US (and 25% for steel, aluminium, and cars) will mean Ms Reeves will have to do more in terms of tax rises or spending cuts to balance the books. Steering clear of any additional taxes that impact the housing industry and housing market will be crucial however, if the housing market is to deliver the economic growth on which the Government is relying.