Chancellor of the Exchequer Jeremy Hunt has delivered his Autumn Statement, an intervention aimed at stabilising the UK economy and reducing inflation.
There were several announcements that impact real estate and the built environment:
Business rates
Acknowledging the “significant inflationary pressures” faced by businesses, the Chancellor announced a £13.6million package in response, including:
Freezing the business rates multiplier for another year to protect businesses from rising inflation, worth £9.3 billion over the next 5 years
An extended and increased relief for retail, hospitality and leisure businesses worth almost £2.1 billion. This is the most generous in year business rates relief in over 30 years, outside of Covid-19 support.
Reforming Transitional Relief so for businesses seeing lower bills as a result of the revaluation, the government has said it will make sure these businesses benefit from that decrease in full straight away, by abolishing downwards transitional reliefs caps. The government also announced a £1.6 billion scheme to cap bill increases for businesses who will see higher bills as a result of the revaluation.
Protection for small businesses who lose eligibility for either Small Business or Rural Rate Relief due to new property valuations through a more generous Supporting Small Business scheme worth over £500 million.
DJB Chief Executive Peter Allinson said: “For the high street, which has been in decline for years, business rates mean online retailers have an unfair advantage. We all benefit from vibrant town centres and our high streets are an integral part of this but until business rates are seriously reformed – and potentially abolished – it is difficult to see how there can be a level playing field between online and bricks and mortar retail.”
Residential property and social housing
The nil rate threshold for SDLT has been raised from £125,000 to £250,000 on residential purchases. The threshold has also been raised for first-time buyers, who will now not pay any SDLT on the first £425,000 on purchases of properties up to £650,000 (previously £500,000). All changes are given legal effect by the Stamp Duty and Land Tax (Reduction) Act 2022-23. This is a temporary measure which expires on 31 March 2025. Increases to rent paid by tenants in the social rented sector will be capped at 7% in 2023/24.
Without an intervention, rents could have been increased to 11.8% under the existing inflation linked limit. The measure was put in place to support people living in social housing in England with the rising costs of living. Whilst there were calls within Government to cap the rate at 5%, the case was made for a balance to be struck between reducing the cost of rent for tenants with driving down the value of social housing, which are often borrowed against to fund further development of social housing.
Planning
The Autumn Statement was surprisingly light on planning content. The headline-grabbing measures are the Government’s continued commitment to nuclear energy at Sizewell C and to major infrastructure projects in support of levelling up such as core Northern Powerhouse Rail and HS2 to Manchester. It must also be remembered that NPR and HS2 have been significantly watered down from the original proposals, which would have brought much wider benefits to the north.
Building on the measures in the Levelling Up and Regeneration Bill, the Autumn Statement confirmed proposals to make it easier for local leaders to encourage levelling up, through additional devolution deals for Suffolk, Cornwall, Norfolk and the north-east, and the extension of the existing deals in Greater Manchester and the West Midlands. It is anticipated that in the coming years, over half of England will be covered by a devolution deal.
Climate and Energy
The Chancellor reiterated the government's commitment to delivering on the UK's international climate responsibilities, confirming support for the planned Sizewell C nuclear power plant, announcing a new long-term target for UK energy efficiency, and promising continued investment in clean tech innovation. To help deliver on the target, Hunt promised action to bolster the UK's energy independence through investment in energy efficiency, renewables, carbon capture and storage (CCS), and nuclear power.
The government announced that it will secure the UK’s energy supply through delivering new nuclear power, and the roll-out of cheap, clean renewables, including wind and solar. This will support the government’s commitment to reduce emissions, decarbonise the power system by 2035 and reach net zero by 2050. Treasury documents also confirmed changes to tax breaks that the government previously offered to oil and gas companies who invest in new infrastructure, designed to encourage more investment in green projects. There was no express mention of comparable tax allowances for renewables generators, and the levy on low carbon generators is also higher than the levy imposed on oil and gas firms.
Investment Zones
As expected, Truss’ investment zones have not survived in their current form, but rather than being scrapped there is a narrowing in approach. The zones will now seek to leverage the nation’s research strengths and be centred on universities in “left-behind” areas, to build clusters for innovation and technology. This will leave some local authorities in the unfortunate position of having spent time and energy preparing bids for designation under the previous regime only to see it scrapped less than two months later.
Life Sciences
The Chancellor announced innovation as a key growth priority for the UK, singling out sectors including life sciences, green technology and digital as those with most potential. To stimulate growth, these sectors will be, “supported through measures to reduce unnecessary regulation and boost innovation and growth”. The UK’s research and development budget will be protected and increased to £20 billion a year by 2024 (approximately one third of an increase compared to 2021/22). Import tax on specified imported goods required by these sectors will also be removed and further tax relief for SMEs will also be applied. The Chancellor hopes these measures will help the UK become “the next Silicon Valley”.
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