Summer Budget 2015: comments

The Chancellor of the Exchequer gave his summer Budget to Parliament on Wednesday 8 July 2015. Listed is a selection of comments on the key announcements.

Brian Berry, Chief Executive of the Federation of Master Builders, said:

“The construction industry is at a loss as to why the Government is ignoring the need to improve our current housing stock. By refusing to acknowledge the importance of these improvements, the Government is exacerbating problems such as high household fuel bills, carbon emissions and the national housing shortage.”

“First and foremost, the Government has a legally binding target to reduce the UK’s carbon emissions by 80 percent by 2050 and our existing homes account for 27 percent of our current emissions. Simple logic suggests that if they do not address 27 percent of the issue, that target will not be met. Climate change is an issue that concerns the majority of the population, but without tackling the energy inefficiency of our housing stock, the Government is not taking cutting carbon emissions seriously. This is rather surprising when you consider that not long ago; the Prime Minister wanted his Conservative-led Coalition to be the “greenest Government ever.”

“What’s more, the issue goes to the heart of household finances. By improving energy efficiency in our homes, the Government will reduce fuel bills and put more money back in the pocket of the consumer. The benefits of taking action in this area are clear and the Government is aware of this but seems determined to sit on its hands. Making our existing homes a national infrastructure priority, re-directing carbon taxes, putting an energy efficiency financing framework in place and reducing VAT on housing renovation and repair work from 20 percent to 5 percent are all effective and implementable measures. We urge the Government to wise up on energy efficiency – we want to work with Ministers to find a sustainable solution.”

Mike Quinton, Chief Executive of NHBC said:

“NHBC registered 145,174 new homes for development in 2014 across the UK, up 9 percent on 2013, but with research showing that 245,000 homes are needed every year to meet demand, there is still some way to go.”

“We welcome the launch of The Housing Growth Partnership earlier this week, which gives vital financial support to small and medium sized housebuilders. It also helps to increase the supply of new homes that our country so desperately needs.”

“Small housebuilders and developers have contributed to UK housing output throughout history. However, in recent years the number of smaller builders have not returned to the market at the same rate following other recoveries. Research by NHBC last year found that access to finance is one of the biggest barriers preventing smaller housebuilders.”

Melanie Leech, chief executive of the British Property Federation, commented:

“The way we shop has changed beyond all recognition in recent years and Government has struck the right balance between being alive to that and ensuring any further liberalisation of shopping hours is well managed. Longer hours will not suit all places, but equally should not hold other places back. Devolving the decision to a local level and those who know what will be best for their area, in this instance, therefore makes perfect sense.”

Liam Bailey, Global Head of Research at Knight Frank, commented:

“On their own, the changes to the non-dom tax rules will not have a profound impact on the prime London market as demand is driven by a number of factors, and non-doms form only a part of demand.”

“These reforms follow a series of changes in recent years that make it increasingly difficult to argue prime residential property is under-taxed. The relatively subdued nature of the prime London market since December’s stamp duty changes highlights the risk of higher taxation on market demand and also Government revenues.”

Mark Naysmith, UK COO and MD for transportation, infrastructure and property at WSP | Parsons Brinckerhoff, said:

“This has been a mixed bag for the construction industry. The start of a new Parliament is a significant opportunity for the Government to present an ambitious programme to take the UK forward. On the one hand we welcome the priority that has been given to essential infrastructure funding and apprenticeships. It’s great to see more attention for tackling the skills shortage, so that industry and the supply chain have the capacity to deliver on projects. On the other hand we still lack a coherent vision for how we are going to build our way out of a housing crisis. The stakes are high. The nation’s need for new housing and infrastructure remains urgent and we should already be looking beyond where Crossrail 2 and HS3 might go, and how this will drive associated developments.”

Bruce Lightbody, partner and head of real estate (Leeds) at Addleshaw Goddard, said:

“If this budget has highlighted anything, it is the need for the government to have a proper national economic plan, drawn up by a non-partisan commission and agreed by all parties, rather than relying on political set pieces like the Budget to announce major new projects, if they do at all.”

“The delay over airport expansion and decision to shelve the electrification of the TransPennine railway are just more evidence of the short-term view this government is taking in regard to investment in infrastructure. If we are to remain competitive in the long run, a new run way in the South East is vital, and if we are to end our longstanding regional imbalance, improving connectivity between the regions is essential.”

Patrick Heaps, Head of Retail at BNP Paribas Real Estate, said:

“Restrictions on Sunday trading make little sense in the digital age and should be removed entirely. Freeing shops to open for longer will give a welcome boost to retailers and should drive footfall to beleaguered high streets and prime shopping destinations alike. Leaving them to the discretion of local authorities however risks creating a potentially confusing ‘postcode lottery’ for both retailers and consumers.”

The Council of Mortgage Lenders (CML) director general Paul Smee says:

“The most significant Budget announcement for the mortgage market is the fundamental change to Support for Mortgage Interest, which will change from a benefit to a loan in 2018.”

“This is a radical change and we will need time to consider it and work through the practicalities and logistics. The systems and risk challenges for our members arising from such a change are potentially huge.”

“Our members already go to significant lengths to support customers through temporary periods of difficulty, and will continue to do so. We will do our utmost, whatever the landscape of State provision, to keep in their homes customers whose problems are temporary and whose circumstances will allow them to get back on track over a reasonable timeframe. But this is a change that could have wide implications.”

“Other notable announcements for the mortgage lending industry include the four-year phased reduction of higher rate tax relief on buy-to-let mortgage interest payments. The phasing is important. We will need to understand whether this will have a behavioural impact on higher-rate buy-to-let landlords, but a four-year timetable does at least reduce the risk of sudden market shocks.”

Phil Nicklin, Real Estate Tax Partner at Deloitte, comments on significant tax changes to the Buy-To-Let market:

“This measure will almost double the effective cost of borrowing for a taxpayer on the highest rate of tax. Currently interest payments of £100 only cost £55 after tax relief, but will cost £80 from 2020. A landlord who borrows at even a modest level might end up paying more in tax than he makes in profit.”

“This measure must make Buy-To-Let investment a less attractive proposition in future and may reduce the options for those who see it as an alternative to a pension. The proposed restriction in interest relief reduces affordability for Buy-To-Let landlords and might force some to sell their properties. This could have an effect on the housing market and the availability of rental properties.”

Paul Kenny, GMB General Secretary, said:

“This is a beautifully crafted con trick by Osborne. On the one hand he offers a vision of a living wage which is welcome. He confirms what GMB has being saying for some time – the vast majority of employers can afford pay rises and no amount of howling from CBI will alter that fact. On the other hand he is taking away money from working families without any guarantee that they will be better off.”

“For the huge numbers of working families that will be hit by cuts in tax credits the answer is simple – they should join a union to fight for better pay from employers who can well afford it as Osborne confirms.”

“George Osborne is big in attacking working families and young workers but he has yet to take action on the billions of public money flowing out of the country into tax havens because of the abuse of housing benefits income by private landlords.”

Eddie Tuttle, Senior Policy and Public Affairs Manager of the CIOB said:

“Regional infrastructure is vital for economic growth. Although there is a clear case for devolution, local authorities will need to react quickly to harness the opportunities for local growth and employment. Whilst this announcement details a commitment to devolve more powers, it remains to be seen how effective implementation will be across the UK.”

“Alongside devolution, there is a pressing need to improve access to finance for SMEs. With a significant proportion of the construction industry either self-employed or linked to an SME, the announcement that SME builders will get a £100m boost through the Housing Growth Partnership is welcome. However, more must be done to find solutions to the housing crisis and it is concerning that the Office for Budget Responsibility predicts there will be 14,000 fewer affordable homes built as a direct result of social housing rent cuts.”

“The CIOB welcomes the rise in employment allowance to £3,000, which will allow small firms to employ four people on the national living wage without paying any national insurance.”

Greg Hill, Strategy and Change Management Director at Hill, comments:

“We welcome today’s budget, which in addition to measures already taken in this Parliament will help to boost home-building and home-ownership across the UK. The inheritance tax changes will help more first time buyers to save for a deposit and the reduction in corporate tax will support investment into the sector, particularly amongst small and medium sized housebuilders. However we are concerned that the reduction in tax relief for buy-to-let investors to 20 percent could reduce demand for new homes. Buy-to-let investors are crucial in providing more homes for rent across the UK and these changes could potentially impact the growth of the new build Private Rented Sector.”

“We also look forward to hearing the detail of the government’s planning reforms on Friday – a reduction in bureaucracy and red tape will help us to get high quality homes onto the market more quickly. Further devolution would be welcome, but some authorities are still too slow in getting new developments through planning, so it’s important we address these issues first.”

RenewableUK’s Director of Policy, Dr Gordon Edge, said:

“The Chancellor’s announcement that renewable electricity will no longer be exempt from the Climate Change Levy is a punitive measure for the clean energy sector. Until now, Levy Exemption Certificates (LECs) generated as a result of the CCL have provided vital financial support for renewable energy producers.”

“The Chancellor says the removal of the exemption will earn the Treasury £450 million in 2015/16, rising to £910 million in 2020/21.”

“We’re suddenly looking at a substantial amount of lost income for clean energy companies which was totally unexpected. For example, Levy Exemption Certificates account for just over 6 percent of onshore wind generators’ revenues.”

“The Government had already announced an end to future financial support for onshore wind – even though it’s the most cost-effective form of clean energy we have. Now they’re imposing retrospective cuts on projects already up and running across the entire clean energy sector.”

“Yet again the Government is moving the goalposts, pushing some marginal projects from profit into loss. It’s another example of this Government’s unfair, illogical and obsessive attacks on renewables”.

Steve Sanham, development director at HUB residential, said:

“This is another budget stoking demand in an already bloated housing market. Encouraging people into further debt in order to buy overpriced homes, even after a ‘discount’, cannot be the answer to the housing crisis.”

“Ultimately, buyers want to buy in the open market at a sensible price – not in some artificially suppressed and relatively small ‘submarket’. Deregulating the planning system, releasing public land at sensible prices for housing development, and being flexible about the types of and deliverers of affordable housing should be the priorities if we want to create a balanced and resilient housing market.”