What does the PM’s plan for economic recovery mean for your business?
This week Prime Minister Boris Johnson has set out the first steps in the strategy to rebuild Britain and fuel economic recovery across the UK.
In a lengthy and extensive plan Johnson outlined the plans that mean that this government has committed not just to defeating coronavirus but to using this crisis to tackle this country’s great unresolved challenges of the last three decades; to build the homes, to fix the NHS, to tackle the skills crisis, to mend the gap in opportunity and productivity and connectivity between the regions of the UK.
A statement from the government read: “We will invest in and accelerate infrastructure across the UK; promote a clean, green recovery; reform our planning system; and strengthen the Union and local government. All of these changes will make life better for the people of this great country and unleash Britain’s potential. The Chancellor will unveil more of this plan next week, and we will use the forthcoming Spending Review and Autumn Budget to set the direction for the rest of this parliament.”
Investing in and accelerating infrastructure
The government is committed to building a Britain with world class infrastructure. Spring Budget 2020 set out that the public sector will invest £640bn over five years into future prosperity.
The government has said that it will redouble its efforts to get on with this now, in support of economic recovery and jobs right across the country by bringing forward £5bn of capital investment projects, supporting jobs and the economic recovery, including:
- £1.5bn this year for hospital maintenance, eradicating mental health dormitories, enabling hospital building, and improving A&E capacity. This will improve patient care, make sure NHS hospitals can deliver world-leading services and reduce the risk of coronavirus infections.
- £100m this year for 29 projects to improve road networks to get Britain moving, from bridge repairs in Sandwell to boosting the quality of the A15 in the Humber region. Plus £10m for development work to unblock the Manchester rail bottleneck, which will begin this year.
- Over £1bn to fund the first 50 projects of a new, ten-year school rebuilding programme, starting from 2020-21. These projects will be confirmed in the autumn, and construction on the first sites will begin from September 2021.
- £560m and £200m for repairs and upgrades to schools and FE colleges respectively this year.
- £142mn for digital upgrades and maintenance to around 100 courts this year, £83m for maintenance of prisons and youth offender facilities, and £60m for temporary prison places, creating thousands of new jobs.
- £900m for a range of ‘shovel ready’ local growth projects in England over the course of this year and next. This will enable local areas to invest in priority infrastructure projects to drive local growth and jobs. This could include the development and regeneration of key local sites, investment to improve transport and digital connectivity, and innovation and technology centres to build on local comparative advantage
- £96m to accelerate investment in town centres and high streets through the Towns Fund this year. This will provide all 101 towns selected for town deals with £500k-£1m to spend on projects such as improvements to parks, high streets, and transport.
The government has said that it will establish a new Infrastructure Delivery Taskforce, named ‘Project Speed’.
- Led by the Chancellor, Project Speed will bring forward proposals to deliver government’s public investment projects more strategically and efficiently.
- The taskforce will aim to cut down the time it takes to develop, design and deliver vital infrastructure projects. For example, it will look at how it can address outdated practices and identify blocks to progress.
- Projects will include the 40 new hospitals the government has committed to build and the school rebuilding programme announced yesterday.
In the Autumn, the government will also publish a National Infrastructure Strategy which will set a clear direction on core economic infrastructure, including energy networks, road and rail, flood defences and waste.
The Government also intends to bring forward funding to accelerate infrastructure projects in Scotland, Wales, and Northern Ireland – working with the devolved administrations to identify where developers can get spades in the ground, build communities, and create jobs faster for citizens across the United Kingdom. They will also carry out a review to look at how best to improve road, rail, air and sea links between the four nations to create a more connected UK.
Through the Barnett formula, the UK Government has already given the Scottish Government £5.4bn, the Welsh Government £2.4bn, and the Northern Ireland Executive £1.7bn in capital funding for devolved areas this financial year.
Promoting a clean, green recovery
The UK was the first major economy to commit to net zero emissions by 2050 in law. Currently, there are over 460,000 UK jobs in low-carbon businesses and their supply chains.
The Government will continue to set out further measures as part of its green agenda in the run up to COP26 in November 2021.
- There will be additional funding available this year to attract investment in ‘gigafactories’, which mass produce batteries and other electric vehicle components, enabling the UK to lead on the next generation of automotive technologies.
- £10m of funding will be made available immediately for the first wave of innovative R&D projects to scale-up manufacturing of the latest technology in batteries, motors, electronics and fuel cells.
- Additional funding will also allow progress in initial site planning and preparation for manufacturing plants and industry clusters, with sites under consideration across the UK.
- This funding forms part of the government’s commitment to spend up to £1bn to attract investment in electric vehicle supply chains and R&D to the UK.
- And this comes on top of the over £1bn provided at Budget to support the rollout of ultra-low emission vehicles in the UK via support for a super-fast charging network for electric vehicles, and extension of the Plug-In Grant schemes.
- The UK will also aim to produce the world’s first zero emission long haul passenger aircraft.
Rebuilding natural infrastructure:
- Re-foresting Britain by planting 75,000 acres of trees every year by 2025.
- £40m Green Recovery Challenge Fund to help halt biodiversity loss and tackle climate change through local conservation projects, connecting more people to the outdoors by delivering up to 5,000 jobs.
- Up to £100m of new funding for research and develop a brand new clean technology, Direct Air Capture (DAC), which captures CO2 emissions directly from the air around us. If successful, DAC technology could be deployed across the country to remove carbon from the air, helping sectors where it’s tough to decarbonise such as aviation.
- To help bring forward this technology, the government is exploring options around carbon pricing and incentives, where the government may pay a price per tonne of CO2 captured.
Reforming the planning system
The government aims to make it easier to build better homes where people want to live.
New regulations will give greater freedom for buildings and land town centres to change use without planning permission and create new homes from the regeneration of vacant and redundant buildings.
Under the new rules, existing commercial properties, including newly vacant shops, can be converted into residential housing more easily, in a move to kick start the construction industry and speed up rebuilding.
The changes include:
- More types of commercial premises having total flexibility to be repurposed through reform of the Use Classes Order. A building used for retail, for instance, would be able to be permanently used as a café or office without requiring a planning application and local authority approval. Pubs, libraries, village shops and other types of uses essential to the lifeblood of communities will not be covered by these flexibilities
- A wider range of commercial buildings will be allowed to change to residential use without the need for a planning application
- Builders will no longer need a normal planning application to demolish and rebuild vacant and redundant residential and commercial buildings if they are rebuilt as homes
- Property owners will be able to build additional space above their properties via a fast track approval process, subject to neighbour consultation.
- These changes, which are planned to come into effect by September, will both support the high street revival by allowing empty commercial properties to be quickly repurposed and reduce the pressure to build on green fields land by making brownfield development easier.
The Prime Minister also announced that work will begin to look at how land owned by the government can be managed more effectively.
Ahead of the Spending Review, a new cross-government strategy look at how public sector land can be managed and released so it can be put to better use.
This would include home building, improving the environment, contributing to net zero goals and injecting growth opportunities into communities across the country.
These announcements come alongside a package of measures to support home building across England, including:
- A £12bn affordable homes programme that will support up to 180,000 new affordable homes for ownership and rent over the next eight years, confirmed today.
- Included in the affordable homes programme will be a 1,500 unit pilot of ‘First Homes’: houses that will be sold to first time buyers at a 30% discount which will remain in perpetuity, keeping them affordable for generations of families to own.
- Funds from the £400m Brownfield Land Fund have today been allocated to the West Midland, Greater Manchester, West Yorkshire, Liverpool City Region, Sheffield City Region, North of Tyne and Tees Valley to support around 24,000 homes.
- The Home Building Fund to help smaller developers access finance for new housing developments will receive additional £450m boost. This is expected to support delivery of around 7,200 new homes.
The government will launch a Policy Paper in July setting out a plan for comprehensive reform of England’s seven-decade old planning system, to introduce a new approach that works better for a modern economy and society.
Strengthening the Union
- The government will take steps to guarantee and enhance its internal market and find new ways to invest in Scotland, Wales, England and NI and focus on “levelling up” the whole country.
- As above, the government also intends to bring forward funding to accelerate infrastructure projects in Scotland, Wales, and Northern Ireland – working with the devolved administrations to identify where developers can get spades in the ground, build communities, and create jobs faster for citizens across the United Kingdom.
- The Spending review will create a multi-year, UK-wide Shared Prosperity Fund which will support local economic recovery by driving economic growth and tackling deprivation.
- They will also carry out a review to look at how best to improve road, rail, air and sea links between all parts of the UK to create a more connected kingdom.
Osborne Clarke reacts to the PM’s post-coronavirus recovery plan
Responding to the Prime Minister’s speech today setting out the UK’s post-coronavirus recovery plan, Matthew Germain, partner and head of the environment group at Osborne Clarke in Bristol, says: “It was very underwhelming from a ‘green’ angle.
“Apart from some high-level comments about boosting afforestation schemes, the was no sense that the recovery would be underpinned and harnessed by a focus on decarbonisation and net zero models, for example there was no mention of the massive investment needed in energy efficiency.
“In terms of the infrastructure announcements, while positive, the unmentioned elephant in the room is how these will be balanced by climate challenges such as those we saw with Heathrow. I don’t think the government has worked that out yet. Let’s hope in general there’s more detail coming about the ‘green recovery.’
“Understandably and rightly Covid-19 has taken priority – however on the environment generally, there is a feeling that the government has gone quiet on some key issues and programmes.
“These include the Environment Bill – currently stalled in Parliament due to Covid-19 – and the massive potential that legislation has to help transform UK environment law so that it’s fit to operate in a world with a climate and ecological emergency; its 25-year environment plan, where we have seen very little action or follow-up; and achieving environmental equivalence with the EU in terms of the Brexit trade negotiations.”