Autumn Statement 2016: Government spending on housing is set to double over the next five years as part of a raft of measures included in an allocation of £23bn for infrastructure and innovation announced in the Autumn Statement.
Chancellor Philip Hammond said the government would form a new national productivity investment fund, with housing, infrastructure and devolution all receiving new government commitments.
Housing
Hammond acknowledged the effect unaffordable housing had on productivity and released a raft of measures to increase affordable housing, in a major move away from previous policy.
“This commitment to housing delivery represents a step change in our ambition to increase the supply of homes for sales and for rent to deliver a housing market that works for everyone,” he said.
Key policies
• £1.4bn to provide 40,000 additional affordable homes.
• Relaxed restrictions to government grant to allow a wider range of housing tenures.
• Continued support for home ownership through help to buy equity loans and ISAs.
• London to receive £3.15bn as its share of national affordable housing funding to deliver 90,000 affordable homes.
• Double real annual government spending on housing,
• Housing white paper to arrive “in due course” – potentially in the new year.
Infrastructure
Alongside the productivity investment fund, the chancellor put a large focus on further infrastructure spending, asking the National Infrastructure Commission to recommend how spending could increase to more than 1% of GDP each year by 2020.
Announcements include
• £2.3bn infrastructure fund to unlock new homes in areas of high demand.
• Commitment to new Oxford to Cambridge expressway and technology corridor.
• Infrastructure commitment to spend 1%-1.2% of GDP on infrastructure investment by 2020.
• Northern LEPs to receive £556m for infrastructure projects, £542m in Midlands and £683m in South West, South East and London.
Devolution
Hammond also reaffirmed previously agreed devolution deals, highlighting the need for a more equally balanced economy.
“Economic growth has been concentrated for too long in London and the South East,” he said.
“No other major developed economy has such a major gap between the productivity of its capital city and second and third cities.”
He said the strategy for addressing productivity barriers in the Northern Powerhouse was being published today, with the same for the Midlands Engine to follow shortly.
Announcements include
• More borrowing powers for mayoral regions.
• A commitment to mayoral regions and city deals in Wales and Scotland
• A £1.8bn local growth fund.
• Business rates reduction package worth £6.7bn – reduction in rates relief caps in 2017 and 2018.
The chancellor said the task now was to prepare the UK economy to be resilient and match fit for the challenges ahead. He cautioned that the government would maintain its commitment to fiscal discipline, but also the need to drive productivity.
He said: “In view of the uncertainty facing the economy, we no longer seek to deliver a surplus in 2019/20, but the prime minster and I remain firmly committed to seeing the public finances return to balance as soon as practicable, while leaving enough flexibility to support the economy in the near term.
The Office for Budgetary Responsibility forecast revised down UK economic growth over the next five years by 2.4%.
It revised annual growth to:
2016: 2.1%
2017: 1.4%
2018: 1.7%
2019: 2.1%
2020: 2.1%
In a surprise move, Hammond also abolished the autumn statement, saying after next year’s spring budget there would only be an autumn budget, with a statement in the spring.
“Though I will of course reserve the right to announce actions at the spring statement, but I will not make changes twice a year for the sake of it,” he said
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