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Budget 2020: Infrastructure Bonanza (in theory)

11.03.2020

By Sam Fowles

The new Chancellor's first budget includes some eye-catching infrastructure spending commitments which could herald a bonanza for both housing and infrastructure development. What is not clear, however, is how much of the promised funds represent "new money" and exactly how quickly it will filter through to developers.

"Unlocking" new housing

The Chancellor's headline housing promise was £1.1bn for the Housing Infrastructure Fund ("HIF") to "unlock" 70 000 new homes in high demand areas. Three points arise:

  • First, if this is genuinely new money then it represents an increase of almost 50% in the size of the HIF (which was originally established at £2.3bn. This represents a significant commitment and an opportunity for local authorities and developers.
  • Second, the HIF provides money for the infrastructure needed to support new housing, it cannot be used to subsidise new housing itself. This means that it will be effective where housing would be built but for poor infrastructure (such as on the outskirts of settlements or even in new "garden communities).
  • Third, it also puts the housing development ball firmly in local authorities' court. The HIF will only "unlock" new housing if local authorities take a strategic view and work closely with developers to identify and bring forward the sites that can benefit from HIF funding. This process is not without pitfalls (state aid rules, for example, will likely survive the UK's exit from the EU) and both local authorities and developers will be well advised to bring legal advice in at the early stages of any strategic process.

The Chancellor's second housing-related announcement was a £1bn "Grenfell Fund". This will support the removal of dangerous cladding from local authority and housing association (and potentially privately held) buildings.

This represents both an opportunity and a risk. It is an opportunity for landlords to step up the removal of dangerous cladding (thereby protecting themselves from future liability and, most importantly, safeguarding tenants) in a way that is likely to avoid or reduce difficult "service charge" disputes with tenants. It also, however, removes any excuse not to act on risky cladding, landlords will likely find little sympathy from courts or the public if they fail to utilise the Chancellor's promised funds.

Transport and infrastructure

The Chancellor has promised "the highest level of infrastructure spending since 1955". It's not clear, however, whether he has adjusted for inflation. If this claim comes after an adjustment, then is undoubtedly impressive. If the Chancellor had not adjusted, then it is perhaps not so deserving of fanfare.

It seems, from the Chancellor's speech at least, that the primary focus of any new money will be transport spending. This includes £27bn (although this figure is being queried) for "more than 4000 miles" of roads. Interestingly, it seems the Chancellor intends to devolve at least a measure of decision making on spending the fund to local government. He highlighted, for example, that West Yorkshire Metro Mayor would share a fund of £4.2bn for transport investment with other metro mayors.

This, once again, represents an opportunity for local authorities, but it also increases the necessity of thinking strategically at an early stage. Transport infrastructure is often controversial, raising both legal and political issues. This controversy should be addressed as early as possible to avoid or reduce the potential for expensive litigation or protest.

What about the environment?

There is good news and bad news for environmentalists. The good news is that the Chancellor has promised to fund the planting of 30 000 hectares of new trees (a forest larger than Birmingham) and the restoration of 35 000 hectares of peatland.

Planners will be wise to take account of this commitment, not least because the Chancellor did not give details on where this planting will occur. When more clarity is provided as to the location and mechanism for planting it may well become a relevant consideration for planning at both the local plan level and application level.

The bad news for environmentalists is that the Chancellor has, once again, frozen fuel duty, as well as the (aforementioned) substantial expansion in road infrastructure.

In the wake of the Court of Appeal's decision in Plan B Earth et al v Secretary of State (the Heathrow judgment) both local and central government must consider how their obligations under the Paris Agreement (and other climate change obligations) impact on decision-making around new roads (which will undoubtedly increase pollution).