Predictions for the Autumn Statement 2016
The Autumn Statement will be delivered on November 23 by Philip Hammond, the new chancellor. Nick Gross, head of transport and logistics, and Nick Leavey, head of commercial property have made their predictions of investment in roads and railways, investment in housing and a reversal of SDLT.
Nick Gross said: “There is more limited scope for tax cuts, and any spending initiatives must be carefully chosen. Mr Hammond has said that there won’t be a spending splurge, and that he wants to focus on shovel-ready projects, which can deliver the quickest schemes, and offer the highest economic benefits and the greatest increases in productivity.
“In particular, Mr Hammond has signalled that any fiscal stimulus in the Autumn Statement would be concentrated on boosting Britain’s roads and railways.
“Except for HS2 (which is increasing in predicted cost with every new announcement, and given the shift in policy may not be invulnerable from slashing or pushing back in the queue), much of the Government’s spending commitments are expected to be delivered via local bodies, such as the Local Enterprise Partnerships (through the Local Growth Fund), or via the Local Transport Majors for larger projects. However, money won’t be easy to come by – the current Local Growth Fund round is over-subscribed by five times, and in last year’s Autumn Statement the Department for Transport’s operating budget was slashed by 37%, the biggest drop for any government department, so there’s ground to make up.
“Therefore, we can expect spending in the transport sector to be focussed on local requirements, with perhaps those who shout loudest and, in relation to the Local Growth Fund, those who are pushing on with local devolution, getting priority. A patchwork solution seems to await.
“Despite the fanfare accompanying the announcement of the new Heathrow runway, the time lag and groundwork involved in getting this project up and running suggests that it is unlikely to feature heavily in the Autumn Statement.”
Nick Leavey said: “I expect that a new multi-billion housing package will be announced. This will largely take the form of HCA loans used to back developers of all sizes and it has been proposed that the Home Building Fund will be increased from £3 billion to £5b.
“It is also anticipated that there will be a more balanced approach towards building starter-homes and build-to-rents. Theresa May is reported to be more amenable to the latter than David Cameron was, but that probably won’t be popular whilst the 3% SDLT surcharge remains in place.
“Oxford Economics Research say that SDLT increases are backfiring with 2,000 fewer £1 million+ sales in the year proceeding the changes. This is having a wider impact on the economy – £8.3b hit to gross domestic product, a £450m drop in wider tax receipts and the loss of 14,000-plus jobs.
“Many doubt the benefit of the SDLT changes for first-time buyers and are calling for Phillip Hammond to make changes to reverse these effects.
“Developers are less inclined to pursue higher-quality sites for fear that prospective buyers will be put off because of the SDLT rates, particularly for dwellings +£1m.
“While the Government may seek to boost housebuilding via HCA funding for developers of all sizes, developers might not take the bait unless SDLT changes are promised in order to give prospective buyers confidence.”