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Property industry sees chinks of light in the gloom of Comprehensive Spending Review

Commenting after the Comprehensive Spending Review set out by the Chancellor of the Exchequer, George Osborne, today, Liz Peace, chief executive of the British Property Federation (BPF), said: “The Comprehensive Spending Review was as gloomy as we were led to expect, but there are some chinks of light – such as support for Crossrail, the presumption in favour of sustainable development, and the Chancellor’s commitment to introducing tax increment financing (TIF), something for which the BPF has long campaigned.

“We are also heartened by the Government’s increased support for regional economic growth, and look forward to receiving more details on how Local Enterprise Partnerships and the Regional Growth Fund will work in practice.

“Nevertheless, the loss of nearly half a million public sector jobs will reduce the demand for office space considerably in some areas and this is likely to hit those regions most heavily dependent on the public sector.”

The BPF was also concerned at reforms to the Carbon Reduction Commitment announced today, and will be asking for greater clarity regarding plans for the Scheme after CSR documents revealed that £3.5bn due to be recycled to participants in the scheme will instead be kept by government.

Liz Peace commented: “The coalition said they wanted to simplify the complexities of the CRC and they have certainly found a novel way to do that. This will not however “remove the burden on businesses” as they claim, but ensure that the CRC will cost the wider business community almost £3.5bn more than it would have.

“Today's announcement contains little detail on the Government's full intentions in respect of the League Table, how allowances sales will function and to what ends the money gathered will be used.  We urge the Government to clarify urgently how the revised Scheme will function, as people are making decisions today upon it.”

Social housing is also hit, with a huge reduction in the affordable housing budget and the CLG ‘Communities’ budget taking the biggest departmental hit of all. Spending on housing benefit will be further reduced in the private rented sector with the shared room rate aimed now at people up to 35 years old, and through the reductions in housing benefit already announced in the emergency Budget.

Liz Peace said: “The Government’s keenness to encourage intermediate rent provision provides interesting opportunities for greater collaboration between councils, housing associations and private investors. If the Government really wants its ideas to fly it needs to consider amendments to planning policy, so that there is greater flexibility over affordable housing requirements, and restoring direct payment to private sector landlords. Delivering 150,000 new units in the current climate will be challenging, but might be possible with these sorts of reforms.

“What is absolutely clear is the hugely damaging impact that linking future housing benefit to the CPI (Consumer Price Index will have), which will constantly erode the amounts claimants receive to the point where they won’t cover their housing costs and the Government should pull back from that aspect of its reforms.”

However, the BPF endorsed the announcement that over £10 billion will be invested over the spending review period on maintenance and investment in new high value road, regional and local transport schemes, including London Crossrail.

Liz Peace commented: “Large infrastructure projects such as Crossrail will be vital to the economy as London and the UK seeks to retain a competitive edge. As such property owners across London and the UK will be relieved to see the Government continuing its commitment to Crossrail and local transport schemes.”

/ends

Notes to editors

Additional comment from Liz Peace on particular elements of the CSR can be found below:

Threat to planning services

“Communities and Local Government bears some of the largest cuts and local government will have to absorb much of them. With areas of ring-fenced spending also being removed local authorities will be tempted to focus their spending in areas likely to reap the biggest dividends at the ballot box. This could put local authority planning services at greater risk despite the fact that the Government sees planning as crucial to its localism agenda. More specialist areas like conservation that are already severely squeezed will be at particular jeopardy.”

The Big Society – Local communities and localism

“Again, a reaffirmation of the Big Society and the involvement that local communities will have in their local areas, further devolving power away from local authorities to create a ‘bottom-up’ system. We are still waiting for further detail concerning how local communities will create, or be involved in local plans and how this, in turn, will enable the regeneration and development that is so badly needed.”

Localism Bill

“This confirms the government’s commitment to reformation of the planning system, and to the introduction of a presumption in favour of sustainable development. We are working closely with the relevant civil servants and ministers to try and ensure a smooth transition to a new, more community based system.”

Regional Growth and LEPs

“Although LEPs have been widely discussed, it is still unclear as to what function they will actually perform, and what will happen in the gaps between LEPs when the final list is announced. LEPs have the potential to play an important role in fostering a long-term (and even a cross-party) approach but their effectiveness will depend on the resources they have available, the remits they are given and the degree of buy-in they can command both from participating local authorities and the business sector. Much of this remains uncertain at present. It is crucial that LEPs do not simply create another bureaucratic tier but rather complement and supplement existing local structures.”

For further information please contact:

Patrick Clift, Media and Public Affairs Manager, on 07834 439 505, or pclift@bpf.org.uk

Paul Sweeney, Media Assistant, psweeney@bpf.org.uk, or 020 7802 0113