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Budget 2023: What does it mean for planning & development?

It is sometimes hard to believe that it is only six months since Liz Truss's 'mini-budget' quite so thoroughly upset the apple-cart that is the UK economy. 

Today, Jeremy Hunt delivered his first proper, non-emergency, budget as Chancellor. It is, he says, a budget for growth, but does that translate into good news for planning and development?

Well, possibly, but probably not in the way that the Government had hoped. 

Investment and Infrastructure 

All of the headlines in the speech, focused on investment and infrastructure. The Budget announced yet another re-invention of 'Investment Zones' - which as been widely trailed over the last few days. The proposed new Investment Zones are significantly scaled back, when compared to the version in the "mini-budget", but would still provide additional investment and resources to twelve ‘investment zones’ across the UK including eight mayoral authorities in the Midlands and the North of England. 

The main purpose of the new Investment Zones, from the policy prospectus at least, appears to be to act as incubators for new industries or start-ups in five 'priority sectors' including life sciences and green industries – as they are largely centred on universities. 

The zones will be supported by an up to £80m package of government support over five years, which can be spent flexibly on a number of interventions - including  improving support for Planning and Development, "e.g., the provision of funding to recruit a dedicated planning team, implement an LDO or support a Development Corporation to deliver complex or large-scale developments." 

We also have the promise of more funding for new infrastructure projects and regeneration schemes across the country, again in service of the Levelling-Up Agenda, alongside new levelling-up partnerships and greater devolution.

In particular, promises of:

  •  The rollout of new Levelling Up Partnerships, providing over £400 million of government funding for bespoke place-based regeneration in twenty of England’s areas most in need of levelling up over 2023-24 and 2024- 25. 
  • £211 million for 16 regeneration projects in England. 
  • £58 million will be invested in three levelling up capital projects in the North West of England. 
  • A further £161 million for high-value capital regeneration projects in city regions across England.
  • Funding for a further 30 projects across the UK as part of the existing £150 million Community Ownership Fund. 
  • A third round of the Levelling Up Fund will proceed as planned later in 2023 with a further £1 billion to level up places across the UK. 

We have also been promised better and more extensive devolution, with consultations on how best to give local authorities greater power over their own economic development - by transferring the functions of Local Economic Partnerships across to local government - and also allowing Mayors outside of London to set the strategic direction of their own Affordable Housing Programmes. 

This last step is a long overdue acknowledgement of the fact that centrally set targets for affordable housing products, such as First Homes, simply do not work for all parts of the country. 

Nutrient Neutrality

Surprisingly, the biggest news for the sector didn't actually make it into the Budget Speech.

It is not investment zones nor the new levelling-up partnerships, but rather the promise of additional help in tackling nutrient neutrality issues throughout England. Specifically, a promise provide funding for "local nutrient neutrality schemes".

The Budget promises that:

"4.134 Nutrient neutrality credit schemes – DLUHC will open a call for evidence from local authorities in England for locally led nutrient neutrality credit schemes. Where high quality proposals are identified, this government will provide funding to support clearer routes for housing developers to deliver ‘nutrient neutral’ sites, in line with their environmental obligations"

At the time of writing the 'Call for Evidence' has yet to open - but the intention to pump prime local nutrient neutrality credit schemes can only be a positive thing. 

The HBF estimates that nutrient neutrality rules are currently holding up the development of at least 120,000 new homes, anything that can help ease the situation is to be welcomed- particularly as the proposals in LURB to force water companies to tackle pollution at source are not likely to become effective until 2030.

Interestingly, the Budget is not only helping councils and developers with nutrient neutrality - it also contains incentives for landowners as well.  

Alongside the Budget documents, the Treasury has launched a consultation on the "Taxation of environmental land management and ecosystem service markets".

This consultation, which runs until 9 June, explores two different but connected questions, that are designed to make it easier for ecological mitigation schemes to come forward - namely:

  • a call for evidence on the tax treatment of the production and sale of ecosystem service units. The aim is to understand the commercial operations and the areas of uncertainty in respect of taxation; and
  • a consultation about the scope of agricultural property relief from inheritance tax. The aim is to explore the extent to which the current scope of agricultural property relief may represent a barrier and, if necessary, potential updates to the scope of the existing land habitat provisions in the relief. 

Our Rural Team will comment more on this, from a landowner perspective, in due course but for now, it is at least encouraging that the government is paying attention to the need to incentivise landowners to release sites for ecological mitigation, as well as the need for councils and developers to be able to access it. 

3.132 High levels of nutrient pollution in protected sites are stalling housing
delivery across 74 Local Planning Authorities, reflecting a major barrier to the government’s ambition of delivering 300,000 homes per year. The government has already provided significant support for protected sites that are affected, both to address the pollution at source and to support housing developers to deliver their environmental obligations.

3.133 In recognition of the scale of the impact, the Spring Budget announces
further support to ensure ‘nutrient neutrality’ obligations can be efficiently
delivered, thereby reducing the risks facing developers building homes in affected areas. DLUHC will shortly launch a call for evidence from Local Planning Authorities, backed by a commitment to provide funding for high quality, locally-led nutrient mitigation schemes.”