Reaction to Cladding, Tax, Planning and Social Care Announcements
Chancellor Rishi Sunak delivered his Autumn Budget on Wednesday 27 October 2021 setting out the Government’s tax and spending plans for the next 12 months.
Our experts explain how some of the announcements may affect you:
Property and cladding
Chancellor Rishi Sunak announced 80,000 more affordable homes, just under £2bn for homes on brownfield land and cladding tax of 4% on developers who make more than £25m in profits a year.
Expert Opinion“As feared, the Government has now confirmed its intention to point the finger at a select group of developers, tax them - in a way that doesn’t address the issue or change behaviours - and then tiptoe away from the cladding scandal. It’s also not yet clear whether the tax will actually go as additional funds towards remediating the problem, or indeed helping those currently trapped in unsafe or un-sellable homes.
All interested parties should work together to ensure that the heat isn’t turned down in respect of making funds available for remedial work, vastly improving the regulatory, planning and building regulations framework and ensuring the true culprits don’t escape unpunished.” Jeremy Raj - Partner
With such a massive focus on spending during this Budget, personal tax experts at Irwin Mitchell have questioned where the expected tax rises were - or whether we'll see this come up in the future.
Expert Opinion“This third Budget of the year has mainly been about spending, but nothing major on personal tax. The big winners are the baby boomers who have gold-plated pensions and rental incomes, plus anyone who feared any capital gains tax reliefs would be restricted or see some rates increased.
It was thought the Government would at least do something to share the tax burden out amongst the different generations after the health and social care levy fell mainly on the working population, and to not see this happen is somewhat surprising.
The devil is always in the detail with these announcements and we wait to see how the Government implements its taxation plans after this Budget.” John Bunker - Consultant Solicitor and Chartered Tax Adviser
With a raft of new announcements made by the Chancellor including brownfield housing building and green investments, planning specialists at Irwin Mitchell say the investment is a positive commitment from the Government.
Expert Opinion“Rishi Sunak has tried to present a budget focussed on investment and optimism. Many of the announcements had been widely trailed over the last few days. Perhaps the most significant ‘new’ announcement was the £4.8bn uplift in general local authority funding over the next three years – described “the largest increase in core funding for over a decade”. Many of the problems in the planning system at present are a direct result of under-resourced local authorities struggling to cope with the volume of applications they face. As such, this additional funding is likely to be extremely welcome. That said, planning is not the only local authority department struggling for cash. Councils are also responsible for funding social care, education and a wide range of other local services. As such, whether any of this money makes its way to local authority planning departments will have to be seen.
"The new incentives for ‘green investment’ are also to be welcomed, however they sit uncomfortably next to announcements of major investment into our roads networks and a cut in air passenger duty for domestic flights.
"As to the funds already announced: Regenerating brownfield land can be notoriously expensive, so the additional funds to support Councils’ remediation efforts is to be welcomed. This latest tranche of funding for brownfield land, in addition to the £400 million Brownfield Housing Fund and the £75 million Brownfield Land Release Fund, indicates that the Government may be serious about the ‘brownfield first’ pledges that Johnson made in his conference speech earlier this month.
"The £65 million of investment into the digital transformation of the planning system is also a welcome recognition that the current software relied on by council planning departments may no longer be fit for purpose. Given that this announcement follows hot on the heels of DLUHC’s announcement that 13 Councils have been awarded a share of the £1 million PropTech Engagement Fund to pilot ‘innovative’ new digital consultation tools; it seems clear that the pledge to digitise and modernise the planning system may be one of the few proposals from last year’s Planning White Paper left standing” Nicola Gooch - Partner
The Chancellor announced that English councils would be receiving £1.6 billion of new grant funding in each of the next three years, on top of the funding to implement social care reform - but later life experts warn general spending won't help the crisis around staffing in the sector.
Expert Opinion"Following on from the Government’s long-awaited social care reforms last month, it is encouraging to see that there appears to be a further planned injection of funds to local authorities, announced in today’s Budget. Hopefully this is a sign of the government further prioritising this issue.
"However, like always, the devil is in the detail. It’s obviously unknown how much of this will be allocated specifically to social care issues and in particular the need to attract qualified and quality staff into the sector. This particular point needs to be addressed, rather than simply allocating funds more generally." Emma McCann - Partner
Changes to gilt issuance and growth forecasts for the year ahead are already having an impact on investments - making careful financial planning even more important than ever.
Expert Opinion“In what was meant to a well leaked budget the reduction in gilt issuance came as a major surprise and resulted in some very sharp price increases which in turn drove yields down. These moves in yields and some disappointing growth forecast for economic activity in coming years need to be placed in the context of the Chancellor's belief that inflation will rise in the coming months. Taken together, the mix creates a challenging environment for investors and one that is likely to see increased volatility in many UK markets. There are opportunities, but the value of careful financial planning and a flexible investment approach have never been more important following the latest Budget." Richard Potts - CEO of IM Asset Management Ltd