In addition to the £40bn of tax rises achieved by Rachel Reeves in her Government’s first Budget to sustain investment in public services, the Chancellor also announced a total of £100bn to be spent on capital projects during this Parliament, including a host of investments in construction.
The tax rises were largely to be funded by National Insurance contributions by all employers except for the very smallest firms, and a hike in capital gains tax. Reeves said that the rises were essential to increase growth and deal with the previous Government’s spending “black hole” of unfunded spending commitments such as public sector pay rises, project overspends and military assistance to Ukraine, which Labour claims to total £22bn.
Reeves also announced changes to fiscal rules in order to enable £100bn to be spent on capital projects over the next five years. She commented: “Today’s budget marks an end to short-termism.”
She confirmed the plan to offer housing guarantee schemes totalling £3bn to support SMEs and the Build to Rent Sector, and a £500m ‘top-up’ to the Affordable Homes Programme to build up to 5,000 additional affordable homes. An increase to the stamp duty land tax surcharge on second homes to two percentage points to 5% would be used to “support over 130,000 additional transactions from people buying their first home or moving home over the next five years,” Reeves said.
To help unlock housebuilding, the Chancellor announced an extra £46m to recruit and train 300 graduates and apprentices to work in local planning authorities, as well as “accelerate large sites that are stuck in the system, and boost and upskill local planning authority capacity.” A major 2000 home scheme was confirmed at Liverpool Central Docks, with £56m of Government funding.
The Chancellor £25m joint venture between Government, developer Muse Places and Pension Insurance Corporation to deliver 3,000 affordable energy-efficient homes across the UK. She also pledged £47m to support the delivery of 28,000 homes “stalled” due to nutrient neutrality rules.
Reeves also announced a £3.4bn “commitment to cleaner heat,” under the Warm Homes Plan, including a pledge to increase funding for the Boiler Upgrade Scheme in England and Wales this year and next, following the high demand for the scheme. The Government is also providing funding to grow the heat pump manufacturing supply chains in the UK to support the plan.
In the social housing sector a consultation was announced on a new long-term social housing rent settlement of CPI+1% for 5 years. Investment in remediation will rise to over £1bn in 2025-26, said Reeves, including new investment to speed up remediation of social housing, and “further steps on remediation will be set up later this autumn.”
Reeves announced reduced discounts on the Right to Buy scheme to retain many more social homes, but confirmed councils in England would be able to keep all the receipts generated by sales. From 2025 £1bn would be granted to extend the household support fund and discretionary housing payments to help people facing financial hardship. The Warm Homes investment included £1.8bn to support fuel poverty schemes, helping over 225,000 households reduce their energy bills by over £200.
In addition, funding for 11 new green hydrogen projects was confirmed, plus an extra £300m for school maintenance.
Commentators have complained that the Budget announcement was lacking in mention of the promised reforms to the National Planning Policy Framework, and of the Future Homes Standard.
Transport investments confirmed included extending HS2 to Euston, including tunnelling projects, and pledges to deliver “priority transport schemes”, including the TransPennine route upgrade between York and Manchester.