The Budget

Analysis and reaction to the final Budget before Brexit

  • From April 2020, lettings relief will only apply to owners living with tenants
  • A new UK digital tax for online giants – apparently not to hit smaller companies. Coming into effect in April 2020
  • A lift on the cap on spending for Local Authorities on council housing
  • Future High Streets fund for Councils. This is to invest in improvements and support redevelopment into residential, helping with housing and delivering footfall
  • Adjustment to rateable values will be in 2021. Smaller retailers having business rates cut by a third until that point creating an annual saving of up to £8k for independent shops, pubs and cafes
  • £500m for housing infrastructure fund – partnerships with 9 housing funds delivering homes across the country. Revival of SME housebuilders and encourage conversion of commercial to resi.
  • First time buyers purchasing shared ownership homes to be exempt from stamp duty on properties up to £500k – backdated to the last Budget.
  • Additional funding for rail services between Oxford and Cambridge.

Philip Woolner, Joint Managing Partner, Cheffins comments:

On Business Rates

 “Spreadsheet Phil has tinkered with the figures for business rates and the proposals which he has suggested today, whilst very welcome, will not have a significant impact on SMEs. The raft of recent insolvencies across the country is indicative that meaningful change is required here rather than headline-grabbing soundbites. The issue is that business rates have been the government’s cash cow for years and the system is so embedded and the tax so easy to collect that a complete overhaul is always going to be unrealistic, particularly with the government otherwise engaged in Brexit and its implications. It should be considered that a larger reduction in business rates might give a few businesses some breathing space, however the shortfall which would then be felt keenly by The Treasury would likely have to be shored up by the Amazon Tax or other measures.”

 

On Digital Services Tax

“The Chancellor’s so-called ‘Amazon Tax’ is unlikely to be the essential measure which will redress the imbalance between online giants and traditional bricks and mortar retailers. There is a feeling that online companies have not been paying their fair share of taxes for some years, however the view that this will be the catalyst to rejuvenate the high street is unrealistic. Rather it could be viewed that the ‘Amazon Tax’ is an easy way for the Chancellor to bolster the public purse as we enter into stormy waters ahead of Brexit. High street stores are feeling the pinch due to high business rates, falling footfalls in the UK’s town centres and changes in shopping habits, and whilst many businesses operate across multi-channels, the rejuvenation of the British high street will need much more than this rebalance of tax on retail. The majority of high street retailers also operate online, so if this measure is being introduced in the hope of buoying up traditional retailers, it will have to come hand in hand with further business rates reform which has been the largest drain in retailers’ overheads for years.”

 

On council housing provision

“The country has not delivered on the numbers of affordable homes needed for decades and lifting the cap on money borrowed for council house building could be a significant game changer for the housing market. It could well have a bigger impact on the housing crisis than any other measures mentioned in this Budget or those previously. However, this needs to come conjointly with a raft of recruitment within local government. The biggest blockage on housing and infrastructure delivery continues to be at Local Authority level where a lack of resources consistently delays the approval of planning applications and without the planning approval, there is no point in the government releasing cash which then cannot be spent. Local Authorities haven’t built quality homes for years and this will not be a case of just turning on the tap and expecting housebuilding across the country. Rather Local Authorities will now be under serious pressure to deliver quality housing in the correct locations.”

 

Oxford – Cambridge railway

“The Chancellor’s announcement of additional funding for the Cambridge – Oxford rail network is welcomed in today’s Budget. There is ground to be made up here, particularly in the Oxford - Cambridge arc and this needs to be sped up for our home-grown industries to be taken seriously on a global stage. On a more local level, developing this area of the country will help to unlock industry in towns such as Bedford and Northampton which will benefit exponentially from improved access to Oxford and Cambridge. Cambridge has been one of the world’s biggest success stories, growing at a phenomenal rate and creating some of the world’s most incredible breakthroughs in science and technology and if we want our city to continue to prosper, we have to accelerate infrastructure and connections between these two important locations.”  

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