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Winchester T: 01962 893 893 F: 01962 893 883
London T: 020 7812 6490 F: 020 7812 6677
info@remarkable-engagement.co.uk
Find out more about Localism visit localism-agenda.com
The PBR is presented in the autumn / winter, and provides a progress report on what the government has achieved since the previous Budget, an update on the state of the economy and public finances, and sets out the direction of government policy in the run up to the Budget statement in the spring.
Like the Queen's Speech last month, the Pre-Budget Report (PBR) this year had a more overtly party political edge to it. Not only did it come six months before a likely general election, but it came at a point when the economy forms one of the key points of division between the two main parties, Labour and the Conservatives. George Osborne, the Shadow Chancellor, set out what a Conservative government would do if elected at the Conservative's party conference in October.
Though Nick Robinson, BBC Political Editor, has argued that this was Alistair Darling's budget as opposed to Gordon Brown's, the chancellor, though serious in tone and demeanour, still fired some political shots. He noted, for instance, that:
The choices are between going for growth or putting the recovery at risk. To reduce the deficit while protecting front-line services or cuts which put these services in danger.
He spoke not of dividing lines, but of "competing visions". It is important to note, therefore, that all announcements made in the next six months will have more than an eye on the forthcoming election. The Tories have labelled the PBR a "pre-election con", a charge fiercely rebutted by the chancellor, while Liberal Democrat Treasury spokesman Vince Cable said it was a budget good for "bingo and boilers".
There is still a Darling-Budget and an Osborne-shadow budget to come before the election, but with the Queen's Speech and the PBR, there is no doubt that the electioneering has begun.
The environmental measures
Chapter seven of the PBR - Supporting Low-Carbon Growth - sets out the environmental measures. Schemes announced included £160m investment in low-carbon and renewable projects, £200m extra investment for the Warm Front insulation scheme, which will help an estimated 65,000 households, a boiler scrappage scheme for 125,000 households, an exemption for electric cars from company car tax for five years, and a tax rebate for installation of wind turbines and solar panels.
Darling estimated that old boilers waste £200 on the average household bill, and put an extra tonne of carbon into the atmosphere. People will be given £400 to replace their old boilers with a new condensing one, but energy companies have already insisted it must be offered to more people.
It was also announced that from April people with a home wind turbine or solar panels that send power back to the grid will receive an average tax-free payment of £900 per year.
The government also gave the go-ahead for electricification of railway lines between Liverpool, Manchester and Preston, and made a commitment to fund four carbon capture and storage demonstration units, a doubling of the UK's previous commitment. Via the Renewables Obligation, there will be additional support for offshore wind projects accredited from April 2010 to March 2014.
Overall, the PBR set aside £400m over the next two years (including funding reprioritised from other low-carbon technologies) to support green growth and the development of low-carbon technologies, including £50m for offshore wind development.
City-regions
Greater Manchester is to be the key economic driver of the UK's future low-carbon economy, as Darling confirmed that deals had been struck with Greater Manchester and Greater Leeds to pilot statutory city-region status, giving councils more control over regeneration and economic development spending.
The Leeds city-region was launched last month and gave 11 constituent local authorities more control over housing, regeneration, and transport, among other things. Though Manchester's scheme is yet to be officially launched, Darling announced that the city-region would be designated as a low-carbon economic area (LCEA) specialising in the built environment.
The aim of LCEAs is to pull together national, local and regional agencies to focus on accelerating the growth of low carbon industries, skills bases and supply chains. To date, the government has announced that the South-West of England and the three Northern regions would be designated as LCEA's.
Development
One idea that has been touted by many in the building industry over the past few months (and was not ruled out by the shadow Planning Minister Bob Neil at a private briefing last month) is the Tif.
The Tif (Tax Increment Financing) has been used in the US for over 50 years. The theory is that future gains in taxes can be used for current improvements (which, theoretically, will then allow for those future gains). For example, if a public road was built, this could lead to an increase in the value of the surrounding real estate, and perhaps new investment. The increased site value and investment will often lead to increased tax revenues, which are known as tax increments.
Tax Increment Financing dedicates tax increments within a certain defined district to finance tax debt issues to pay for the project. It is designed to channel funding to areas where development might not otherwise occur. TIF was first used in California in 1952, but is now widely used across the US.
Though the scheme is not without its critics, articles in trade magazines over the past few months would seem to suggest it would be welcomed by many within the industry. Regeneration and Renewal revealed earlier in the year that 82 public bodies had submitted a total of 124 bids to pilot the model.
In the PBR, the chancellor announced that the government would "continue to examine" the framework for Tif in the UK, as well as looking at the primary legislation that would be required.
The move was welcomed in industry circles. Liz Peace, chief executive of the British Property Federation, said: "This is a good move for the industry as we all know that new funding will be extremely limited. Councils must be given the powers they need to raise funding and if we are serious about kickstarting construction then action will be needed to support Tifs and ensure that we do not stifle great opportunities to rebuild out towns."
Housing
The government announced a pledge to look at expanding the Public Land Initiative, aimed at bringing forward surplus public sector land for new housing. The scheme supports the government's target of achieving 240,000 new homes a year by 2016.
The initiative was launched earlier this year, and is run by the Homes and Communities Agency (a quango whose future under a possible Conservative government is still far from secure). It allows public land owners to make sites available to house builders on a "deferred payment" basis, rather than selling them outright. The delivery target is for 1,250 homes over the next three years, and although the PBR contained no new targets it said the Treasury and the Department for Communities and Local Government would explore possibilities for expanding the scheme.
The chancellor also announced that the government would look at ways at tightening up the process by which local authorities are required to have five years worth of land for housing identified at any one time. He said that authorities found not to have an adequate supply of housing land in place could face having finding withheld.
Also announced in the PBR was a consultation document, due to be published by the government in early 2010, which would consider the possible contribution of the private rented sector to meeting housing demand. It is expected to consider possible ways of attracting more private investment into the sector.
Liz Peace said: "Although Darling has shied away from taking any real decision that would help things get moving now, this at least shows they have listened to what we've been saying. Clearly we need more homes and clearly there's little money in the current model."
Other measures announced included an extension the Empty Property rates relief for a further year, and a new body called Infrastructure UK, charged with the task of advising the government on priorities for long-term national infrastructure investment. The body, Darling said, would develop a strategy for national infrastructure by Budget 2010.
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