Autumn Budget 2017
Highlights for the BID Industry
Earlier today, Philip Hammond delivered the Autumn Budget as Chancellor. You can read the entire Budget here. We are pleased to bring you a summary of the Budget and the relevance to the BID industry.
The key headlines are as follows:
Economic forecasts from the Office of Budget Responsibility:
– Weaker productivity but still positive economic growth over the next few years
– Household spending and investment continues to grow
– Another 600,000 people in work by 2020
– Borrowing to continue to fall until 2021
Transport & Infrastructure:
– A £1.7 billion new transforming cities fund out of the National Productivity Investment Fund, to improve connectivity and support jobs across England’s great city regions
– An increase of 50% in transport investment between now and 2020-21
– £1.9 billion for transport improvements in the Oxford – Milton Keynes corridor by 2021
– £3.95 billion for the Tyne & Wear Metro by 2021
– The Infrastructure and Projects Authority will publish an update to the National Infrastructure and Construction Pipeline in December 2017. This will set out a 10 year projection of public and private investment in infrastructure of around £600 billion, and demonstrate the UK’s strong track record of infrastructure delivery since 2010.
– The introduction of the ‘millennial’ railcard for 26-30 year olds
Small business support:
– Business rates re-evaluation once every 3 years not 5
– Business rates to be uprated with CPI instead of RPI from 2018. The measure was brought forward by two years after intense lobbying by the BRC and the CBI
– Keeping VAT threshold for small businesses at £85,000
– New measures to ensure online retail markets are liable for VAT as well as the sellers to ensure better parity with high street traders
National Living Wage:
From April 2018, the National Living Wage (previously the National Minimum Wage) will see the following increases according to age:
– Increased rate for 21+ year olds to £7.38 per hour
– Increased rate for 18 to 20 year to £5.90 per hour
Local Government funding and powers:
– London business rates retention pilot scheme – The government has agreed a pilot of 100% business rates retention in London in 2018-19
– Tailored package of support for the Oxford-Milton Keynes Corridor
– Secured a second devolution deal in principle for the West Midlands specifically to address local productivity barriers
– North of Tyne devolution deal – The government has agreed a ‘minded to’ devolution deal with the North of Tyne authorities, which will be subject to the consent of local partners. This will see £600 million of investment in the region over 30 years and create a new mayor elected in 2019 with powers over important economic levers including planning and skills
Housing & Development:
– Government is prioritising redevelopment in urban centres and Green Belt protections will continue.
– Planning reforms will be introduced that will ensure more land is available for housing, and that better use is made of underused land in our cities and towns
– £15.3 billion of new financial support for housing over the next five years, bringing total support for housing to at least £44 billion over this period
– Abolishing stamp duty for first time buyers on the first £300,000 of any new home purchase
– Government is focusing on securing certainty for businesses so they can better plan long term investments.
The budget contained some very welcome measures for BIDs but also highlighted a few emerging concerns.
British BIDs’ analysis
Firstly, the Chancellor acknowledged that businesses wanted as much certainty as possible from the Brexit negotiations when looking at future long investment, including in our town centres. Although the Government has said many times that it wants to deliver as much certainty as possible for businesses throughout the negotiations, it was important that the Chancellor mentioned it as the first thing on the agenda in his Budget speech. Even though there was very little follow up detail.
Many economists over the past few years have highlighted productivity as an issue for the economy going forward, and this was reflected in new OBR figures. That said, predictions on household spend and employment numbers were up which bodes well for consumer spending.
The Chancellor’s solution to improving productivity is to invest heavily in transport and digital infrastructure, which is very positive for BIDs. The more people can move and communicate with BID destinations for work and leisure the better and the Chancellor announced major projects in many larger cities as well as support for smaller projects across the county.
The millennial railcard is an interesting proposal from the Chancellor with off-peak railcards which are designed purely to make the cost of leisure activities cheaper for the age group. This is again positive for many BIDs’ marketing initiatives to attract visitors and tourists.
The Chancellor also announced a raft of new devolution deals and major projects; local BIDs should be key consultees, helping to ensure that businesses get their voices heard and that the final product can be capitalised on fully by BID destinations as a whole and individual levy payer.
Business rate reform for small businesses was also a key part of the Chancellor’s support for small businesses with moves to increase the frequency of rate reviews. The Chancellor also announced that the switch from RPI to CPI would take place in 2018 instead of 2020 thanks to a well-run campaign by the BCC and the CBI. An interesting inclusion into the Budget was the news that online market places will now also be liable for VAT as well as sellers, in a move designed to bring more parity between online retailers and traditional traders. All of these measures will be welcomed by BID levy payers.
The Chancellor’s commitment to build more homes in urban centres should be welcomed as it will mean more derelict plots developed and an increase in local markets for BIDs. BIDs should be wary however that it doesn’t put more pressure on local authorities to convert more vacant commercial space into residential under permitted development rights.
Finally, another measures that levy payers will be interested in is the increase in the National Living Wage announced for this April. Businesses in the retail and leisure sectors will need to start incorporating this into their future planning now to ensure the impact is as managed as possible.
All in all, British BIDs welcome the measures in the Budget, particularly commitments on infrastructure and business rates. However, BIDs and levy payers should monitor the impact of housing and pay policies to ensure their impact on the local trading environment is as managed as possible.