Autumn Budget 2022 | Main takeaways, industry reaction

Chancellor Jeremy Hunt revealed the government’s economic strategy on 17 November, overturning much of the Growth Plan introduced by the previous administration two months ago.

The Autumn Statement 2022 comes in at 70 pages, filled with tax rises, business rates relief, and promises of Levelling Up.

• Read the Autumn Statement 2022

Below are our key takeaways from the budget. Scroll down further to see industry reaction to the announcement.

Levelling Up update

At least £1.7bn will be awarded in the second round of Levelling Up Fund awards, nearly £500m more than the first round last year. It is worth noting that as of October only £187m of that £1.24bn first round had been paid out. Winners from the second round of funding are to be announced later this year.

Infrastructure investment

More than £600bn will be safeguarded for capital investment over the next five years.

Business rates relief

A £13.6bn package of support on business rates is in the works, including the increase of relief for retail, hospitality, and leisure sectors to 75%.

Stamp Duty changes

The mini budget’s promise of no Stamp Duty on the first £250,000 of a property (£425,000 for first-time buyers) will end on 31 March 2025.

Investment zones rethink

The government is going to scrap the existing expressions of interest in these zones in favour of coming up with its own list of knowledge-focused clusters. “The government is grateful to local authorities for their work to develop proposals,” the Autumn Statement reads.

Northern Powerhouse Rail support

The Autumn Statement uses the phrase “core Northern Powerhouse Rail” when describing the rail project, which shows that the promise of the Liz Truss administration to deliver the project in full is dead. HM Treasury officials confirmed with Place that the version of NPR promised in the budget is the same as was described in last year’s much-maligned Integrated Rail Plan. The budget also includes a recommitment to East West Rail and HS2 to Manchester.

Social rent caps

Rents on affordable housing can only increase by a maximum of 7% in the next fiscal year. “This will save the average tenant in the social rented sector £200 next year,” the Autumn Statement reads.

Devolution trailblazers

Doubling up on an idea in February’s Levelling Up White Paper, the government has said it is working with Greater Manchester Mayor Andy Burnham on a new “trailblazer” devolution deal, which the government wants to deliver by early 2023. This deal would provide the Greater Manchester Combined Authority more power to aid in skills, transport, and housing.

According to the budget: “This could give local partners more flexibility and accountability over key economic growth funds, moving away from competitive bidding processes.”

The government is also working with West Midlands Combined Authority on the project, which could be rolled out to other authorities down the line.

Solvency II

The budget states that reforms to Solvency II “will unlock tens of billions of pounds in investment by UK insurance companies”. This will be done by letting pension funds and insurers “take a more relaxed view of risk” and “to keep smaller cash buffers”, to quote Subplot columnist David Thame. In his 24 March column, Thame spoke to Colliers chief economist Walter Boettcher who described the reforms as “potentially transformative, potentially staggering”.

• Read the results of the Solvency II reform consultation

Industry Reaction

Comments have been edited for clarity and brevity.

Reasons for positivity

There are some definite positives for the prospects for development in the region. The rent cap announcement for social housing providers, although behind inflation, is better than the expected 5% and should limit the constraints on development capacity for affordable housing. This will hopefully be bolstered by enhancements in the Greater Manchester devolution deal which is anticipated to be signed in the new year and was referenced in today’s budget statement. On a longer-term basis, a welcome return to the phrase ‘Northern Powerhouse’ was used in the renewed to commitment to delivering the Manchester phase of HS2 and probably more importantly East/West connections – real progress in housing delivery can only be made with better transport links so this promise will hopefully be followed up with some more concrete planning for implementation.

• Suzanne Benson, partner at Trowers & Hamlins

Light at the end of the tunnel

The tax hikes from today’s Autumn Statement signalled a bleak outlook for the UK in the short term. However, with the maintenance of capital spending funds for key projects such as HS2 and Northern Powerhouse Rail, there seems to be a light at the end of the tunnel for a renewed levelling up push.

Sunak and Hunt have, at the very least, remembered that the Conservative Red Wall was won on the promise of Northern investment and that recommitting to the ethos of regeneration will be a good move for both the public and government.

With Gove also being gifted a new remit of devolution, there could very well be life in levelling up yet.

• Danny Crump, director of urbanism at Broadway Malyan and High Street Task Force expert

 Glimmers of hope

The gloom that surrounds The Autumn Statement was perhaps underscored by confirmation that the UK is already in recession. And with public spending being squeezed and taxes going up there will be difficult months ahead for the Conservative Party as it seeks to recover its reputation for economic competence.

But there are glimmers of hope. The fact that £600 billion of capital investment into major infrastructure projects will be maintained over the next 5 years is a positive. This protects projects like HS2 to Manchester and Northern Powerhouse Rail here in the North West.

Nods towards planning reform and updated National Policy Statements for transport, energy and water resources next year and commitments to roll-out ‘cheap, clean renewables’ offer hope that pro-growth reforms mooted by Liz Truss haven’t been completely sidelined.

• Kevin Whitmore, head of North & Midlands at BECG

­­Business rate package is a ‘very welcome and sensible solution’

It’s good to see that the government has finally taken action on business rates to the tune of £13.6 billion over the next five years. A freeze to the multiplier was center stage but of more significance is clarity on transitional relief from 1 April 2023. Despite widespread calls for its scrapping, the government solution is to limit increases on those with increased RV’s while allowing those with reduced RV’s to immediately benefit – a very welcome and sensible solution.

We expect retail RV’s to reduce dramatically so the high street will get a welcome shot in the arm. This is an effective solution that provides targeted support where required.

Retail discount will increase from 50% to 75% but a cap of £110,000 per business means it’s almost irrelevant to chain operators across the country. There has been no mention of revised small business rates relief thresholds. Instead, a supporting small business scheme will provide minor support for those losing relief. Overall the outlook for ratepayers in 2023 is mixed but it could have been much worse.

• Richard Roberts, principal director of Roberts Vain Wilshaw

Stamp Duty cuts will bring short-term stability

It has been a turbulent year for the property industry and maintaining the Stamp Duty cuts until 2025 will at least bring some short-term stability and clarity to the marketplace.

Typically, in autumn and winter we see a slowdown in new clients coming to the market as they focus on Christmas and other end-of-year priorities. However, today’s news may result in an unexpected uptick.

It will certainly provide added impetus for would-be first-time buyers to get on the property ladder before March 31 st 2025. Equally, second steppers and those in the middle of the market who were perhaps casually considering a move in the next 5 years, may now turn their attention to an earlier sale and thus free up some entry-level stock.

In Cheshire, I expect to see an increase in activity in areas such as Macclesfield, Cheadle, and Holmes Chapel where there is a healthy supply of property suiting first-time buyers and those in the middle market.

• John Halman, executive chairman of Gascoigne Halman

Where was planning reform?

The Autumn Statement revealed little in the way of reforms to the planning system or development process. Hopefully that is a positive sign the government is intending delivering the ideas it already has, rather than coming up with new ones yet again. A promise to scale back Liz Truss’ Investment Zones idea and a re-commitment to devolve further powers to the Greater Manchester and West Midlands Combined Authorities – an idea first floated in the Levelling Up White Paper – exemplify the apparent return to the pre-Truss status quo. What the development industry needs most of all right now is a period of stability and certainty to help weather the economic storms ahead. The announcements today-or lack thereof – suggest the government understands that.

• Paul Smith, managing director of The Strategic Land Group

Digital connectivity has to be a priority

As the chancellor intimated, connectivity is key to levelling up the UK because this fuels economic growth, investment from businesses, talent, jobs, and access to social benefits and healthcare amongst many other things, including access to energy infrastructure which is going to be even more crucial going forward. Hence, we hope that the reinforced commitment to the rollout of gigabit-capable superfast broadband and 5G infrastructure remains a priority for Rishi and his new cabinet, and it gets a higher pegging on the list of levelling up priorities – and budget – than the previous administration’s watering down of targets.

• Darren Zitren, head of network estates management at Cluttons and partner in the Manchester office

A well-sourced planning system will be needed to deliver budget promises

The commitment to continuing investment in large infrastructure projects, which provide the ability to unlock housing opportunities, drive growth and help in our journey to decarbonise surface transport, will be supported by committed planners. But this will need to be accompanied by a well-resourced planning system to ensure that residents and businesses can access the amenities that support economic opportunities, healthcare services, and educational facilities.

The ambition to increase energy efficiency by 15% is a welcome step in the right direction. Retrofitting homes at scale and ensuring that new homes are as energy efficient as possible will be essential in tackling the energy and climate crises, but they will fall short if they do not engage with planners throughout the process.

The shift in focus of investment zones, with the involvement of Mayors, devolved administrations, local authorities, and other local delivery partners means that planners will play a crucial role in ensuring they work for the communities involved. While further devolution deals will help to raise the community voice, they must proceed with planning firmly in place so that Mayors have a proper stake in changes to an area’s built environment and the powers to affect them.

• Victoria Hills, chief executive of the Royal Town Planning Institute

‘Austerity 2.0’ will make cities nervous

I think the North West’s cities will rightly feel nervous about the onset of ‘Austerity 2.0’ in today’s Autumn Statement, given that the scars of the last round have barely been healed by the stop-start nature of the levelling up agenda.

Clearly, given the financial crisis caused by the markets’ fear that the UK had lost its sense of fiscal responsibility, there was a need to restore trust today. But with few initiatives to boost growth and a slower rise in capital spending, the North West’s public sector is going to find it much harder to play an active role in local regeneration projects. Cuts to budgets force government departments and local authorities to make really hard decisions that ultimately reduce the people and capacity available to deliver on growth and renewal in our regions.

There wasn’t much to cheer about in today’s Autumn Statement but a renewed commitment to Northern Powerhouse Rail was something. It shows that despite the need for us all to endure short-term pain as the government tries to fix our public finances, it does at least remain committed to projects that boost long-term growth.

Investment zones may not have delivered what was suggested in the ‘mini-budget’ but they were an idea of some promise and at least worthy of exploration. Many will feel disappointed by their scrapping, As we look ahead, we await details for the university-focussed scheme that will replace them and hope it will come to the fore before the next budget to support local authorities.

•  Stephen Hogg, head of North West and regional residential UK regions at JLL

An ‘ideal opportunity’ to work with affordable housing sector

Given the focus on settling the economy, we did not expect the budget to have many commitments to boost funding in the built environment. It was good to hear that a rent cap will help the most vulnerable tenants. However, at a time when affordability is at an all-time low and 2.8m families in England alone live in substandard rental accommodation, the focus must firmly be on how to fix the affordable housing sector more structurally.

Affordable housing is in crisis thanks to a perfect storm of supply, costs and energy prices affecting viability;  the inflexibility, lack of commerciality and empowerment of local authorities holding up developments if the AH quota isn’t met (30% of nothing is nothing!); and this to be top of everybody’s list as we head into a recession that the Bank of England says will last until mid-2024.

With institutional investment still flowing into BTR and other parts of the PRS, the government has an ideal opportunity to work with and incentivise funding into the affordable housing sector.

• Nick Fell, head of residential at Rapleys

Next steps will be crucial for future of infrastructure

It was encouraging to hear that capital expenditure will not face sweeping cuts, although the announced freeze in public investment from 2025 may still represent cuts in real terms. This will put pressure on the UK’s already-delayed pipeline of major infrastructure projects, and risks missing an opportunity for economic growth, at a time when markets are readying for recession. The government’s next steps will be crucial in deciding whether opportunities can be seized and whether the levelling up strategy is realised following years of well-intentioned policy announcements. UK infrastructure ambitions may not be sinking, but they are treading water.

Private sector capital is ready and waiting to be mobilised to fill the gaps left by cuts and deliver projects that will drive jobs, skills and growth in the regions and industries that need them most. However, private institutional investors need clarity on what our national infrastructure priorities are, the projects government wants to pursue, and how it plans to finance them. The government has acted to balance public finances, and now it must match that with an explicit pathway towards infrastructure partnerships that empowers business to step in to carry the load.

• Rohan Malik, UK and Ireland government and infrastructure leader, EY

Recession will have lasting effects

The big thing for the industry will be the impact on interest rates. Today’s announcements will hopefully stabilise the market and instil trust in buyers to re-start the moving plans they’d recently paused. As well as hard facts, a lot of it’s down to whether the nation perceives that the economy is in good hands … will that happen with recession now officially declared?

From a development perspective, the last few months could have lasting effects on the projects that get built in the years to come. Demand for homes isn’t diminished as populations continue to grow, but we could see funders more likely to revisit portfolios and back build to rent projects over sales. Not only in cities, but in the suburbs, rental demand is outstripping supply and that’s only going to worsen if more people decide to stay put to give them greater flexibility whilst they assess their monthly budgets.

A major issue facing property and its role in the levelling up agenda is viability and trying to keep inflation under control. We’ve seen examples in the last week of rocketing costs – and in particular fears of burdensome long-term running costs  – killing off some levelling up projects. That’s a particular perfect storm that’s going to affect communities beyond the south, where land values are already lower, viability is a challenge and every cost is rising month on month. It’s down to local authorities to strike up partnerships with the development community and, together, revisit levelling up aspirations to make sure that they still work against the vastly different economic climate and, secondly, are commercially viable in the long term.

• Tim Heatley, co-founder of Capital&Centric

Impacts on commercial property are indirect but substantial

Aside from business rate mitigation, most budget impacts on commercial property are, as ever, indirect, but in this instance potentially substantial.

The chancellor’s infrastructural commitments are especially reassuring alongside the commitment towards further devolution to support ‘civic-led investment’. The chancellor’s citation of the work done by Andy Street at the West Midlands Combined Authority and Ben Houchen in the Tees Valley is very heartening. It demonstrates that the conceptual apparatus that informed the Northern Powerhouse initiative is alive and well and will continue to be rolled out across the UK as part of the levelling up agenda.

Furthermore, this civic development could potentially be accelerated exponentially should the proposed Solvency II reforms mentioned by the Chancellor be implemented. Though obscure to many, the Solvency reforms may bring the collective weight of UK institutional capital to work directly on the levelling up agenda, as well as on the expansion and commercialisation of UK’s science industries.

• Walter Boettcher, head of research and economics at Colliers