In today’s Budget, the Chancellor’s task was unenviable. As a result of the Covid-19 pandemic, 700,000 people have lost their jobs since last year. The total Covid-19 support package is set to reach £352bn by the end of this year. The liminal silver lining was that the Office of Budget Responsibility, whose job it is to provide oversight of Government finances, predicts that growth will rebound by 4% this year and by 7.3% next year. Yet this all remains somewhat ‘jam tomorrow’ and therefore it was to be expected that the Chancellor would extend existing support mechanisms until such time as the economy starts to reopen in earnest.
As the BTR sector, the livelihoods of our target markets are relevant to us, and sustaining our customers should sustain us. Therefore measures on extending furlough support and maintaining the income tax threshold increases next year were welcome measures. I know that many of our members have been endeavouring to go out of their way to support their customers during the pandemic, and it would have been good to see that recognised in some support for renters alongside the announced support for 95% mortgages that will benefit aspiring homeowners.
I welcomed, too, a series of measures designed to stimulate regional growth in the UK. A levelling up prospectus fund, 45 more Towns Fund recipients and a number more City and Growth Deals were confirmed, which I suspect will attract high quality employment, infrastructure and a demand for high quality homes. Support for infrastructure itself was announced via a newly inaugurated UK Infrastructure Bank. The Chancellor also confirmed, with HM Treasury leading by example, that Government will press on with moving its offices outside of London. The presence of major high quality employers such as MHCLG and HM Treasury in Darlington and Wolverhampton can be supported by BTR with attractive high quality homes that can scale more rapidly compared to other forms of tenure. I believe, too, that the amenity offered by BTR can lend itself well to the hybrid/home working environment that will likely be in the futures of many of us.
There will be some pain to come. Business Rates, VAT and other reliefs were extended in this Budget to sustain business in general, the Chancellor did set out a plan for how business would repay the support it had obtained during the Pandemic. The Chancellor was also accurate in his assessment that the repayment of current borrowing was likely to be the collective yoke of successive Governments, given its size and relationship to GDP. This will include increases to Corporation Tax from 2023, with a tapered approach designed to reduce the overall burden on SMEs and micro-businesses. The blow was softened slightly by the introduction of a time-limited ‘Superdeduction’ (essentially a 130% first year capital allowance) although the Budget Red Book contains only tantalising details on that announcement and so we will be seeking further clarity.
Dave Butler, CEO, UKAA