Rishi Sunak, the UK’s Chancellor of the Exchequer, has just delivered the most anticipated budget announcement in the last decade.
On March 3rd, 2021, the Chancellor set out his 2021 Budget. It mainly focused on the recovery from the Coronavirus pandemic, jobs and the economy, Mr Sunak outlined plans for stamp duty, income tax rates, green industry, freeports, and the new national infrastructure bank.
Green infrastructure was a hot topic in the budget, with the announcement of a new UK Infrastructure Bank in Leeds it will see £12 billion in capital, with the aim of funding £40 billion worth of projects. The Chancellor also reiterated the need for a commitment to green investment, which the Infrastructure Bank will help with.
He also announced a £20 million to fund UK-wide competition to develop floating offshore wind demonstrators and help support the Government’s aim to generate enough electricity from offshore wind to power every home by 2030.
Also announced £68 million to fund a UK-wide competition to deliver a first-of-its-kind long-duration energy storage prototypes which will reduce the cost of net zero by storing excess low carbon energy over longer periods.
As well as this, the Chancellor a £1 billion investment for a further 45 towns in England, via the Towns fund, this will support the long-term economic and social regeneration of these towns, as well as their immediate recovery from the impacts of the COVID-19 pandemic.
Mr Sunak announced a five nations approach, stating that the majority of the announcements made in this Budget would benefit. He said the country needs to ‘stay as a United Kingdom’. To do this, the Chancellor announced £1.2 billion in funding for the Scottish Government, £740 million for the Welsh Government and £410 million for the Northern Irish Executive, meaning that the devolved nations will all have a chance to be part of the ‘levelling up’ of the country.
Speaking about being a United Kingdom, the Chancellor announced three Growth Deals in Scotland, in Ayrshire, Argyll & Bute and Falkirk, areas which will see funding come to them quicker. He announced £4.8 million to support the development of a demonstrator hydrogen hub in Holyhead, Anglesey. There was also £30 million announced for the Global Centre for Rail Excellence in Wales. Staying with Wales, the will also see City and Growth Deals in North-Wales, Mid-Wales and Swansea Bay, where like the three in Scotland, will see funding come to them quicker.
Looking to Northern Ireland, the third devolved nation will benefit from the Corporation Tax Exception for the Northern Ireland Housing Executive, Northern Ireland’s biggest landlord.
He also spoke about Freeports, something which he said ‘could only be done now we have left the European Union’, after this, he announced the locations of the eight English Freeports, they will be located in:
- East Midlands Airport
- Felixstowe &Harwich
- Liverpool City Region
- Thames, and
The Freeports will be special economic zones, with tax breaks for importing, as well as this they will also have their own infrastructure funds.
There were plans for at least £15 billion in funding of green glit issuance in the coming financial year, this will help finance critical projects to tackle climate change as well as other environmental challenges, fund important infrastructure investment and helping to create green jobs throughout the country.
Dominick Veasey, Director at Nexus Planning and Head of Research & Analytics said: “The location of eight new Freeports was confirmed, these being: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames, and Teesside. Locations with Freeport status will benefit from tax reliefs and simplified customs, but interestingly also simplified planning restrictions. The detail of individual Freeport zones and the extent to which planning restrictions will be simplified will be interesting to follow in due course. Freeports are expected to significantly boost the local economy, but in practice are likely to have much wider economic benefits and development opportunities.”
Jordan Rosenhaus, chief executive at Goldman Sachs-backed modular housebuilder TopHat, says: “I welcome Rishi Sunak’s green-tinged Budget, but it was disappointing to see that policymakers are still failing to address the problems caused by consumers’ unwillingness to change old habits – especially in relation to how they live in their homes.
“Changing decades-old habits is not going to be easy, but it is vital. The Committee on Climate Change estimates that costs to green the UK’s housing stock will reach £11.7bn of average annual investment over the next 30 years. However, the same organisation also calculates that from mid-2040 savings in operating spending – e.g. how much cheaper it will eventually be to run a home’s heating system using air source heat pump instead of a gas boiler – will start to exceed the annual investment.
“For a step change to happen now it will require a cocktail of Government grants and incentives – not like the Green Homes Grant, which has crashed and burned, but more like basing a home’s council tax bill on its energy performance. Lower Stamp Duty for properties with higher Energy Performance Certificate ratings is also an example of how to encourage developers to improve the energy performance of their new homes. This would echo the tax incentives available to the motor industry and electric cars.”
Overall, Rishi Sunak’s second UK wide budget focused on the recovery from the Pandemic, a year on after he announced his first. By ‘levelling up’ the county, the Chancellor hopes that there is light at the end of the tunnel for a nation who have weathered the storm of the Coronavirus pandemic for more than a year.
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