Budget 2016 Key Announcements And Reaction

“We are the builders,” George Osborne declared in his Budget today, as he announced plans to improve road infrastructure and build major rail lines across London and the north.

In his statement, the chancellor gave the green light to the capital’s Crossrail 2 project, which will connect South West and North East London for £80 million.

He also promised a £60 million investment in the HS3 rail link between Manchester and Leeds to reduce travel times between the two cities, as well as an additional £161 million to upgrade the M62 to a four-lane highway. Another £75 million will be spent on improving other road links in the north.

Flood defence spending will be increased by £700 million, with the money coming from a 0.5 percentage point increase in the insurance premium tax.

Despite a £100 million investment to combat homelessness, Osborne failed to address the UK’s housing crisis.

Instead, he announced that the planned stamp duty hike on additional property purchases would be extended to include those who purchased more than 15 properties, and that a 3% levy would be added to standard stamp duty rates on second homes.

In 2017, the Government announced the launch of a new lifetime ISA to assist those under the age of 40 in purchasing a home or saving for a pension, with savers receiving a 25% bonus on deposits of up to £4,000 per year.

Senior figures and organisations weigh in on George Osborne’s Budget 2016 speech:

“Much of the British property industry will be very disappointed with today’s Budget changes,” said Elizabeth Bradley, head of the corporate tax team at international law firm Berwin Leighton Paisner. The real estate industry is effectively being used to appease the Government’s backbenchers.

“While the Chancellor recognises the need for more housing, the extension of the additional SDLT rate on buy-to-let to large investors will discourage investment in the private rented sector.”

“Overall, the reduction in corporate tax rates to 17 percent by 2020 will not offset the increased tax costs.”

According to Jonathan Stephens, managing director of Surrenden Invest, a property consultancy specialising in high-yielding buy-to-let investments:

“The chancellor’s announcements today will come as no surprise to those looking to buy an investment property in the coming months.

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“George Osborne has maintained his earlier pledge on Stamp Duty, remaining firm on the changes already announced, which means that those investors who keep their fingers on the pulse will not have experienced any kind of real shock to the system today.”

“What it does mean is that there will be an increasing emphasis on the ‘Northern Powerhouse’ as the location of choice for investment properties.

“This government’s focus on the North West was emphasised even more today with the announcement of new road improvements in the region, as well as a new tunnel connecting Sheffield and Manchester.

“Giving the go-ahead for the HS3 Manchester-Leeds line will also significantly increase investment opportunities in the Northern Powerhouse, improving transportation links and high-speed travel.

“This implies that the emphasis is shifting away from the capital.

“Having ‘London’ at the end of your address should be a licence to print money, but the current oversupply of new build property, combined with the turmoil in the overseas market, means that the London market is cooling – and cooling quickly. In fact, I predict that new build stock in London will be 50% lower by Christmas.

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“However, this is representative of London as a whole. There are still areas, such as Ilford, that are undervalued, and savvy investors looking to buy in the city should look to such areas, which offer low entry points and decent rental income, as well as positive future Crossrail-impacted price growth.

“Overall, I would say that this budget has confirmed that there is no better time to look north, however, with the dream buy-to-let conditions created for the Northern Powerhouse.”

Charles Clarke, a partner in the Planning and Infrastructure department at leading law firm Bircham Dyson Bell, shared his thoughts on the transportation improvements.

“The government has set some ambitious targets for major project promoters to obtain funding from sources other than direct contributions from central government, particularly Transport for London, which saw its resource grant cut in last year’s autumn statement.

“The government has now asked TfL to submit proposals for financing infrastructure projects.” We anticipate some innovative funding solutions for future projects, and we hope that the government will be open to them if these projects are to be completed.”

Chris Wood, CEO of Develop Training Limited (DTL), one of the UK’s leading training specialists for the water and energy industries, applauded the £700 million increase for flood defences.

“Many councils must urgently review their ability to manage flood risk. Announcements about infrastructure investment are also welcomed.

“However, given the chronic skills shortage in the construction industry, Britain will struggle to deal with issues such as flooding while also maintaining our existing infrastructure.”

“The Chancellor’s support for businesses, including a cut in the top rate of corporation tax, is heartening.”

“We would have liked to see something in the Budget headlines about how the government plans to address the issue of training and development in mainstream industrial sectors, possibly through increased funding opportunities or other incentives.”

“More importantly, the government must explain how it will effectively and financially hold the ultimate owners of those privatised utility companies accountable in the future to provide an adequately trained workforce.”

Last Updated on December 29, 2021


Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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