The UK Prime Minister has announced a government plan to invest £5bn (€5.5bn) in infrastructure and reform planning permissions to help create new homes and revive the country’s post-COVID-19 economy.
In a speech today, Boris Johnson said the “new deal” puts jobs and infrastructure at the centre of the government’s economic growth strategy.
The government is embarking on what it has dubbed the “build, build, build” strategy to upgrade Britain’s infrastructure and skills to fuel economic recovery across the UK.
This year, some of the government’s spending will include £1.5bn for hospital maintenance, £100m for 29 road projects and over £1bn to fund the first 50 projects of a new, 10-year school rebuilding programme, starting from 2020-21.
Johnson also expects to spend £560m and £200m for repairs and upgrades to schools and further education colleges, respectively, this year.
The government has also set aside £900m for a range of “shovel ready” local growth projects in England over the course of this year and next, among other spendings as it embarks on an “infrastructure revolution”.
In a bid to making it easier to build better homes, the Prime Minister has outlined reforms to UK’s planning system including an eight-year £12bn affordable homes programme.
The changes would mean a wider range of commercial buildings will be allowed to change to residential use without the need for a planning application.
“Pubs, libraries, village shops and other types of uses essential to the lifeblood of communities will not be covered by these flexibilities,” according to Johnson.
Ted Frith, GLIL Infrastructure COO, said the announcements “will hardly get us out of the station” and will only capture the public imagination if they target the areas that match their long-term priorities, including renewable energy.
“We urgently need more details from the chancellor next week in his economic update and in the National Infrastructure Strategy to be published in the autumn,” he said.
“There are billions of pounds of capital in pension funds looking for investment opportunities in infrastructure in the UK.
“So far, the government has given no indication as to what role, if any, private sources of capital will be encouraged to play in financing the ambitious plans. The industry is eager to get some clarity on this point.”
According to Nimesh Shah, partner at tax and advisory firm Blick Rothenberg, a number of the “infrastructure initiatives were already planned and, but the government is now bringing forward those projects”.
He said: “Whilst it’s not a bad move, it’s not strictly additional spending by the government beyond the pre-pandemic projections.”
Shah said the decision to accelerate the spending appears to be a move to inject cash into the economy in 2020, which the government will hope has a knock-on effect to the wider economy.
“It’s essentially a form of quantitative easing through the back door.”
Melanie Leech, CEO of British Property Federation, said the government’s ambition to invest in infrastructure and the built environment is welcome but will only be delivered in partnership with private sector investment and activity.
“The proposals in our Building a Shared Recovery plan should help to reassure investors of the government’s support for the real estate sector, and to enable the sector to maximise its role in supporting the UK’s future.
“With the right policy framework, underpinned by a new sense of bravery and creativity to support us in overcoming the challenges ahead, we stand ready to work as supportive partners investing in people, property and places.”
Mervyn Howard, executive chairman of Apache Capital Partners, said: “Boris Johnson is right that house-building can play a crucial role in supporting Britain’s recovery post-pandemic but it is important we don’t repeat the mistakes of the past by focusing on homeownership-at-all-costs.
“The growth of the private-rented sector was a long-term trend that predates COVID-19, but the disruption caused by the pandemic will see a short-term spike in rental demand and so it is vital that the government’s housing policy reflects the growing demand for high-quality private-rented housing in the UK.”
Tony Dalwood, CEO of Gresham House, said: “As the UK works to restart the economy following the COVID-19 pandemic, investment into green infrastructure needs to be at the top of the priority list so that we can usher in a green recovery.
“Although capital investment has poured into some sustainable solutions such as electric vehicles, and solar and wind energy, more investment is needed in energy transition and efficiency, food security and transport- for example, with hydrogen energy solutions, vertical farming, and with electric vehicle charging points.”
Dean Clifford, co-founder of Great Malborough Estates, said: “The promise of turning brownfield sites into starter homes targeted at first-time buyers is not a new idea but we hope Boris Johnson is able to make this a reality and deliver a new type of affordable housing that helps young people get onto the property ladder.”
According to Clifford, the planning reform will be crucial to getting Britain building again, however, “planning deregulation must be accompanied with proper resourcing for local planning departments as well as investment into affordable rented housing alongside starter homes for first-time buyers”.