What will the March 2020 Budget mean for housing?
PUBLISHED: 13:01 06 March 2020 | UPDATED: 13:43 06 March 2020
Tony Abel shares his thoughts on the housing sector ahead of Chancellor Rishi Sunak’s upcoming Budget.
After just four weeks in the job, Chancellor Rishi Sunak will deliver his first Budget statement next Wednesday - and all eyes will be on how he manages to come up with the funds to deliver the promises made in December's election campaign.
One area where spending is likely to happen is housing. The availability and cost of finding somewhere to live is a pressing issue for many people in our country, and they will be looking to next week's Budget to provide increased spending in this area. Few would argue against this, but as ever, the devil will be in the detail.
Sunak must avoid the common pitfall of putting forward eye-catching, headline-grabbing promises which also come with unintended consequences.
It is widely predicted that there will be a tranche of new money for new affordable homes. In itself that is a positive move, but it won't work on its own. Someone has to build those new homes, and at a time when there is a shortage of relevant skills - which will doubtless be exacerbated by stricter immigration controls limiting the availability of labour from overseas - there will need to be concurrent investment in training and upskilling the workforce.
If this doesn't happen, the law of supply and demand will simply force up the cost of labour, negating much of the benefit of the new spending and making it costlier to build new homes, whether affordable homes or for people to buy.
If we are going to deliver more new homes, the government must also invest in the infrastructure needed to support them.
We often hear that local amenities such as doctors' surgeries are struggling to cope with growing local populations; we see for ourselves how stretched local planning departments are as a result of the double whammy of increased workload and squeezed local government funding. All of these issues will need more cash to go alongside the likely increased investment in new homes.
A more fundamental requirement is the investment in our electricity infrastructure. From 2025 - just five years away - it is envisaged that all new homes will not be able to be built with fossil fuel-based heating, and this will put pressure on the National Grid. The exponential growth in electric vehicles may have less of an effect on generation capacity (most are charged at night), but even this will require a significant investment in the charging infrastructure.
Politicians are always tempted to go for the big headlines, but what the Chancellor needs to do next week is present a Budget made up of joined-up thinking. Only then will he make a real impact on the UK's housing crisis.
This column is sponsored by Abel Homes.