Freshwater’s Nick Garland looks at the transport and infrastructure elements of the Budget 2014…
The Chancellor announced that the Government will reform air passenger duty (APD) by abolishing bands C and D from 1 April 2015. This will remove the two highest rates of APD charged on flights to countries over 4,000 miles from Britain, cutting tax for millions of passengers travelling to China, India, Brazil and many other emerging markets. Indeed, the Chancellor announced that these high duties “hit exports, put off tourists, [and] create a great sense of injustice.” This will mean that flights to South Asia and the Caribbean will now pay tax at the lower band B rate, the same rate as is paid on flights to the US. In its written Budget submission, the CBI had asked that “at a minimum APD rates should be frozen”, a plea that Osborne was able to meet.
Continuing in aviation, the Chancellor also declared more support for the country’s regional airports, extending the scope of the Regional Air Connectivity Fund, providing £20m per year to assist the establishment of links to more destinations.
Elsewhere, George Osborne announced that the proposed fuel duty rise in September would be frozen, a move that will reportedly save a typical motorist £680 by 2015-16. VAT is to be removed on fuel for emergency services search as search and rescue and coastguard teams. There was also an increase in the discount forUltra Low Emission Vehicles (ULEVs).
Repeating the message of Sir David Higgins’ report on HS2, the Chancellor explained to Parliament that “we’ve been reminded again this week of the benefits high speed rail will bring to the north of our country and I’m determined it goes further north faster.” Reiterating Patrick McLoughlin’s announcement to Parliament, the Chancellor said HS2 Ltd will be commissioned to develop proposals for accelerating the project and opening the line to Crewe by 2027, six years earlier than planned, as well as exploring options for undertaking a substantial redevelopment of Euston station, one of the biggest undeveloped commercial opportunities in central London.
The Chancellor announced a £270m guarantee to the Mersey Gateway Bridge to support the raising of debt finances as well as introducing tax and borrowing powers to the Welsh Government fund infrastructure needs such as improvements to the M4 in South Wales. The announcement on Wales was made in advance of the Government taking forward the Wales Bill shortly that will devolve new tax and borrowing powers to Wales, enabling the Welsh government to raise more of the money it spends and providing it with further tools to support growth in the Welsh economy. £200m was also made available for local authorities to bid for in order to repair pot holes on Britain’s roads.
As expected, the Chancellor spent a period of time detailing his pledge to invest in Britain’s housing infrastructure. By asserting that “we’re getting Britain building”, Osborne repeated the Government’s plans for developing a Garden City at Ebbsfleet, forming an Urban Development Corporation, to build 15,000 new homes and install the necessary infrastructure in the region whilst also publishing a prospectus on the future of Garden Cities. Osborne also announced plans to support people to build their own homes, offering £150m through a new ‘Right to Build’ fund.
In a move that will be welcomed by the likes of the Royal Institute of Chartered Surveyors (RICS) and the National Housing Federation, George Osborne also announced the proposal to release of £5bn worth of government land and property to create further opportunities for housing and economic development. Both organisations had asked the Chancellor to carry out this policy in their written submissions. All in all the Chancellor is hoping to “support over 200,000 new homes for families” across his proposals.
London First had written in their budget submission asking the Chancellor to “fund the extension of the Gospel Oak Overground line to Barking Riverside to enable London’s growth to the East.” Osborne did not disappoint them. In his Budget, the Chancellor announced that the Government is to work with the Mayor of London and the Greater London Authority to develop proposals to construct 11,000 new homes in Barking Riverside to enable further growth in the capital’s east, whilst also working on extending the Gospel Oak to Barking Line into the area.
The Budget also detailed further Government support for Enterprise Zones to create more jobs and attract private investment to local areas. The Chancellor has extended the period in which enhanced capital allowances are available in Enterprise Zones by 3 years until March 2020 as well as extending the deadline by which business must have located to an Enterprise Zone to 2018. These measures are to act as an incentive for new and expanding businesses to locate in Enterprise Zones, such as the new pilot Enterprise Zone near Coleraine in Northern Ireland.
One of the Chancellor’s biggest announcements was that the Government would be capping the Carbon Price Support rate at £18.00 from 2016-17 to 2019-20. It is currently uncapped. Whilst he explained that he was committed to the UK’s Carbon Price Floor (CPF) as a means to stimulate investment in low carbon infrastructure, Mr Osborne said that he wanted to limit any competitive disadvantage of British companies in the global race. The Government will review the CPF trajectory for the 2020s.
Mr Osborne also introduced a new compensation scheme, to help energy intensive industries with higher electricity costs resulting from the renewables obligation and small-scale feed in tariffs for renewable generation, from 2016-17.
These key energy announcements were underpinned by the Chancellor’s restating of the Government’s commitment to investing in low carbon and renewable energy.
The aviation sector was the biggest winner from the transport industry, although denouncers of potholes will likely also be pleased. The Garden City and Enterprise Zone announcements should bring welcome jobs and investment to the housing and infrastructure sector, whilst the country’s energy intensive industries will benefit from compensatory schemes designed to keep British companies competitive in the near future. A little bit for everyone in George’s 2014 Budget…