Summary: The Autumn Statement focusses on boosting “productivity” which is to be delivered principally by the government borrowing to invest in infrastructure and innovation. A £23bn National Productivity Investment Fund will provide investment from 2017-2022. Housing and transport are identified as two areas that will benefit from this investment. Decisions on fund distribution to specific projects will follow.
The buzzword of the Autumn Statement was “productivity”. Productivity is too low with the US, Germany, France and even Italy producing more efficiently than UK workers. The government announced that it would borrow to invest in highly-targeted infrastructure and innovation to boost productivity. The cornerstone of this productivity drive is a new £23bn National Productivity Investment Fund (NPIF). This will provide high-value investment for 5 years from 2017-2022. The fund will target spending at 4 areas considered critical for productivity: housing, transport, digital communications, and research and development .
It is interesting that the government is considering housing under an “infrastructure” banner (the industry has been doing this for a while) and it is clearly a move in the right direction with more classic forms of infrastructure - such as transport connectivity – being identified as critical to delivering housing growth. A more holistic – and cross-departmental - approach to development and growth is considered to be likely to lead to more targeted investment in areas where a pool of projects albeit to be delivered by different development bodies will be funding beneficiaries. Of course this assumes that local planning authorities will embrace this vision, and experience suggests this will not necessarily be forthcoming.
Investing in infrastructure
The Chancellor announced that the NPIF will provide £23 billion of additional spending . This will be targeted in areas key to boosting productivity including transport, and housing. The new investment will fund projects that demonstrate a clear and strong contribution to economic growth. Specific projects will be decided in due course, using value for money assessments. Where relevant, bodies such as Highways England, and the Homes and Communities Agency will make this assessment.
In relation to local infrastructure it was announced that the government will award £1.8 billion to Local Enterprise Partnerships (LEPs) across England through a third round of Growth Deals. Awards to individual LEPs will be announced in the coming months. This funding of local infrastructure will improve transport connections, unlock house building, boost skills, and enhance digital connectivity. The government will also consult on lending local authorities up to £1 billion at a new local infrastructure rate to support infrastructure projects that offer high value for money.
Investing in transport
The NPIF will provide:
Roads and local transport
- £1.1 billion by 2020‑21 in new funding to relieve congestion and deliver much-needed upgrades on local roads and public transport networks.
- £220 million investment to tackle key pinch-points on strategic roads.
- £390 million investment by 2020-21 in future transport technology. This will include:
•£100 million investment in testing infrastructure for driverless cars
•£150 million to provide at least 550 new electric and hydrogen buses, reduce the emissions of 1,500 existing buses and support taxis to become zero emission
•£80 million to install more charging points for ultra-low emission vehicles.
- £450 million to trial digital signalling technology, to expand capacity, and improve reliability.
- Around £80 million will be allocated to accelerate the roll out of smart ticketing.
- Construction of High Speed 2 Phase 1 will start in 2017, the government has announced its preferred route for Phase 2b of High Speed 2, and is looking forward to receiving a business case for Crossrail 2.
- £5 million investment in development funding for the Midlands Rail Hub, a programme of rail upgrades in and around central Birmingham that could provide up to 10 additional trains per hour.
Other transport funding:
- £27 million development funding for the Cambridge-Milton Keynes-Oxford growth corridor, including an Oxford-Cambridge expressway.
- £100 million to accelerate construction of the East-West Rail line western section in the growth corridor.
- £10 million development funding for the central rail section in the growth corridor.
- £50 million for rail flood resilience projects.
- £100 million to improve the resilience of roads to flooding.
Whilst no specific figure is mentioned, it is stated that the government will begin talks on future transport funding with Greater Manchester.
Investing in Housing
The government will publish a Housing White Paper shortly, setting out a comprehensive package of reform to increase housing supply and halt the decline in housing affordability. To help deliver this, the Autumn Statement announces that the NPIF will fund:
- £2.3 billion - a new Housing Infrastructure Fund - which will provide infrastructure targeted at unlocking new private house building in the areas where housing need is greatest. This will deliver up to 100,000 new homes. The government will also examine options to ensure that other government transport funding better supports housing growth.
- £1.4 billion will be used to provide 40,000 new affordable homes, a mix of homes for affordable rent and low cost ownership including shared ownership.
- £1.7 billion will be used to speed up the construction of new homes on public sector land.
The government has also confirmed the Greater London Authority’s (GLA) affordable housing settlement, under which the GLA will receive £3.15 billion to deliver over 90,000 housing starts by 2020-21.