Week commencing 20 November 2017

In today's bulletin

• Government launches Industrial Strategy with focus on R&D
• Chancellor’s Stamp Duty cut will drive house price growth

• Thameslink route through London could be delayed by a year
• Innovation valued at £1.7 billion for electricity network

Industrial Strategy

Government launches Industrial Strategy with focus on R&D

Driving innovation and equipping key sectors and businesses in the UK to meet future world challenges is at the heart of the Government’s Industrial Strategy, launched today by the Prime Minister and the Secretary of State for Business, Energy and Industrial Strategy. Heavily trailed by the Prime Minister, the Rt Hon Theresa May MP, ahead of last week’s Budget, the Government says it wants to see investment in research and development rise from 1.7 per
cent to 2.4 per cent of GDP in the next ten years and plans to support this by raising the R&D tax credit to 12 per cent. The first ‘Sector Deals’ were confirmed for construction, life sciences, automotive and artificial intelligence (AI), with £725 million being committed over three years to the next wave of Industrial Strategy Challenge Fund programmes.

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Property, Planning and Regeneration

Chancellor’s Stamp Duty cut will drive house price growth

The price of homes in the UK is set to rise by 3.1 per cent next year, before slowing slightly to 3 and 2.9 per cent respectively in 2019 and 2020, according to the Office for Budget Responsibility’s (OBR) independent analysis following last Wednesday’s Budget. The Chancellor’s Stamp Duty cut is expected to see its most prominent effect in London, where first-time buyers
face the highest prices. However, the OBR only expects house prices to increase by 15 per cent between Q2 of this year and the beginning of 2022, down from its March forecast of 22 per cent. The OBR says this decrease in growth will be driven by a drop in the growth of real incomes.

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Budget “doesn’t match up to Government’s ambition” on housing

The package of housing support announced in the Autumn Budget “does not represent the kind of comprehensive strategy we need”, according to the Royal Institution of Chartered Surveyors (RICS). Responding to the Budget on 22 November, the RICS claimed that it was unclear how much of the £44 billion investment was made up of previously announced measures and that the majority of these policies would only come into effect in 2019-20, arguing
that this was insufficient as housing supply needed an “almighty immediate shove”. The body also called the Stamp Duty abolition for first-time buyers a “distraction” that does not tackle the underlying problem of the need to increase housing supply, and called for a representative at Secretary of State level to tackle what it believes is the UK’s “number one problem”.

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BPF welcomes Budget housing commitments

Changes to Stamp Duty announced in the Budget have been welcomed by the British Property Federation (BPF), the membership organisation that represents the UK real estate industry. The BPF argued that the tax represents a barrier to the efficient working of the housing market and that further
reforms should be introduced to help stimulate supply, particularly of affordable private rented homes. The BPF also welcomed investment in infrastructure, especially transport between regional cities, as well as guarantees for loans to housebuilders.

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Chancellor delivers much-needed “Budget for builders”

The Federation of Master Builders (FMB) has commended Chancellor of the Exchequer, the Rt Hon Philip Hammond MP, for introducing a “Budget for builders” that will enable smaller and medium-sized firms to contribute more to the construction of new homes in the UK. The FMB said the £1.5 billion of further investment in the Home Building Fund and a £630 million fund to prepare small sites for development will be significant in channelling funding
to small builders and providing opportunities to increase small-scale development. The trade association also backed the commitment to training for construction skills, but said Brexit will bring “unprecedented challenges” to the construction sector and urged the Government to ensure the sector continues to have access to skilled EU workers.

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Concerns about London office market overstated

The underlying strengths of London’s office market have been underestimated, casting doubt on previous negative predictions, according to JLL’s latest data and market analysis. Issued on 24 November, the report says that investment in London property has reached £12.5 billion by the end of
Q3 2017, the highest level on record and a 44 per cent increase on the same period in 2016. also argues that the possible exodus of financial services jobs from London once Britain leaves the European Union has been overstated, as have concerns about oversupply and a resulting crash in prices.

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Local knowledge is key for good planning enforcement

Effective local planning enforcement relies on strong local knowledge, given the range of specific issues that affect different places, according to speakers at the annual planning enforcement conference. However, the event, which
was hosted by the National Association of Planning Enforcement (part of the Royal Town Planning Institute), saw a number of speakers say that a clear national legislative framework would help improve enforcement across the country.

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Transport

Thameslink route through London could be delayed by a year

The Department for Transport (DfT) has agreed to Network Rail and Govia Thameslink Railway’s proposal to delay the introduction of the full 24 trains per hour timetable on the Thameslink route by a year. Announced on 23 November, the National Audit Office (NAO) said that the additional services that the Thameslink Programme will require cannot yet be reliably supported by the South East’s suburban network. The programme will instead be rolled
out gradually, leading to a full service commencing in December 2019, in an effort to protect value for money and avoid possible disruption that would be risked by simultaneously launching a large number of new services. The £7 billion project aims to increase the number of suburban services running through central London via Farringdon and Blackfriars.

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HGVs more likely to be involved in fatal traffic accidents than other vehicles

The Campaign for Better Transport has called on the Government to reduce the number of heavy goods vehicles (HGVs) on roads after a recent report showed that trucks are now twice as likely to be involved in a road fatality when compared to a decade ago. HGV fatal collision rates, a study
commissioned by the Campaign for Better Transport and carried out by the Metropolitan Transport Research Unit, shows that HGVs represented 12.2 per cent of traffic on motorways but were disproportionately involved in 41 per cent of motorway accidents resulting in fatalities.

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Energy and environment

Innovation valued at £1.7 billion for electricity network

Innovation projects by local electricity Distribution Network Operators (DNOs) could deliver up to £1.7 billion in benefits for the UK by 2031, according to the Energy Networks Association. Its draft Electricity Network Innovation Strategy, published on 20 November, calls on DNOs to shift from a passive role
in distributing electricity to proactively managing local supply and demand. Successful collaboration to date between energy innovators and network companies include planning for electric vehicles, quicker network connections for generators and integrating battery storage into the grid.

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Key sectors missing out on £1 billion in energy savings

Adopting distributed energy solutions could save key sectors almost £1 billion annually while delivering an £18.5 billion boost to the UK economy, Centrica has found. Released on 23 November, Powering Britain’s Economic Future assesses the potential benefits of the industrial, healthcare and hospitality
and leisure sectors, together worth a quarter of the UK economy, adopting technology including battery storage and onsite power generation. According to the report, these solutions would save NHS England over 20 per cent on its annual £500 million energy bill.

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