Week commencing 1 October 2018

In today's bulletin

• Council house borrowing cap to be lifted
• Conservative Conference: more measures to build more homes

• Warm welcome from logistics for fuel duty freeze
• Government cashes in on green energy subsidy savings

Property, Planning and Regeneration

Council house borrowing cap to be lifted

Restrictions which cap how much money councils can borrow to fund housebuilding will be removed following an announcement by the Prime Minister at the Conservative Party Conference on 3 October.
The Housing Revenue Account borrowing cap will be scrapped in a move which the Government says lifts the greatest barrier to housebuilding for local authorities. Further details will be confirmed in the Budget on 29 October before the cap is fully lifted.

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Conservative Conference: more measures to build more homes

In an effort to increase housing delivery, the Government will publish proposals for new Permitted Development Rights to allow for upward extensions on certain buildings, along with greater flexibility for local authorities to dispose of surplus land. The measures were announced by the Secretary of State for Housing, Communities and Local Government, The Rt Hon James Brokenshire MP, at the Conservative Party Conference last week.
During his speech to delegates, Mr Brokenshire also announced the creation of a New Homes Ombudsman which will act as champion for homebuyers, protecting their interests and holding developers to account. The Secretary of State also confirmed a ban on the use of combustible cladding on new high-rise residential blocks after a review of building safety following the Grenfell tower tragedy stopped short of recommending an outright ban.

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Restricting Right to Buy could fund 12,000 homes a year

New analysis from the Chartered Institute of Housing (CIH) has calculated that cutting the discounts available through the Right to Buy scheme could lead to an extra 12,000 homes being built each year.
The figures – revealed in the UK Housing Review 2018 Autumn briefing paper on 2 October – highlight that total Right to Buy discounts reached £1 billion in the last year, with a net loss to local authorities of £300 million. The CIH went even further to argue that the scheme should be suspended to counter the loss of social rented homes.

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Meanwhile uses can improve the development process

London’s unused spaces should be turned into meanwhile uses such as temporary housing or community gardens to offer more affordable, experimental space to the public and improve the development process, according to a new report.
Released on 3 October, the analysis conducted by Centre for London, JLL and U+I found that 24,400 commercial properties currently lay empty in London, and that an area equivalent to the size of the London borough of Lambeth had planning permission to develop, but construction had yet to start on site. The report puts forward four recommendations, including a suggestion for London boroughs to release data on empty commercial units to encourage meanwhile use.

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Planning fees will help cash-strapped councils

Local authorities should be allowed to levy planning fees on applicants to cover all costs associated with the planning application function, the Royal Town Planning Institute (RTPI) has urged the Government.
Making the call on 3 October, the RTPI argued that for councils to better cope with the increasing demands in housing and social care, applicants should pay for all administrative costs of planning so more funds can be channelled to these frontline services. The RTPI claims that the recent 20 per cent increase in planning fees only covered 40 per cent of the total running cost of development control services.

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‘Steady’ house price growth in September

Annual house price growth remained steady at two per cent in September, in line with the narrow growth range apparent over the past year, according to Nationwide’s latest House Price Index.
The figures, released on 2 October, showed an average monthly rise of 0.3 per cent, and the bank expects a further one per cent increase by the end of 2018. Prices remained mixed across the regions – from annual growth of 5.8 per cent in Yorkshire and Humberside to a 1.7 per cent drop in the North.

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Warm welcome from logistics for fuel duty freeze

Fuel duty will be frozen for the ninth successive year, the Prime Minister announced at the Conservative Party Conference on 3 October, in a move welcomed by the logistics industry.
The ongoing freeze will cost the Exchequer around £9 billion a year but has been supported by the Freight Transport Association (FTA), which claims that UK operators already pay one of the highest rates in Europe. According to FTA, a 10p per litre cut in fuel duty would boost the country’s economic activity by nearly one per cent and create over a quarter of a million jobs.

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Government to support local air quality measures

Ten local authorities will be given government funding to take forward new measures to tackle air quality concerns, it has been announced. The Government published a supplement to its air quality plan on 5 October, detailing how it will help 33 councils to reduce harmful Nitrogen Dioxide (NO2) emissions.
The first ten will now adopt measures in partnership with the Government, including retrofitting buses with emission-reducing technology, traffic management measures and campaigns to encourage individuals to take responsibility for their contribution to air pollution.

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Energy and Environment

Government cashes in on green energy subsidy savings

The Government is expected to net £296 million after wholesale energy price forecasts were shown to have been too pessimistic, resulting in green energy subsidy savings of up to 25 per cent. The new analysis, published on 2 October by the Energy & Climate Intelligence Unit (ECIU), highlighted savings resulting from the higher-than-expected wholesale cost of power which has cut the amount of ‘top-up’ funding the Government was expected to pay under the Contracts for Difference (CfD) scheme.
The CfD initiative commits the Government to supporting renewable energy projects by paying the difference between wholesale energy costs and the pre-agreed strike price for developers.

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New tech drives cost reductions in renewables

Improving technologies could reduce the cost of generating renewable energy by up to 55 per cent by 2050, making wind and solar competitive with gas and coal-fired plants in several new markets by 2040.
Published on 2 October, IHS Markit forecasts indicated that onshore wind was already competitive with conventional fuels in most global markets. However, due to variances in local factors – such as resources, the regulatory environments and labour costs – coal-fired plants will remain the cheapest source of energy in markets like Japan and China until the mid-2030s.

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Other News

Councils face £1.3bn cut in funding

The main source of government funding for local authorities is set to be cut by 36 per cent next year, the Local Government Association (LGA) has revealed.
Figures released on 1 October show that the revenue support grant will be cut by £1.3 billion in 2019/20, meaning 168 councils – almost half of the total in England – will no longer receive this grant. The LGA pointed out that between 2010 and 2020, councils will have lost 60p out of every £1 the Government had provided for services and said this cut could “tip many councils over the edge.”

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Recovery for manufacturing sector

Increases in output and new orders helped the UK manufacturing sector return to growth at the end of the third quarter of 2018. Figures from IHS Markit, published on 1 October, highlighted that sector production increased for the 26th successive month in September. Analysts attributed the rise to more new business, rebuilding inventories and reducing backlogs of work.
Foreign demand also recovered with more sales to the USA, Europe, Canada, Scandinavia and Russia, while SMEs helped offset job cuts at larger producers to see employment increase in the sector overall.

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Solid increase reported in UK service sector

The UK’s service sector also experienced a strong September with another increase in business activity, slowing only slightly from August.
Released on 3 October, IHS Markit figures highlighted the strongest rate of job creation since February, which companies reported was due to the need to ease stretched capacity and aid long-term business expansion plans. Input costs have risen due to an increase in fuel prices, but output charges remain largely unaffected as the data shows a rise at the slowest pace since June 2017.

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UK construction output falls to six-month low

Less positive were the fortunes of the UK’s construction sector which experienced the weakest output growth in six months in September, according to new figures released by IHS Markit on 2 October.
All construction sub-sectors recorded a decrease in momentum, with civil engineering activity the worst performing in September. In contrast, the latest report did point to a faster rise in new business volumes, reaching the highest level since December 2016.

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