Chancellor boosts housebuilding support in Autumn Statement

Published:  24 November, 2016

Chancellor of the Exchequer Phillip Hammond announced new housebuilding investments in his first Autumn Statement (23 November), along with new funds for roads and to improve the UK’s digital infrastructure.

Mr Hammond said the Autumn Statement would "prepare our country to seize the opportunities ahead and create an economy that works for everyone".

Many of the changes introduced were part of the Chancellor's plans to prioritise high value investments in infrastructure and innovation to boost the country's productivity which, according to Mr Hammond, lags significantly behind countries such as the US, Germany and France. "Too many British workers work longer hours for lower pay than their German counterparts," he said. "This must change to deliver higher living standards for British workers."

Following on from the £3bn Home Building Fund for England announced in October, the government has now allocated a further £3.7bn of spending for a variety of housing projects over the next five years. Acknowledging that one of the biggest objections to new housing developments at a local level are its impact on the local infrastructure, Mr Hammond allocated £2.3bn of this spending for infrastructure projects – such as roads – to support the building of up to 100,000 new homes.

A further £1.4bn will be used to boost affordable housing in England, with the Treasury estimating this could lead to 40,000 more affordable homes being built. Local authorities will be able to access this second fund through the existing Shared Ownership, Rent to Buy or Affordable Rent schemes.

While announcing further devolution of power to regional governments, an investment package for London was also outlined that would, the Treasury said, allow 90,000 affordable homes to be built in the Capital.

Government will relax the current restrictions on its grant funding, in order to allow a more varied mix of affordable homes to be built. Work will also begin on a White Paper in due course to investigate the "urgent" challenges that currently face the housebuilding sector.

Mr Hammond said this new funding would, in real terms, more than double the government's capital spend on housing, which he described as "a step change in our ambition to deliver a housing market that works for everyone".

Other infrastructure investments announced during the Autumn Statement included:

  • An additional £1.1bn for road improvements to relieve traffic congestion
  • £220m to tackle key road 'pinch points'
  • £27m to develop an expressway between Oxford, Milton Keynes and Cambridge
  • £450m to install digital railway signalling,
  • £1bn in fibre networks and 5G mobile trials, to make the UK a “world leader” in digital technology
  • £340m in flood protection including new flood defences, protection for rail lines and roads.


Addressing the wider economy, the Office for Budget Responsibility (OBR) has upgraded its projected growth forecast for 2016 to 2.1% (up from 2.0%), but has downgraded its 2017 forecast to 1.4% from 2.2%. This, the Chancellor said, was as a result of lower investment and weaker consumer demand, as a result of higher inflation and continuing uncertainty.

According to the OBR, UK growth by 2020 will be 2.4% lower than it would have been had the UK voted to remain within the European Union.

Turning to taxes, Mr Hammond confirmed that government still planned to reduce the rate of Corporation Tax to 17% by 2020, as was announced in the March Budget, and that April 2017's planned increase in the personal income tax threshold to £11,500 would go ahead. Mr Hammond also announced that by the end of this Parliament, they would increase the threshold again to £12,500, and the higher rate income tax threshold would rise to £50,000.

In April 2017, the National Living Wage will increase from £7.20 to £7.50 while, in June 2017, the rate of Insurance Premium Tax will increase from 10% to 12%. The government will, however, introduce legislation to limit the maximum compensation payable to whiplash claims, which it says will reduce average motor insurance premiums by £40 per year.

The planned increase in Fuel Duty is being cancelled for the seventh successive year, which Mr Hammond said was effectively an average saving of £130 per year for car drivers, and £350 per year for van drivers.

The construction industry reacted positively to the additional housebuilding investment.

John Newcomb, managing director of the Builders Merchants Federation, welcomed the new Housing Infrastructure Fund. "[The Fund] will help to invigorate the market by encouraging house building, particularly in areas like London where housing is in high demand," he said. "It will also help to create jobs and growth in construction and the wider UK economy. This is good news for merchants and we expect to see a continuation of September's strong timber and joinery sales as construction work generated by the fund begins."

The Brick Development Association also welcomed the news. Keith Aldis, chief executive officer of the Brick Development Association, said: "For the construction industry, what is important is that the Chancellor breathes life into a turbulent sector. We are also happy to see that government is addressing the issue of affordability in the interim period, and not simply waiting for supply to balance demand. We are hoping that continued, long term, investment will help to aid the chronic housing crisis. However, the focus must be on quality houses that are sustainable as opposed to cheaper houses in greater density. Following the statement, he must turn these promises into reality."

The UK Green Building Council (UK-GBC), while also welcoming the boost for affordable housing, warned that energy bills are a growing financial concern for many families, and that these new homes must be built to high energy efficiency standards to make them cheaper to heat and healthier to live in.

"Government must do more to ensure that our homes are cost effective to run in the long term," said Julie Hirigoyen, chief executive at UK-GBC.

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