Local Government Lawyer identifies some of the key measures from Chancellor Rishi Sunak’s Budget affecting the local government and housing sectors.
Source: Budget 2021, published by HM Treasury on 3 March 2021.
Coronavirus Job Retention Scheme (CJRS) – To support businesses and employees across the UK through the next stage of the pandemic, the government is extending the CJRS for a further five months from May until the end of September 2021. Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June. From July, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September, as the economy reopens.
Self-Employment Income Support Scheme (SEISS) fourth grant – To support the self-employed across the UK through the next stage of the pandemic, the government confirmed that the fourth SEISS grant would be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total. The grant will cover the period February to April, and can be claimed from late April. Self-employed individuals must have filed a 2019-20 Self Assessment tax return to be eligible for the fourth grant. “This means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019-20. All other eligibility criteria will remain the same as the third grant.” Further details will be published in due course.
SEISS fifth grant – The government announced that there would be a “fifth and final” SEISS grant covering May to September. The value of the grant will be determined by a turnover test, “to ensure that support is targeted at those who need it the most as the economy reopens”. People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July. Further details will be published in due course.
Universal Credit increase – The government is extending the temporary £20 per week increase to the Universal Credit standard allowance for a further six months in Great Britain, on top of the planned uprating. This measure will apply to all new and existing Universal Credit claimants.
Mortgage guarantee scheme – The government will introduce a new mortgage guarantee scheme in April 2021. This scheme will provide a guarantee to lenders across the UK who offer mortgages to people with a deposit of just 5% on homes with a value of up to £600,000. Under the scheme all buyers will have the opportunity to fix their initial mortgage rate for at least five years should they wish to. The scheme, which will be available for new mortgages up to 31 December 2022, will increase the availability of mortgages on new or existing properties for those with small deposits.
Temporary Stamp Duty Land Tax (SDLT) cut – The government will extend the temporary increase in the residential SDLT Nil Rate Band to £500,000 in England and Northern Ireland until 30 June 2021. From 1 July 2021, the Nil Rate Band will reduce to £250,000 until 30 September 2021 before returning to £125,000 on 1 October 2021.
Bringing forward exemptions to the Shared Accommodation Rate (SAR) – From June 2021, care leavers up to the age of 25 and those under the age of 25 who have spent at least three months in a homeless hostel will be exempt from the SAR in Universal Credit and Housing Benefit, helping more vulnerable people access suitable housing. These measures were previously due to be implemented from October 2023. These measures apply in Great Britain, and the Northern Ireland Executive will be funded to similarly bring forward implementation of these measures.
Projects and Regeneration
UK Infrastructure Bank – The new UK Infrastructure Bank will provide financing support to private sector and local authority infrastructure projects across the UK, to help meet government objectives on climate change and regional economic growth. The Bank will: be able to deploy £12 billion of equity and debt capital and be able to issue up to £10 billion of guarantees; offer a range of financing tools including debt, hybrid products, equity and guarantees to support private infrastructure projects; from the summer, offer loans to local authorities at a rate of gilts + 60 basis points for strategic infrastructure projects; and establish an advisory function to help with the development and delivery of projects. The institution will begin operating in an interim form later in spring 2021. The Bank will be headquartered in Leeds.
Freeports in England – East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames were successful in the Freeports bidding process for England. Subject to agreeing their governance arrangements and successfully completing their business cases, these Freeports will begin operations from late 2021. The Freeports will contain areas “where businesses will benefit from more generous tax reliefs, customs benefits and wider government support, bringing investment, trade and jobs to regenerate regions across the country that need it most”.
Freeports in Scotland, Wales and Northern Ireland – “Freeports will benefit the whole of the UK. Discussions continue between the UK Government and the devolved administrations to ensure the delivery of Freeports in Scotland, Wales and Northern Ireland as soon as possible.”
Tax sites in Freeports – The government will legislate for powers to create ‘tax sites’ in Freeports in Great Britain; it will bring forward legislation to apply in Northern Ireland at a later date. Tax sites within Freeports will need to be approved and confirmed by the government. Businesses in these tax sites will be able to benefit from a number of tax reliefs.
Levelling Up Fund prospectus launch – The government has launched the prospectus for the £4.8 billion Levelling Up Fund alongside Budget. “The Levelling Up Fund will invest in infrastructure that improves everyday life across the UK, including town centre and high street regeneration, local transport projects, and cultural and heritage assets. The prospectus will provide guidance to local areas on the process for submitting bids, the types of projects eligible for funding, and how bids will be assessed. To ensure that funding reaches the places most in need, the government has identified priority places based on an index of local need to receive capacity funding to help them co-ordinate their applications.”
City and Growth Deals – The government is accelerating investment in three City and Growth Deals in Scotland (Ayrshire, Argyll and Bute, and Falkirk) and three City and Growth Deals in Wales (Swansea Bay, North-Wales and Mid-Wales). Over the next five years £84.5 million in funding will be brought forward to speed up investment in local economic priorities.
Towns Fund – There will be more than £1 billion for a further 45 Town Deals across England. “This will help to level up regional towns, giving them the tools to design and implement a growth strategy for their area and aiding local recovery from the impacts of COVID-19.”
UK Community Renewal Fund prospectus launch – The government has launched the prospectus for the £220 million UK Community Renewal Fund alongside Budget. “This will support communities across the UK in 2021-22 to pilot programmes and new approaches as the government moves away from the EU Structural Funds model and towards the UK Shared Prosperity Fund. Funding will be allocated competitively. To ensure that funding reaches the places most in need, the government has identified 100 priority places based on an index of economic resilience to receive capacity funding to help them co-ordinate their applications.”
Community Ownership Fund – The government will create a new £150 million Community Ownership Fund “to help ensure that communities across the UK can continue to benefit from the local facilities and amenities that are most important to them”. From the summer, community groups will be able to bid for up to £250,000 matched funding to help them to buy local assets to run as community-owned businesses. In exceptional cases up to £1 million of matched funding will be available to help establish a community-owned sports club or buy a sports ground at risk of loss from the community. “This will help ensure that important parts of the social fabric – like pubs, sports clubs, theatres and post office buildings – can continue to play a central role in towns and villages across the UK.”
Modern Methods of Construction (MMC) Taskforce – The Ministry of Housing, Communities and Local Government (MHCLG) will establish an MMC Taskforce, backed by £10 million of seed funding, to accelerate the delivery of MMC homes in the UK. It will be headquartered in MHCLG’s new office in Wolverhampton. The Taskforce will work closely with local authorities and Mayoral Combined Authorities, including the West Midlands Combined Authority and the Liverpool City Region who have already brought forwards proposals.
National Infrastructure Commission (NIC) Towns and Regeneration study – The government will commission a new NIC study on towns and regeneration, which will consider how to maximise the benefits of infrastructure policy and investment for towns in England. Any recommendations in reserved areas will be relevant to the whole of the UK.
Regional cultural infrastructure – The government will invest £18.8 million in local cultural infrastructure projects in Carlisle, Hartlepool, Wakefield and Yeovil to boost the vibrant cultural life of these towns and cities.
Business and Property
Recovery Loan Scheme – From 6 April 2021 the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million “to give them confidence in continuing to provide finance to UK businesses”. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.
Restart Grants – The government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses, “giving them the cash certainty they need to plan ahead and safely relaunch trading over the coming months”. The government is also providing all local authorities in England with an additional £425 million of discretionary business grant funding, on top of the £1.6 billion already allocated. Altogether, this support will cost £5 billion. This brings the total cost of cash grants provided by the government to £25 billion.
VAT reduction for the UK’s tourism and hospitality sector – The government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. To help businesses manage the transition back to the standard 20% rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.
Business rates reliefs – The government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties. “When combined with Small Business Rates Relief, this means 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1 April 2021, with the vast majority of eligible businesses receiving 75% relief across the year.” Local authorities will be fully compensated for the loss of income as a result of these business rates measures and receive new burdens funding for administrative and IT costs.
Business rates repayments – The government will legislate to ensure that the business rates relief repayments that have been made by certain businesses are deductible for corporation tax and income tax purposes. “This will ensure that these businesses are no worse off from a tax perspective than if they had paid the business rates in the first place. This will apply for repayments made to the devolved administrations as well as to those made in relation to England.”
Culture Recovery Fund – The government will provide £300 million to extend the Culture Recovery Fund to continue to support key national and local cultural organisations in England as the sector recovers.
National Museums and cultural bodies – The government will provide £90 million for continued support for government-sponsored National Museums and cultural bodies in England.
Education catch-up funding – Following the £1 billion education catch-up package announced in 2020, the government is making available £700 million of further funding to help young people in England catch up on lost learning as a result of COVID-19. “This new package includes a one-off £300 million Recovery Premium for state primary and secondary schools, £200 million to expand tutoring programmes and deliver early language support, and £200 million for secondary schools to deliver face-to-face summer schools. This funding will help ensure children have the opportunity to make up for lost learning and are able to progress and fulfil their potential.”
Tackling domestic abuse – The government will provide an additional £19 million towards tackling domestic abuse, including £15 million in 2021-22 across England and Wales to increase funding for perpetrator programmes that work with offenders to reduce the risk of abuse continuing, and £4 million between 2021-22 and 2022-23 to trial a network of ‘Respite Rooms’ across England to provide specialist support for homeless women facing severe disadvantage. This comes on top of the £125 million announced at SR20 for local authorities to deliver the Domestic Abuse Bill’s new statutory duty to support victims.
Alcohol duty – To further support the hospitality industry and its suppliers, the duty rates on beer, cider, wine and spirits will be frozen for another year.
Gaming duty – The government will legislate in Finance Bill 2021 to raise the Gross Gaming Yield bandings for gaming duty in line with RPI.
A66 development funding – The government will provide £135 million to accelerate the start of construction on the A66 Trans-Pennine upgrade to 2024.
Intra-city transport settlements – The Budget takes the first step towards implementing the commitment in Budget 2020 for the government to invest £4.2 billion in intra-city transport settlements from 2022-23, through five-year consolidated funding settlements for eight city regions, subject to the creation of appropriate governance arrangements to agree and deliver funding. Budget 2021 confirms capacity funding in 2021-22 to support those city regions with appropriate governance arrangements already in place to begin preparations for settlements.
Birmingham Interchange Station – The government will provide £50 million to develop proposals for transport improvements around the High Speed 2 Birmingham Interchange Station. This will help support regeneration at Arden Cross in Solihull.
Investments in local railways and stations – The government will invest £59 million towards the construction of five new stations in the West Midlands. This Budget will also unlock more than £40 million of funding to reinstate passenger services on the Okehampton-Exeter line, subject to final approval of costs and contracts.
Global Centre for Rail Excellence – The government will match fund up to £30 million, subject to business case, towards the construction of a rolling stock and infrastructure testing complex in Wales.
Flood schemes – The £5.2 billion flood and coastal defence programme for England announced at Budget 2020 will start in April this year, with schemes in Waltham Abbey, Sunderland, Preston, Warrington, Salisbury, Rotherham and Doncaster expected to start construction in 2021-22.
Green Gilt – The government will issue its first sovereign green bond – or green gilt – this summer, with a further issuance to follow later in 2021 as the UK looks to build out a ‘green curve’. Green gilt issuance for the financial year will total a minimum of £15 billion. The green gilt framework, to be published in June, will detail the types of expenditures that will be financed to help meet the government’s green objectives. The government also commits to reporting the contributions of green gilt spending towards social benefits such as job creation and levelling up.
Green retail National Savings and Investment (NS&I) product – The government will offer a green retail savings product through NS&I in the summer of 2021. This product will be closely linked to the UK’s sovereign green bond framework and will give all UK savers the opportunity to take part in the collective effort to tackle climate change, benefiting from the innovative reporting standards planned for the green gilt programme.
Overseas Electors – The government is providing an additional £2.5 million to remove the limit preventing British citizens who live overseas from voting after 15 years.