CBI calls for a Budget for housing

8 Mar 13
Business leaders have urged Chancellor George Osborne to prioritise investment in housing in next week’s Budget as part of moves to boost the economy through construction.

By Richard Johnstone | 11 March 2013

Business leaders have urged Chancellor George Osborne to prioritise investment in housing in next week’s Budget as part of moves to boost the economy through construction.

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In its Budget submission, published today, the CBI called on the chancellor to make housing ‘the main plank’ of his statement on March 20. The business group suggested increasing capital investment in housing by £1.25bn and called for some business taxes to be reduced, at a cost of £950m. This should be paid for by £2.2bn of further cuts in current departmental spending.

Housing investment should prioritise lending schemes to help first and second-time buyers, the group’s letter to Osborne stated. It called for 50,000 affordable homes to be funded directly by government through a £1.25bn boost for the Affordable Homes Programme. This would generate £18bn of benefits in the wider economy and create 75,000 jobs, the CBI estimated.

The government’s NewBuy mortgage guarantee scheme should also be extended to those with limited or negative equity looking to buy their second home. This would in turn make more properties available for first-time buyers.

The CBI also called on Whitehall departments to accelerate the release of public sector land for new housing on ‘build now, pay later’ terms for developers. The existing £10bn housing guarantee scheme, which as part of the UK Guarantees programme currently underwrites loans made to housebuilders building new homes for rent, should be extended to cover all tenures.

CBI director general John Cridland insisted that government must stick to its deficit reduction plan, but added that ‘now is the time to kick-start confidence’.

He said the CBI’s fiscally neutral measures would ‘provide another boost for the housing market’, benefiting first-time buyers as well as those trapped in negative equity.

‘With its relatively short lead-in times, house building offers the most bang-for-buck in growth terms ¬– unleashing pent-up demand, while creating jobs and growth,’ Cridland added.

Planned spending on road construction and repair programmes should also be accelerated to boost construction, the submission added. Improvement works on the A63 in Yorkshire and Humber and the A38 in Derby are among the projects that could be fast-tracked.

The business lobby also called on the government to introduce a new tax allowance for capital spending, to incentivise businesses to upgrade the quality of privately owned infrastructure. The chancellor should also freeze business rates for the next financial year.


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