Last edited 30 Sep 2015

Fixing the foundations: creating a more prosperous nation


[edit] Introduction

On 10 July 2015, just two days after the 2015 Emergency Budget, HM Treasury and the Department for Business, Innovation & Skills (BIS) published ‘Fixing the foundations: creating a more prosperous nation’ a government plan for increasing Britain’s productivity.

In a speech at Longbridge, Birmingham, Business Secretary Sajid Javid said, “Britain is home to some of the world’s most innovative and dynamic businesses, staffed by incredibly talented, hardworking individuals. Yet our productivity – the rate of output per hour worked – is well below its potential. In stark terms, it now takes a worker in the UK 5 days to produce what his or her counterparts in Germany can deliver in 4... If we could match USA for productivity, it would boost our GDP by 31% – that’s equivalent to £21,000 a year for every household in the UK.” Ref

Fixing the foundations’ sets out a 15-point plan to encourage long-term investment and promote a dynamic economy:

  1. An more competitive tax system.
  2. Rewards for saving and long-term investment.
  3. A highly-skilled workforce.
  4. World-leading universities, open to all who can benefit.
  5. A modern transport system.
  6. Reliable and low-carbon energy.
  7. World-class digital infrastructure.
  8. High-quality science and innovation.
  9. Planning freedoms, more houses to buy.
  10. A higher pay, lower welfare society.
  11. More people able to work and progress.
  12. Financial services that lead the world in investing for growth.
  13. Competitive markets with less regulation.
  14. A trading nation open to international investment.
  15. A rebalanced economy and a thriving Northern Powerhouse.

[edit] Planning and housing

Item 9 ‘Planning freedoms and more houses to buy’ focusses on the need to increase the supply of housing to support growth and improve labour market flexibility.

The report suggests that an excessively strict planning system can prevent land and other resources from being used efficiently, impeding productivity, and it proposes a number of reforms:

  • Introducing a new zonal system to give ‘automatic’ planning permission in principle on suitable brownfield sites.
  • Taking action to ensure that local authorities have local plans in place and are making homes available for local people. The government will intervene to arrange for local plans to be written where necessary, in consultation with local people.
  • Bringing forward proposals to significantly streamline the length and process of local plan preparation.
  • Considering how policy can support higher-density housing around key commuter hubs.
  • Considering how national policy and guidance can ensure that unneeded commercial land can be released for housing.
  • Improving the planning process to ensure planning decisions are made on time.
  • Bringing forward proposals for stronger, fairer compulsory purchase powers.
  • Devolving new planning powers to the Mayors of London and Manchester.
  • Working with the Mayor of London to remove the need for planning permission for upwards extensions for a limited number of stories up to the height of an adjoining building, where neighbouring residents do not object.

The report also proposes restricting the relief on finance costs that landlords of residential property can get to the basic rate of tax. The restriction will be phased in over 4 years, starting from April 2017.

Other policies are also mentioned that had previously been announced:

These proposals come on top of a raft of measures announced just 6 days earlier to accelerate house building over the next 5 years which will form part of the Housing Bill to be introduced in the autumn, including:

  • Extension of the Help to Buy scheme to 2020.
  • Placing a duty on councils to help allocate land to people who want to build their own home.
  • A new Housing Growth Partnership that will invest alongside smaller builders in new developments.

For more information see: Government announces a package of housing measures.

[edit] Zero-carbon homes

The report states, 'The government does not intend to proceed with the zero carbon Allowable Solutions carbon offsetting scheme, or the proposed 2016 increase in on-
site energy efficiency standards, but will keep energy efficiency standards under review, recognising that existing measures to increase energy efficiency of new buildings should be allowed time to become established.'

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