What are the key Budget headlines for Hertfordshire's businesses and the wider economy?

Industrial Strategy and the regional economy 

  • £1.6bn new investment to support a Modern Industrial Strategy with a focus on science and innovation with £120 million for the Strength in Places Fund to support regional areas of R&D excellence across the UK. This funding extends the existing programme until 2021-22.
  • Funding for 10 new University Enterprise Zones (UEZ): These are specific geographical areas where universities and business work together to increase local growth and innovation. Each UEZwill be supported by a partnership between a university and Local Enterprise Partnership.  
  • £115m for Digital Catapults in the North East and South East. In addition, theOffice for AI and Government Digital Service (GDS) will review how government can use AI, automation and data in new ways to drive public sector productivity and wider economic benefits.
  • £20 million to support local peer-to-peer networks focused on business improvement
  • £10 million to generate proposals for new business-backed Development Corporations and similar delivery bodies

UK Research and Innovation (UKRI): “Sustained financial commitment is essential in maintaining the UK's global leadership in research and development.” Professor Sir Mark Walport, CEO

What does it mean for Hertfordshire? These decisions renew the Government’s commitment to LEPs and other business-backed bodies to deliver regional growth and firmly positions enterprise and innovation as the cornerstone of success. The development of Local Industrial Strategies, supported by regional investment programmes, will play a critical role. As part of this process, Hertfordshire LEP’s Envoys held a workshop focusing on how AI and big data can be applied to some of the public service delivery issues facing Hertfordshire.

Find out how we are developing a Local Industrial Strategy for Hertfordshire and our progress so far at our Hertfordshire State of the Economy Event 2018.

Businesses and high streets

  • £900m of business rates support for small businesses on the high street. All retailers in England with rateable values of £51,000 or less will have business rates bill cut by a third – saving business up to £8,000 annually.
  • A freeze of the current VAT threshold for two years.
  • The protection of the Employment Allowance which will now be focused on small employers to knock £3,000 off their National Insurance Bill.
  • A new pilot scheme to fund training for the self-employed. 
  • £675m co-funding to create a future high street fund “for councils to transform their high streets”.
  • Apprenticeship Levy contributions from small firms to be halved from 10 per cent to five per cent as part of a “£695 million package to support apprenticeships”.

Federation of Small Businesses: “This is the most small-business-friendly budget that this Chancellor has delivered.” Mike Cherry, National Chairman

What does it mean for Hertfordshire?
Hertfordshire is not performing to its full potential in terms of its underlying productivity and our long-term economic performance has not kept pace with other strong performing local economies in the South East of England, such as the home county areas around London. Within the county itself, there are marked local variations in rates of long-term economic growth. These measures, coupled with the Government’s renewed focus on enterprise and business support networks, will help us to strengthen our focus on SME productivity.

Infrastructure

  • £28.8bn (2020-25) National Roads Fund for the new major roads network and large local major roads Draft £25.3bn Roads Investment Strategy 2 (2020-25) for strategic roads, including Oxford-Cambridge Expressway and the Lower Thames Crossing. Alongside the Budget, Government responded to the National Infrastructure Commission’s report on the Cambridge – Milton Keynes – Oxford Arc. The Government supports the NIC’s ambition to deliver up to 1 million new homes in the Arc by 2050 to maximise sustainable economic growth and a new East West Rail company will be established to accelerate delivery of the central railway section between Cambridge and Bedford. The Government is providing a further £20m to develop a strategic outline business case for the railway.
  • Additional £420m available to local highway authorities to tackle pot holes and minor repairs.
  • Establish a Centre of Excellence to manage current Private Finance Initiative contracts and abolish future PFIs.
  • Crossrail 2 – The government is considering the recommendations of the Independent Affordability Review of Crossrail 2, and will consider the case for the project at the Spending Review.

The Oxford-Cambridge regeneration plans have been met by a mixed response from local politicians, planners and environmentalists including the Campaign for Rural England (CPRE): “If given the green light, this development will change the face of England’s countryside forever. Whilst there will be a need for genuine affordable housing to meet local need in the area, the scale of these proposals is completely unacceptable.” Paul Miner, Head of strategic plans and devolution

What does it mean for Hertfordshire?

Hertfordshire is already the second most densely populated county in the country, but it faces unprecedented growth over the next decade. Over 100,000 new homes and 100,000 jobs are planned by 2031 – in terms of housing, that’s equivalent to at least two Watfords or five Welwyn Garden Cities. This includes 30 major housing locations across the county, each with over 500 new homes. The scale of growth expected beyond 2031 is at least the same again. The growth of the Arc is one of a number of wider regional growth and transport proposals that require greater strategic collaboration across borders.

The Hertfordshire Infrastructure and Funding Prospectus has been commissioned from Aecom by Hertfordshire County Council (HCC) and the Hertfordshire Infrastructure and Planning Partnership (HIPP) – of which the LEP is a member – to provide a view of emerging development and infrastructure requirements to support growth from 2018 to 2031 and an exploration of potential funding options. The final Prospectus, expected later this year, will provide the cornerstone for future infrastructure decision-making in the county.

Housing

  • New consultation on new permitted development rights to allow upwards extensions above commercial premises and residential properties, including blocks of flats, and to allow commercial buildings to be demolished and replaced with homes.
  • Alongside the Budget, Sir Oliver Letwin’s review of the gap between housing completions and the amount of land allocated or permissioned has been published. It concludes that greater diversity in the types and tenures of housing on large sites would increase market absorption rates of new homes – which it sees as the main constraint on build out rates on large sites. The Government will respond to the recommendations in February 2019.
  • The Housing Infrastructure Fund will increase by £500m to a total £5.5bn nationally, unlocking up to 650,000 new

What does it mean for Hertfordshire?
Hertfordshire is one of the most expensive places to buy a property outside London, with average house prices at £441,791. There is a significant affordability gap between house prices and income, and a lack of balance in the housing mix to accommodate different needs and budgets – with a particular shortage of affordable homes. Furthermore, the premium value of residential land and the current national focus on housing provision allowing the automatic conversion of office space into residential through permitted development rights, has resulted in an imbalance in land use, particularly for employment.

The LEP has appointed Lambert Smith Hampton (LSH) to carry out a study into the loss of employment floorspace across Hertfordshire, examining the extent of loss, what the implications are for the Hertfordshire economy, and what the potential solutions might be. There are a number of apparent drivers for this loss of commercial floorspace. These drivers are often linked and include:

  • Increasing demand for residential units with supply not keeping pace with demand
  • Buoyant residential market with long term increase in values
  • Residential investment values outstripping those for commercial space

Interim findings will be presented at our Hertfordshire State of the Economy event 2018. The full report will be presented to the LEP Board in December with the publically accessible document used to help shape future planning decisions.

Skills

  • Apprenticeship Levy contributions from small firms to be halved from 10% to 5% and up to £450 million available to enable levy paying employers to transfer up to 25% of their funds to pay for apprenticeship training in their supply chains.
  • Up to £5 million to the Institute for Apprenticeships and National Apprenticeship Service in 2019-20, to identify gaps in the training provider market and increase the number of employer-designed apprenticeship standards available to employers.
  • £100 million for the first phase of the National Retraining Scheme (NRS).
  • £20 million of skills pilots.
    · £38 million of capital funding to support implementation of the first three T levels in 2020 across 52 providers.

Association of Colleges: "It is deeply disappointing that a budget which purported to focus on skills, economic growth and jobs did not mention the word ‘colleges.” David Hughes, CEO

What does it mean for Hertfordshire?

This will further support the delivery of the Hertfordshire Skills Strategy and maximise take up of the apprenticeship levy through the Hertfordshire Apprenticeship Alliance. We will continue to work alongside the University of Hertfordshire and further education colleges to align training and skills with local employment needs and equip younger generations for highly digitalised workplaces.