March Update

On 10 February, the Government approved 10 councils to be in its Devolution Priority Programme (DPP) including Cumbria, Cheshire and Warrington, Norfolk and Suffolk, Greater Essex, Sussex and Brighton and Hampshire and Solent. These areas will need to follow an ambitious devolution timetable, with MHCLG consultations already started. Councils have to provide outline proposals later in March and detailed proposals in October Meanwhile, Angela Rayner also announced that all remaining 21 two tier areas in England have to submit plans for future unitary structures.

The key criteria for these councils are that they must be the right size to achieve efficiencies, improve capacity, and withstand financial shocks. This means they need to be large enough to benefit from economies of scale, which can lead to cost savings and better resource management. However, they should not be so large that they lose touch with the local communities they serve. The idea is to create a balance where the councils are efficient and resilient to financial pressures. These unitary structures should focus on delivering high-quality and sustainable public services to citizens. This includes services like education, healthcare, transportation, and social services. Additionally, the proposals should show how councils in the area have worked together to meet local needs and are informed by local views. Collaboration among neighbouring councils is essential to ensure a cohesive approach that reflects the unique needs and preferences of the local population. Another important criterion is that new unitary structures must support devolution arrangements. This means they should facilitate the transfer of powers and responsibilities from the central government to the local government.

Based on ambitious OBR forecasts on productivity growth, there are raised expectations for some that the economy has turned a corner. The estimates, however, have been criticised for being ‘too optimistic’ and lacking realism. The OBR has long predicted the most sustained spell of productivity growth since the financial crisis of 2008/2009 is around the corner, with officials suggesting this is likely. Andrew Wishart, economist at Berenberg bank, stated that the OBR may need to revise its estimates, though, as economists and speculators are becoming increasingly disconcerted with the estimates and their reliability.

The Planning and Infrastructure Bill is set to be introduced to Parliament later this month, parliamentary timetables show. The bill will include details on the government’s new liberalisation of planning laws, reforms to local authority powers on housing and the enhancement of national housing targets. Expectations are it will achieve overwhelming support from Labour MPs and that this will be sufficient to pass the first reading.

Economy:

• Inflation Rates – In January, inflation rose to 3%, a 10-month high, which is above the Bank of England target of 2.5%. The Consumer Price Index (CPI) rose by 3% in the twelve months to January 2025, up from 2.5% in the last twelve months to December.
• Interest Rates – The Bank of England decided to cut interest rates to 4.5% in February, from 4.75%.
• GDP Growth – According to the CBI’s February report GDP growth for 2024 is now projected to be 0.8%, slightly down from the previous forecast of 0.9%. For 2025, the growth forecast is downgraded to 1.2% from 1.6%.
• Pound – The Pound Sterling held steady against the Euro and US Dollar in February, as markets reacted to the latest UK inflation data. Lower inflation has temporarily eased concerns about rising UK borrowing costs, calming and encouraging investors.
• House Market prices- Average UK house markets saw a new year bounce. This brings the average asking price in the UK to £366,189. The number of new properties listed, buyer enquiries and sales agreed are all higher than this time last year. UK home asking prices show biggest early year rise since 2020, Rightmove says
• Unemployment- The UK employment rate increased slightly to 74.9%, according to October to December 2024 data. The unemployment rate increased to 4.4%. Two factors above all are likely to affect hiring plans and unemployment in 2025: businesses that employ minimum wage employees are set to face a steep increase in national insurance tax. Employers’ contributions will go up to £2,583 from £1,617. This will of course discourage hiring. This combined with the second factor of the expected increase to the National Minimum Wage, the total cost of employing a full-time worker on minimum wage will have risen by £2,367 compared to the previous year.

Bills in Parliament:

• Renters’ Rights Bill – MPs are continuing to debate the details of the Renters Reform Bill and it is ever close to being passed. If given Royal Assent, changes include landlords no longer being able to ask for months of rent paid in advance to secure a home, and Section 21 and no-fault evictions will also be banned. The 2^nd reading took place in the House of Lords on the 4^th of February. The bill is now at committee stage in the House of Lords.
• GB Energy Bill – The House of Lords has concluded the final stage of proceedings on the GB Energy Bill, meaning it has now reached its final stages before Royal Assent.
• Water Safety Bill – MPs have finished the first reading of the Water Safety Bill. The second reading is ongoing.

Current Affairs Related to Housing:

• Wales’ final Budget includes £437m for new homes- The Welsh government has published its final Budget for 2025-26, including a capital investment of just over £437m for developing new homes.
• Government needs £50bn to return affordable housing to 2010 levels, researchers say – The UK government would need £50bn to restore affordable housing to 2010 levels of sub-market rent homes, fresh research from a thinktank has claimed.
• Government intervenes in Beehive Centre plans – MHCLG has intervened in an application to redevelop a shopping centre, effectively overruling local planners. Angela Rayner, the Secretary of State for Housing, said a decision on the Beehive Centre in Cambridge should be called in.
• More than 100 new towns being considered by ministers – The Labour government has made housebuilding one of its primary goals. Sir Keir Starmer has also doubled down on his war on NIMBYs
• Government ‘will not renege’ on building safety commitments amid planning deregulation, chancellor says. Chancellor Rachel Reeves has confirmed that the government will not U-turn on its commitments to building safety as it looks to fast-track major housing and infrastructure projects.