The Budget 2026 – Incremental rather than transformational change

John Healey announced his first Budget this afternoon, announcing both short-term measures and long-term strategic changes. Both in the run-up to the speech and in the House itself, the key Budget was marketed as being  for “working people of Britain, for British businesses big and small.”

Following a surprisingly positive economic outlook announced by the IMF this year, the Chancellor focused on both short-term relief for households and small business – with some intriguing announcements on future commitments to building infrastructure and support for local devolution.

As is often the case with any Government announcement, reading between the lines is important and on the face of it Reeves’ fiscal rules have been kept to.  There was no increase in the headline rates of Corporation Tax, Income Tax, National Insurance contributions or VAT.

Depending perhaps on ones’ pre-existing views, this Budget could be seen as a sign that Andy Burnham’s Government is still held by the fiscal chains of the previous administration. Alternatively, it could be seen as a fiscally prudent Budget providing short term relief, while laying the groundwork for future, larger structural changes.

Delivery, delivery, delivery

For the development industry, the Budget does provide some positivity but safe to say today’s announcement will not have set housebuilders into a frenzy of activity. As reported by CalComms following the Labour Conference, there are no more major planning reform coming through barring some Grenfell-related reforms and plans to remove some biodiversity assessment for Brownfield land.

Perhaps the release of the updated NPPF, the scheme of delegation and the release of the Housing Delivery Test results have slated the Government’s need for further changes.

This may give the development industry some optimism that this Government is not pivoting away from its earlier commitments to ease the regulatory blockages for building homes in the UK.

The combination of buyer support, regulatory stability, lower business costs and regional growth investment should be viewed as a broadly supportive backdrop for residential development and land promotion. It will also be interesting to see the lower-than-expected tax on banks may have in future investment in development from the financial sector.

The Government also strengthened its personal commitments to funding house building with an additional £1.5 billion to deliver around 10,000 homes in England, taking total investment in the Social and Affordable Homes Programme to more than £40 billion over 10 years. Alongside this, the Budget has committed £4.7 billion for the new Your First Home equity-loan scheme for first-time-buyers ultimately looking to help 70,000 households get onto the housing ladder.

Embracing Tech

The biggest development announcement may have been reserved for the Data Centre Sector with the announcement of a new Data Centre Covenant which will support applications which will support local communities through lowering electricity bills, investing in communities, meeting environmental standards, support Britain’s reindustrialisation and strengthen the UK’s data sovereignty. Initial response from the Sector has been mixed, with tacit support for the concept of the Covenant, but more clarity required on how this will deliver on further development.

AI continues to be a much-vaulted solution to cut down on regulation and to strengthen the UK’s economic outlook. With the scheme of delegation about to come into effect this week, the Government will push for planning officers to adopt the “PlanAssist” tool by the end of 2027.

Devolution, not revolution

Andy Burnham has consistently made it clear that he wants to deliver more devolution of powers to the Strategic Mayoral Authorities. The Chancellor used his speech to announce that it will be devolving limited tax raising powers to mayors – including 20% of local business rates and a portion of income tax generated locally will go to local authorities in 2028. This money will be used to fund the ‘good growth’ areas outlined by John Healey, and may be the basis of a roadmap for fiscal devolution. Immediately after the Budget, the Government announced plans for a Strategic Mayoral Authority covering Staffordshire and Stoke-on-Trent.

This Budget has provided few surprises and to many this may seem less of a barn storming introduction John Healey than some may have anticipated or event wanted. There will be some relief within this budget for working people and small businesses, which does indicate the moral responsibility that Andy Burnham has been careful to integrate into his administration. To some – given the international economic climate and the wars in the Middle-East – it may seem difficult for the Government to offer more than the ‘breathing space’ this Budget is claiming to provide, especially in the short term. There were some announcements which do demonstrate some longer term thinking – such as the devolved tax receipts for Mayoral Authorities - but perhaps the Government is focused on staying the current course than rocking the economic boat.

At least for now.