News on 10 November 2000
As usual with Gordon Brown's announcements the devil is
in the detail but his pre-budget report on Wednesday received a generally
favourable reaction from those looking at the implications for business,
especially property and development.
To promote urban regeneration the chancellor announced three specific
measures. A "radical reform of tax incentives" will be designed
to raise business investment in areas of high unemployment by £1bn.
From April stamp duty will be abolished on residential and commercial
property transactions in a list of deprived areas to be drawn up by the
government. Developers will be able to claim tax write-offs when they
clean up contaminated land, instead of waiting until they sell the property.
There will also be 100% capital allowances on converting space above shops
and commercial premises into flats, a measure expected to create 800,000
additional flats.
The Royal Institution of Chartered Surveyors welcomed what it called a
'lifeline' for the inner cities. Chris Brown, RICS urban regeneration
spokesman, said: "This package will provide the boost urban regeneration
needs. By targeting both business and property, and by tackling some of
the inherent difficulties faced in the inner city such as contaminated
land, the Chancellor is helping to revitalise the most blighted parts
of our cities. "We look forward to seeing the flesh on these proposals
in the deputy prime minister's urban white paper to be published shortly."
Simon Davis, urban regeneration partner at GVA Grimley, commented: "This
is the single most important Government action on urban regeneration in
recent years. In one swoop the chancellor has provided the opportunity
for the proposals of the Urban Task Force to be implemented."
According to GVA Grimley, 88 areas will share in a £800m Neighbourhood
Renewal Fund designed to improve housing, raise school standards, reduce
crime and improve health. The target areas will include Hackney in north
London, which will receive £23 million, and Peckham in south London.
Each of the local authorities will be free to spend as they see fit within
the designated areas.
A warning note was sounded by David O'Keefe of KPMG, concerned that the
announcement of "further consultation" on business rates could
be bad news for business: "The chancellor is proposing a supplementary
business rate, levied by local authorities and added to their income to
be spent locally. I suspect there will be a slight reduction in the national
rate but it will not offset any increase and there will also be a compliance
burden for business caused by the different regimes across the country."
