Magazine article Public Finance

Building for the Future

Magazine article Public Finance

Building for the Future

Article excerpt

We live in a twenty-first century where economic challenge and global opportunity are more pronounced than ever. In rising to this challenge, the chancellor set out in the Pre-Budget Report the key themes for the UK economy, combining thriving enterprise with real investment in skills, developing the best of our scientific research with decent infrastructure and developing affordable housing for all. Investment matched with long-lasting reform.

We do this in a tough context. In the past year we have witnessed a virtual doubling of global oil and commodity prices and a slowdown in our key export markets. While all countries have faced global inflationary pressures, the UK economy has also had to deal with domestic inflationary pressures - to achieve what we and the Bank of England identified early last year as the necessary slowing of house prices and consumer spending.

In previous decades, when our economy faced simultaneous domestic and global inflationary pressures, such inflation was brought under control by mortgage interest rates above 10%, recession and unemployment. Today is different. In the past eight years or more, inflation has been at or around 2%, unemployment has reached record lows, the economy has grown - every year - and we've seen 34 quarters of continued growth.

With this success comes responsibility. We know for example that continuing a record of high employment with low inflation demands continued wage responsibility. So our task is to build on this platform of stability while ensuring that investment is matched with reform in science and skills, infrastructure and housing.

To help achieve these outcomes, we announced a number of measures in the Pre-Budget Report, including a new public-private partnership, supported by £50m of new public investment, to enable Britain to lead the world in stem cell research; the establishment of a new National Institute for Health Research in the NHS, a network of creativity and innovation centres one in each region offering start-up help to new design talent and supported by an expanded national centre in London to showcase British design. And alongside the PBR we published the interim report of Lord Leitch, the first long-term assessment of our future skills needs.

Furthermore, to build more affordable homes of high quality in strong communities, Britain must - as the Barker report recommended - put in place longterm reforms in planning, land use, the competitiveness of the construction industry and infrastructure in both the private and social sectors.

The deputy prime minister responded on PBR day by publishing new planning guidelines that seek to bridge the gap between the 150,000 new houses we build each year and the 190,000 new households we need, in particular, to build houses that young couples can afford. To provide land for new homes, while protecting and improving the environment, he is asking local authorities to bring forward more brownfield areas for development. Where proposed new housing is of high quality and meets the design code, councils will be obliged to accelerate planning consent.

It is critical, too, that we widen the number of investors in the residential and commercial property markets, which is why we will this month publish legislation to set up real estate investment trusts that will increase the funding of new property developments. …

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