Out-Law Guide 3 min. read

The March 2011 Budget and the Plan for Growth

This guide was last updated in August 2011.

The Chancellor delivered the Budget (900 KB / 104-page PDF) on 23 March 2011. The Government's economic policy objective is to achieve strong, sustainable and balanced growth. The Plan for Growth (1.67MB / 131-page PDF), published alongside the 2011 Budget by HM Treasury, identifies measures that will assist the Government in achieving four overarching policy ambitions, which are:

  • to create the most competitive tax system among the G20 group of major world economies;
  • to make the UK the best location in Europe to start, finance and grow a business;
  • to encourage investment and exports as a route to a more balanced economy;
  • to create a more educated workforce.

This guide highlights both planning and environmental reforms outlined in the Budget and expanded upon in the Plan for Growth.

Planning reforms

The Budget recognises that the current planning system can deter development and growth. As a consequence, the Government will progress a number of reforms to the Town and Country Planning Regime in the UK to address this situation.

The Government will:

  • introduce a new presumption in favour of sustainable development;
  • streamline the system of planning applications - including a 12-month guarantee for processing all applications and appeals, and lifting restrictions on small modifications and additions to existing developments;
  • introduce reforms that will create a new fast-track planning regime for major infrastructure;
  • establish 21 new Enterprise Zones;
  • localise choice about the use of previously developed land by removing national targets and retaining controls on developments in the Green Belt;
  • consult on new proposals for converting commercial premises to new residential dwellings.

The Government's intention is to work together with local planning authorities to progress speedy planning decisions for surplus military land and other public sites that have been identified as suitable for housing. In conjunction with a new presumption in favour of sustainable development, it is envisaged that this will release £350 million of real estate and enable the delivery of up to 20,000 new homes by 2015.

21 new Enterprise Zones will be established. These will benefit from relaxed planning permission procedures, have discounted business rates of 100% for five years and potential enhanced capital allowances, and will allow the use of tax incremental financing to support long-term development and viability. The Government and local planning authorities are to work together to deliver simplified planning approaches in the new zones.

The Government's policy aims are to promote growth and investment by ensuring a new fast-track process for major infrastructure applications.

Green matters and energy tax reforms

In addition to the planning reforms outlined above, the Government identifies a number of environmental reforms in the Budget. Its aim is to revise energy taxation to encourage investment in the power sector and to establish a low carbon economy. The Budget states that:

  • the initial funding for the Green Investment Bank (GIB) will be £3 billion and that it will begin operating in 2012-2013;
  • a carbon price floor for electricity generation will be available from 1 April 2013;
  • despite a commitment to providing public funding for four Carbon Capture and Storage (CSS) demonstration plants a levy will not be introduced to do so. Rather, commitments will be funded through general taxation.

The GIB will receive a further £2 billion in addition to the £1 billion allocated in 2010. The additional funding will come from the sale of assets. The GIB will invest in low-carbon infrastructure projects such as renewable energy, and will begin operations in 2012-13 - a year earlier than initially anticipated.

A carbon price floor for electricity generation will start at around £16 per tonne of carbon dioxide from 1 April 2013. The Government hopes to reach a target price of £30 per tonne by 2020 to encourage investment in the low-carbon power sector.

Climate Change Levy rates will increase in line with the Retail Price Index in 2012-13. The lifespan of Climate Change Agreements, which create discounts from the levy for energy intensive industry sectors that agree targets for improving their energy efficiency or reducing carbon emissions, will be extended to 2023. The levy discount on electricity for these agreements will be raised from 65% to 80% from April 2013, but the exemption for taxable commodities used in rail freight, steel and aluminium recycling will be suspended from 1 April 2011 until reapproved by the EU.

The Climate Change Levy exemption for supplies of gas in Northern Ireland will be replaced with a lower rate to comply with new EU funding rules. From 1 April 2011 to 31 March 2012 this rate will be £0.00059 per kilowatt hour.

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