Budget 2020 - A boost to the UK's Real Estate sector

Budget 2020 - A boost to the UK's Real Estate sector
Published: 19 March 2020

The new Conservative government’s first Budget (Wednesday 11 March 2020) included a number of measures set to boost the UK’s real estate sector, with significant investment promised to improve its infrastructure and housing in particular. What do these measures really mean and how might they impact the sector’s talent and leadership needs? Sector specialists from Berwick Partners’ senior team share their thoughts.

Key points of Budget 2020:

  • More than £600bn is set to be spent on roads, rail, broadband and housing by the middle of 2025.
  • Ministers say this represents the largest capital investment in infrastructure for generations.
  • Northern Powerhouse, the Midlands Engine and the Western Gateway to have dedicated local champions based at key overseas posts.
  • £10 million to increase Growth Hub capacity and provide a high-quality, core business advice and guidance offer across all 38 Growth Hubs.
  • 22,000 civil service roles out of central London, the vast majority to the other regions and nations of the UK.
  • HM Treasury, alongside DIT, BEIS and MHCLG, will establish a new economic decision-making policy campus of over 750 roles in the north of England.

Infrastructure

Marek Dobrowolski leads Berwick Partners’ dedicated Place & Regeneration Practice that delivers senior leadership appointments across all tiers of Local Government. He says the Budget 2020 boost to government spending in infrastructure is a positive step for the country’s economic development:

“The boost to government spending in infrastructure is good news. The government has committed to a ‘levelling up’ of the UK economy and a renewal of economic development and infrastructure investment, focused on the UK regions, in particular the Midlands and the North.

“This budget was the opportunity for government to take practical steps, with clarity on what this means and how it might work. There were some dizzying figures quoted, along with further talk of devolution to regions. How this works in practical terms will be interesting; 22,000 new civil service roles in the North and greater department representation is not the same as powers to effect real local change. In the past, a great deal of the finance behind regional growth has been tied to European Funding, so a lot of those organisations that we are working with, such as Local Enterprise Partnerships, Local Authorities and agencies, need clarity on the sources of finance.”

Talent and leadership

He adds: "It will be interesting to see how the government’s promised help to realise the shift towards a focus on localism and devolution will work in practice. Capital investment doesn’t necessary support human capital – for instance in areas such as skills and training, and there was some mention of tying these together. If we do see the promised £billions going into hard infrastructure in all UK regions, there will need significant investment into programmes that will underpin providing people with the skills to make these projects happen and access these future jobs.”

Ben Ingram, head of Berwick Partners’ Built Environment Practice that works with clients in Infrastructure and Real Estate:

“The Budget is good news for the sector in what remains to be a tough market to attract the best talent.

“The record level of investment in infrastructure that the Government is proposing is certainly a boost. Over the last decade, the likes of road, rail and affordable housing have been managing to attract talent from outside of the sector. However, a significant injection of capital will make infrastructure even more compelling and attract the highest calibre, not only from other industries but also other countries. 

“Beyond the talent directly related to the ‘build out’ of programmes, it is also hugely encouraging for the regional searches we carry out throughout the UK. For the major financial UK centres to be better linked to each other and to London, allows for greater fluidity and movement of talent – ultimately promoting a stronger national business environment and economy,” he adds.

Regional picture

Considering the funding for economic development at a regional level, Marek adds: “On the face of it, the government seems absolutely committed to funding and the models of regional economic development. Local Authorities and agencies will still be sweating on the Comprehensive Spending Review (CSR) in the summer, but committing to funding of the Local Growth Fund for 2021-22. The further funding for Growth Hubs will be seen as positive by Local Enterprise Partnerships.

“This was reinforced by news of a new West York’s City Deal (in exchange for a metro Mayor), and the publication of a White Paper on Devolution in England, which has the potential to be a multi-generational shift around how England’s economy is driven.

“Each of these Budget announcements signal that Infrastructure-led growth is very much at the heart of the UK economic strategy, by addressing the biggest possible buck that financing new rail, road and broadband investment can unlock, illustrated in particular by the deal in the West Midlands, (and the region did really well out of the budget) and the new Cambridge to Oxford arc.”

However, the shift of central government roles and presence in the regions will be viewed with a mixed reception, says Marek: “This is one point of contention, and a lot of senior figures that I have spoken to in the past have said it’s the powers and financing the regions really want, not necessarily government satellite offices.

“Furthermore, DIT having regional representations in overseas embassies is largely dependent on the quality of those DIT teams. I do question whether DIT is the best government department to lead on this, and whether providing regional teams with greater support to have presences internationally would be a better approach.”

Housing

Of the government’s measures for the UK’s housing sector, Tom Neely , who is the Lead Consultant for Social Housing at Berwick Partners across the UK, says:

“It was an interesting day for the Housing Sector. The current funding programme for new affordable housing expires in 2021. The ‘record investment’ in infrastructure, which includes affordable housing, will continue the desperate need for more affordable housing in the UK.”

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