Don’t hold back region in Budget

Mar 12 2008 by Kevan Carrick for The Journal

WHEN Chancellor Alistair Darling stands up to deliver his Budget today, he should take care not to introduce anything that will hold back regional development in the North of England.

The North is doing all it can to regenerate itself, attract new investment and create jobs in order to reduce the £30bn gap in output between this region and the average English region.

The Chancellor needs to remember that any Government fiscal measures which hinder property development generally will have a disproportion- ately negative effect on the regional economy and property market.

There are any number of positive measures the Chancellor can take to redress the economic balance. One of them would be to have a Budget specifically for the North – but let’s stay away from the realms of fantasy.

Top of my list would be reducing the rate of VAT on building work covering the repair, maintenance and improvement of commercial property, housing and historic buildings from 17.5% to 5%.

It would have a positive effect across the country, where there are some 21 million domestic dwellings accounting for 27% of the UK’s carbon emissions.

A reduction in VAT would be especially effective in the North, where our existing stock of homes is generally in a poor state of repair and in need to drastic updating.

Where the North really loses out is when fiscal schemes thought up in the South East are introduced and have a disproportionately negative effect in our region.

This is what will happen when the Government’s Empty Property Rates legislation comes into effect in April.

There is more empty property in the North than the South. The Chancellor could introduce fiscal changes that help to accelerate the regional economies and invest public sector funding into local infra- structure projects, helping to make the regions more competitive.