The Chancellor of the Exchequer promised a “big and bold” Autumn Budget and it’s fair to say he delivered, in some parts at least. While Philip Hammond announced some positive measures to help the economy grow out of austerity including greater investment in infrastructure and R&D, there were some concerns that he hadn’t gone far enough to tackle the housing crisis; one of the greatest challenges we face today in Britain.
Operating in an environment where Brexit uncertainty remains ‘plat du jour’ and slow-moving productivity and a downgraded economic forecast blights confidence, is difficult to stomach. But, we can take some comfort from the Government’s commitment to improving productivity. Its announcement to boost the “productivity fund” to £31 billion and its partnership with the TUC and CBI highlights its ambition to build a British workforce armed with the skills it needs for the future. Meanwhile, a £500 million injection into a variety of tech initiatives such as artificial intelligence, 5G and fibre broadband also demonstrates the UK’s desire to be at the forefront of the 4th industrial revolution. While we were given a pretty depressing valuation from the OBR, which has slashed its growth forecasts for the UK over the next five years, the Chancellor’s tone was upbeat with a realisation that investment into skills and innovation is crucial to tackling the problem head on.
Businesses will be breathing a small sigh of relief following the Chancellor’s announcement on business rates. After a sustained campaign by industry leaders, business groups and independent firms, Hammond confirmed that he will bring forward the alignment of business rates and the CPI, previously scheduled for 2020 by two years. Although this will only reduce rates from the proposed 3.9 percent to just 3 percent next April, the small deduction is certainly better than a kick in the teeth for many businesses who have been suffering at the hands of unreasonable and unaffordable bills for years. In addition, the Chancellor revealed that revaluations will now take place every three years, after the next revaluation in 2022; an important and welcomed step towards increasing fairness within a system afflicted by inequalities.
The Chancellor told us that he’d make housing the centre of his Budget and he didn’t disappoint. The £44 billion investment programme to build 300,000 homes a year is absolutely welcome, as is the recognition that support is required for construction skills, innovation and training to be able to deliver them. Other measures announced to improve the planning system, support SME housebuilders and grow the Housing Infrastructure Fund illustrate the Government’s ambition to unlocking the critical housing supply problem. There is also a welcome boost for second property owners thanks to an announced increase in the Capital Gains Tax threshold by £400 to £11,700 next year for people who make gains on second homes. However, for foreign buyers of commercial property, there is a real fear that the capital-gains tax could reduce the flow of money into London’s commercial market particularly at a time when inward investment is most needed.
But of course, the most headline grabbing element of his speech was the declaration to abolish stamp duty for first-time homes up to £300,000. While it sounds good on paper, in reality it will make only a modest difference to demand and do little to support those struggling to buy, especially in London where the average house price is £481,556. According to Halifax’s First Time Buyer review, only a third of first properties sold last year were below the stamp duty threshold so based on this, a large chunk of first time buyers would not even benefit. Instead, measures to assist with rising house prices and unaffordable deposits that are plaguing would be home owners would perhaps have been more welcome.