Response to Autumn Statement 2016

 

Response to Autumn Statement 2016

This Autumn Statement was well prescribed beforehand and doesn’t really tell us any more than we were already previously aware. Growth, spending and borrowing are pretty well as forecast and predicted. The over ambitious plan to produce a Budget surplus in 2020 has been discarded in favour of a small deficit and, frankly, should be welcomed.

Chancellor Hammond’s less audacious style will, one hopes, have a calming effect on those who are concerned about the UK Economy in the post Brexit era. This is in sharp contrast to the ‘shock and awe’ tactics of the former Chancellor Osborne who demonstrated the subtlety of a ‘train crash’ with the same success. It annoyed me intensely when he received the accolade from the present Chancellor for the recovery from the post ‘Credit Crunch ‘era. As any monetarist knows, full well, this was almost exclusively due to the massive Quantitative Easing liberally carried out by the Governor of the Bank of England at the time and this has had the same positive effect on the American Economy when it was carried out there at the same time. I must admit it was ‘cringe making’ to see Osborne receive ‘The Companion of Honour’ Award recently and one could be forgiven for suffering a spot of reflux when reflecting on the days of the self engrandising,narcissistic, Peter Mandleson debacle where he awarded himself more honours than you could fit on an A4 piece of paper. It is the equivalent of the ‘tin pot presidents’ from the ‘banana republic’ countries from around the world who have never smelt the cordite from the battlefield but yet have more medals on their chests than there is room to put them.

Lettings fees for tenants

The reference to abolishing lettings fees for tenants is interesting and a typical ‘crowd pleaser’, but I am not sure that this will make a great deal of difference to the functioning of the Industry other than to increase rental prices which will have the same damaging effect on tenants. Frankly, it is already ‘riddled’ with ‘suffocating’ and unnecessary regulation, and is reminiscent of an inept medical surgeon claiming that the ‘operating technique was a text book procedure, but the patient unfortunately died’.

The Lettings Sector is a low margin business, where you do a great deal of work for precious little fees which are adequate at best and certainly not largesse. The Lettings Agent is invariably burdened with all manner of legislation concerning money laundering, immigration/Right-to-Rent checks, appliance tests (which includes gas and electrical performance certificates), licences for HMOs, Tenants Deposit Scheme, etc., etc.

The Agent effectively does the governments work for them, without being paid and surely they do not need any further restrictions placed upon them?

Housing

The governments initiative concerning the £2.3bn of additional funds towards the Housing Infrastructure Fund and the further £1.4bn to deliver 40,000 additional affordable homes is very welcome, although we need to ascertain over what period this extends, as always the ‘devil is in the detail’.

Wider home ownership through the existing schemes of Help-to-Buy/Equity Loan Scheme has helped a number of less privileged people release themselves from the ‘shackles’ of permanent renting and has helped them to get onto the ‘housing ladder’. Lest we forget it is the asset owners, over time, who have become richer leaving the ‘less well off’, becoming poorer.

SDLT Receipts will be £9.5bn lower over the next five years

What a pity that he didn’t re-look at the draconian scales of Stamp Duty ‘metered out’ so mercilessly by the former Chancellor hitherto. As a result of ‘Election bribes’ at the time, SDLT was reduced on the lower ranges, which further disenfranchised the vulnerable first time buyers, whilst at the same time he ‘hammered’ the tax scales on the middle to upper price ranges, which has decimated this sector with collapsing prices, 70% less transactions and lower tax receipts. Infact, for the first time the OBR (Office for Budget Responsibility) has predicted that SDLT Receipts will be £9.5bn lower over the next five years. This effectively means that borrowing needs to increase by this amount to subsidise the ‘fool hardy’ tax changes to Stamp Duty which is Osborne’s legacy. Let us hope that sanity prevails in the Spring Budget of 2017 and the top rate moves down from 12% to 9% which will increase activity, generate more money for the Treasury and get the Property Market moving again in London.

I am not sure why, in the past, the Spring Budget was extended to a twice yearly event, to include the Autumn Statement as well, clearly it is much more efficient to have a single Budget per annum in the future.

It is interesting to observe, that despite the uncertainty of Brexit, we will still have the highest growth and lowest unemployment rate of the G20 which confounds the countless, eminent forecasters that predicted otherwise, during that unfortunate three month ‘Operation Fear’ period, orchestrated by the former Prime Minister and Chancellor.