The ‘broken housing market’ must be the biggest issue not only for the Chancellor but for the government and for the Country at large. There is much talk about reducing Stamp Duty, at the lowest level, which could further stimulate the market and in doing so, exacerbate the interests of the already moribund first time buyer who would be in a greater parlous state than at present, if Help-to-Buy is not significantly expanded at the same time.
Personally, I would like them to lower the Stamp Duty levels at the middle to higher end since this is having such a distorted effect on the Residential Property Market, particularly in London.
Transaction levels are down by 65-70% and sales are intermittent at best. I know that the Public are not going to worry about the detrimental effect it will have on the Russian Oligarch selling their £35million mansion but, whether we like it or not, the health of the UK Residential Property Market is indivisibly linked to the growth of the Economy as a key stimulator of this.
Until the Brexit negotiations have been finalised (and we will probably not know the scope of this until October 2018) there will be uncertainty and it is important for the Chancellor to maintain the present level of UK growth until the ‘deal is done’ after which we can then start ‘switching gears’ for our future.
It is evident that we need to build at least 300,000 new homes which ironically is the same number as was the case under Margaret Thatcher’s leadership in the 80s.
A chainsaw needs to be administered to the byzantine arrangements concerning the planning process in local councils, where petty politics are rife and where worthy planning applications are being frustrated by the system. I have said this at nauseum to Michael Gove (Secretary of State for Environment) both personally and in writing. We need a ‘quick fix’ on this in the same way that Permitted Development Rights by-pass the usual labyrinthine planning procedure and have added greatly to the housing pool in the UK.
Frivolous Green Belt and Metropolitan Open Land designations need to be revised and this would provide an avalanche of worthy sites that could be developed, that will provide affordable and private homes for future habitation.
Since the Budget Deficit seems to be going the wrong way and this year we will be heading towards £58billion (as opposed to £47billion last year) the Chancellor has less room for manoeuvre and he will certainly have to abandon, even his revised aspirations, of a balanced budget in 4-5 years time, but I suppose these were all based on a pre-Brexit economic model.
With productivity and real standard of living levels being under threat, he will have to increase the cap on public sector wages in order to address this.
The spectre of higher inflation, which has been exacerbated by imports with a cheaper Pound, will limit his ability to manoeuvre and higher Interest Rates to ‘douse this down’ is not helping things.
Cheaper money and Quantitative Easing is a thing of the past and he can no longer rely on these stimulants to boost growth.
The ‘nuclear option’
I am sure there will be a bit of ‘robbing Peter to pay Paul’ but if he wants a windfall he could go for the ‘nuclear option’ which is to radically reform private pensions from the present system which is ‘no taxed in but taxed out’ to ‘taxed in but not taxed out’. The ‘middle classes’ will hate this like poison, but it will give the Exchequer some instant money in the billions, that they need at present.
Whilst this could ‘boost his coffers’ it will further alienate the traditional, Tory voter which is a dangerous game, after the debacle of the Election in June, when they need all the votes they can get and with a recalcitrant Corbyn ‘snapping at their heels’.
On the trivial side, he should drop the duty on beers since this is a rapidly declining business which needs all the help it can get. Cheers!