A Budget for builders?

Chancellor Philip Hammond approached his second Budget this week from a position of acute vulnerability, said The Guardian. “A little like the polar bear on the thawing iceberg, but less cuddly, he is a lonely figure marooned in a shrinking world, the political climate set against him.” On Wednesday, he chose to stake his future on his plans to “fix the broken housing market”. For years, that market has been buffeted by a “perfect storm” that has made houses unaffordable for most people, and for years, Tory chancellors have failed to calm it. Hammond announced grand plans to ensure that 300,000 new homes will be built every year by the mid-2020s (up from 217,000 last year) and loosened the purse strings to the tune of £44bn in support for construction. There was even a “fluffy white rabbit”, said Norman Smith on BBC News online: the abolition of stamp duty for first-time buyers on properties of up to £300,000.

Abolishing stamp duty “sounds good”, said Sara Benwell in the Daily Mirror. “But in reality, the savings for those struggling to get on the housing ladder are minimal.” In 2016, about a third of first-time buyers bought homes that were below the current stamp-duty threshold of £125,000 – so they’ll save nothing. Even for those that will benefit, the most they can save is £5,000. “It’s hardly going to magically solve the housing crisis.” Economists say it will in fact slightly raise house prices. Hammond’s promises of extra money are “welcome”, said Faiza Shaheen in The Guardian. However, a large chunk of the £44bn will go on schemes such as Help to Buy – which have only served to inflate prices and help the better off – rather than funding affordable housing. In general, though, his plans are “sensible and almost as multifaceted as the housing market’s problems”, said Juliet Samuel in The Daily Telegraph. As well as the stamp-duty cut and funding increases, there will be an inquiry into land-hoarding by housebuilders, and into how planning law blocks development.

He kicked the real problems into the long grass, said Isabel Hardman on her Spectator blog. Instead of announcing major planning reforms, Hammond essentially said: “We’re not going to upset shire England or our backbenchers.” There were two pieces of good housing news in the Budget, said Jonn Elledge in the New Statesman. There are plans for a million new homes in the fast-growing Oxford-milton Keynes-cambridge corridor, and some councils will be allowed to borrow to build housing – which was previously forbidden. The rest of it was “about as radical as cornflakes”. The problem is that the Tory Party wants to make housing more affordable and to drive up home ownership numbers, but it also wants to keep house prices up, to avoid upsetting the economy and older voters. “These two impulses cannot, mathematically, be reconciled.” So the Government compromises by promising to fix the housing market, “but then not actually bothering to deliver”.