Abolishing stamp duty is fine but it will not build the homes we need

It was billed as the Budget to fix housing. Theresa May has made the issue her personal priority, and there was no shortage of ambitious rhetoric. Philip Hammond laid out £44billion of spending and vowed to raise house building output from its current rate of 217,000 a year to 300,000 by the mid-2020s. Yet when it came to explaining how the Government would deliver these numbers, he did not have much to offer – and the £44billion is not what it seems.

The eye-catching number contained an echo of the £50billion that Sajid Javid, the Communities Secretary, is said to have been lobbying for. But that was meant to be borrowing to invest in new houses, or at least the infrastructure to make them possible. Instead, most of what the Chancellor described was existing money which is already being spent on various schemes.

The majority consisted of loans and guarantees, with only a small amount of new capital investment. Of the £15.3billion in new spending, £2billion (for affordable housing) had already been announced by the Prime Minister at the Tory conference last month. More than half of the rest came in the form of guarantees for the

‘More promising is the review into why so many more planning permissions are granted than built’

building industry, used to underwrite risk for smaller firms that have still not recovered from the financial crisis.

The actual investment is, overall, small. There was £2.7billion for infrastructure in high-demand areas, £630million to speed up development on small sites, £1.1 billion for new public-private schemes and £30million a year to establish a new “corridor” between Oxford, Milton Keynes and Cambridge. But there was no new money for the actual construction of homes.

And despite repeated suggestions in recent months that the Government would embark on a new generation of council buildings, Mr Hammond did not lift local authorities’ borrowing caps – only inviting them to apply for higher ones after 2019.

These, then, were modest measures, building mostly on established schemes that have so far failed to shift the dial to the extent required. While helpful, they are too small and too focused on the surface problems. They also risk pouring more public money into enhanced land values that the government should be making a much stronger effort to claw back.

For headlines, the Chancellor was relying on his rabbit out of the hat: the abolition of stamp duty for first-time buyers on homes under £300,000 with a discount on the rest up to £500,000. This will not build any more homes and, as the Office for Budget Responsibility pointed out, it is more likely to push up house prices still further as more people have more money to spend in the market.

More promising was the announcement of a review into why housing developments are proceeding slowly, and why so many more planning permissions are granted than built. Led by Oliver Letwin, the former minister, this could get to the bottom of the fundamental problems in our housing market. But that will not report until next year. In the meantime, the big, bold housing Budget many were hoping for has turned out to be a rather more cautious affair.

Daniel Bentley is editorial director of the think tank Civitas