Budget news in brief
House prices expected to fall by 9% in next two years, says OBR
House prices are expected to fall by nearly 10 per cent over the next couple of years, largely driven by higher mortgage rates and the wider economic downturn.
The Office for Budget Responsibility (OBR) said house prices are forecast to drop by 9 per cent between the fourth quarter of 2022 and the third quarter of 2024. Average interest rates on the stock of outstanding mortgages are expected to peak at 5 per cent in the second half of 2024, the highest level since 2008, it added.
As the economy recovers, house prices are expected to be around seven times earnings, although the OBR said there is significant uncertainty over its forecast “given the sensitivity of house prices to mortgage rates and the recent volatility in the bond yields that drive pricing in the mortgage market”. PA
NHS given targets in exchange for Treasury funding
The NHS has been set targets for ambulance, A&E and GP services by the Treasury as the chancellor seeks “Singapore efficiency” and “Scandinavian quality”.
The chancellor Jeremy Hunt has promised £3.3bn to the NHS for 2023-24 and in 2024-25 to help offset increases in inflation, however, has said the sector will commit to improving ambulance response times by half, year on year improvement in A&E, and for patients to see a GP within two weeks.
NHS England previously estimated it would need £7bn in 23-24 to address inflation costs, however, the NHS chief executive Amanda Pritchard said the settlement would enable the sector to meet its key priorities. The chancellor also promised to publish an “independently” verified workforce forecast for the NHS on the number of doctors nurses and other staff needed in the next five, 10 and 15 years’ time.
Businesses want changes to ‘outdated’ rates system
The chancellor’s new package of support on business rates has been welcomed by businesses but hospitality groups have stressed that it does not go far enough to fix the “outdated” system. Mr Hunt unveiled new measures to help businesses and shops that he said will be worth £13.6bn in total. The steps include freezing the business rates multiplier for another year to protect businesses from rising inflation, meaning that rates will no longer be hiked up in line with double-digit consumer price index from next April. This measure alone is expected to save companies £9.3bn over the next five years. PA
State pensions to increase in line with inflation from April
Jeremy Hunt has said he will increase state pensions in line with inflation in April. On top of the “biggest ever cash increase in the state pension”, the chancellor also said that he would uprate universal credit and benefits by inflation, with a jump of 10.1 per cent next year.
“I’ve talked a lot about British values of compassion, hard work, dignity, fairness. There is no more British value than to protect and honour those who built the country in which we live. So to support the poorest pensioners I have decided to increase the pension credit by 10.1 per cent,” the chancellor said in his autumn statement.
He continued: “I can also announce that we will fulfil our pledge to the country to protect the pensions triple lock. In April the state pension will increase in line with inflation, an £870 increase, which represents the biggest increase to the state pension.”
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