After all the hype, leaks, lobbying and pledges to help the "JAMS" - those just about managing, yesterday's Autumn Statement by Philip Hammond was just that – a statement.
Borrowing will increase, the budget deficit will not be balanced by 2020. Hammond had said this months ago following (and blaming) the Brexit vote. Indeed now it appears Government finances are forecast to be £122bn
worse in the period until 2021, than was forecast in the March 2016 Budget just 8 months ago!
There will be more money for infrastructure spending - again old news regurgitated.
Income TaxIncome tax personal allowance threshold to be raised to £11,500 in April 2017, from £11,000 now. Well isn’t this George Osborne’s budget? Quiet how it can be welcomed yesterday as taking a further 'so many million' working Britons out of tax with Hammond claiming:
"As a result, we have more than halved the tax bill of someone with a salary of £15,000 to just £800. That’s a massive boost to the incomes of low and middle earners. Since 2010 we’ve cut income tax for 28 million people and taken 4 million people out of income tax altogether."
In other words since in 2016, 4 million people have an income of less than 11,500 a year!
Hammond increases Insurance Premium Tax (again!)
Insurance Premium Tax will rise from 10% to 12% in June 2017 affecting the price of car and home and other insurance products, raising the cost of home, car and other insurance products. This is the third rise in this tax in 18 months, a doubling the tax rate within the last two years. The rise will add around £51 to the average household’s insurance costs. How does this cynical tax on what is essential insurance help the "JAMS" who may now be tempted to not insure their homes?
Pension recyclingHammond will limit the amount of money people can recycle in pensions. That is withdrawing cash from their pension pot tax-free, then putting some back into a pension again to get extra tax relief. The plan is to reduce the annual tax-free allowance from £10,000 to £4,000 in April 2017 for those who start to take money from their defined contribution pension pot.
New Savings BondOne thing that escaped widespread coverage was Hammond's announcement of a "new savings bond" apparently offering a "market-leading" rate of 2.2%. They will go on sale for 12 months, after April 2017 from National Savings and Investments (NS&I); will be known as Investment Guaranteed Growth Bonds.
Even the 2.2% interest rate is only "indicative" at the present time and will be fixed when the bond is launched next year. Anyone over 16 will be able to invest up to £3,000 in the three-year bond. Whilst Hammond claims two million people should benefit (from the miserly £66 a year interest!), with a maximum potential total interest return of just £202 most critics said the "offer” was "underwhelming".
HousingHammond announced a ban on upfront fees charged by letting agents in England "as soon as possible." A ban on upfront fees has been in force in Scotland since 2012 and was put forward by Labour for England in early 2014. So, for England, this was long overdue.
HousebuildingThe governments own figures to the end of June show homelessness up by 10% in a year – 15,170 households at the last estimate – while another 73,000 languish in temporary accommodation, a rise of more than 50% in six years. The knock-on effect of the crisis hits home ownership, now at the lowest level for 30 years. Theresa May should have made her own rhetoric of
"serving the many, rather than the few", a reality by addressing a chaotic housing market in which an affordable homes programme will get a paltry £2bn up to 2020 from a total housing package of £44bn.
The forthcoming housing White Paper should be a golden opportunity to change course away from the Cameron/Osborne wasteful, indirect subsidies to the big six private housebuilders through mortgage subsidy. A reassessment of policy, in recognition that the state has a wider role beyond generosity to the private sector. But if yesterday’s Autumn Statement is any indication, it will not.
The chancellor said that for many home ownership "remains out of reach", with a pressing need for affordable housing. Stating the obvious, yet the cause has been failed economic and housing Government policies over many years.
"New" spending on housing projects totalling £3.7bn in England was announced by the chancellor. But quite how much of this £3.7bn is really new extra money? On 3rd October 2016, Secretary of State Sajid Javid announced a £3bn home building fund which included £2bn for infrastructure, £1.2bn of which had been previously announced, so only £1.8bn was actual new, additional money then.
Yesterday Philip Hammond said £2.3bn would be spent on infrastructure - such as roads - related to housing developments. The money would support the building of up to 100,000 new homes in high demand areas, and amounted to a "step-change" in help for the industry. The government has also agreed to spend an extra £1.4bn to deliver 40,000 extra affordable homes. That works out at just £35,000 to build each house and this 40,000 homes being an estimate from The Treasury!
Clearly the figures don't add up, and are repeatedly announced as new. What is needed is instead of bombarding the press and media with countless announcements of spending plans for way into the future; the government should be saying what it is doing now. It should start by saying that as of 5 April 2017, local authorities will be funded to build 100,000 new council houses a year on public land.
"Two Budgets Hammond"As shadow chancellor John McDonnell called it this "Press Release Politics" with all that was missing being a hi-vis jacket, was topped off with the announcement that the Autumn Statement will be abolished and replaced with a Budget beginning in the autumn from next year and a "Spring Statement" from 2018. So we will have to endure two budgets in 2017?
