A Budget For Homes
This month sees what is perhaps Philip Hammond’s most important Budget to date, writes Tony Abel.
The Chancellor has a tricky balancing act: a difficult financial situation with sluggish growth, rising inflation and weak business confidence; a political imperative to re-energise his party’s standing in the country following June’s election which saw people turning away form the idea of austerity; and a challenging 12 months ahead during which the true consequences of Brexit will start to crystallise.
None of which changes the fact that amongst the biggest challenges facing the UK is the issue of housing, which stubbornly refuses to go away. Mr Hammond must take measures in his Budget to tackle our housing crisis.
The Adam Smith Institute this week suggested that the most effective measure would be to abolish Stamp Duty. The think tank says that the tax is leaving people trapped in unsuitable homes because of the amount it adds to the cost of moving. However, given that Stamp Duty brought £11.7 billion into the Treasury’s coffers last year, such a move seems improbable.
More likely is a further extension of Help To Buy, one government initiative which has actually worked, helping many thousands of people onto the property ladder for the first time.
In the end, helpful though such measures might be, there is only one sure-fire way of solving the UK’s housing crisis, and that is to ensure we have enough homes for everyone. And after decades of inadequate new house building, that means doing everything possible to accelerate the delivery of new homes.
The three things which are slowing down new home building are planning, infrastructure and finance. And in each of these, the Chancellor could announce measures to help.
As we know, local authority finances are severely squeezed, with the result that planning departments, district valuers, highways, and other statutory participants in the planning process are under-resourced and, despite their best efforts, struggling to keep up. More funding for these services in the Budget would help.
The public infrastructure necessary for the delivery of new homes is wider than that, though. It is no good building homes if there are not the doctors’ surgeries, schools and road networks to service them. Housebuilders are expected to contribute towards these things, but we cannot expect them to fund them entirely.
Access to the finance necessary to bring forward schemes has also been squeezed – only three of the mainstream banks will currently lend to smaller house builders (larger concerns generally have better access to finance). As a result, the fundamental change in the sector since the last recession is the lack of small builders.
The Chancellor could create a public fund for lending for the creation of new homes; not only would this allow constructors to get building, it needn’t be a drain on the public finances, as the loans would be paid back, with interest.
The other limiting factor is the availability of skilled staff – we need to see enhanced government support for apprentice schemes and training programs to ensure the labour force is there to build at a quicker rate.
No Budget can completely fix the housing market – there are too many interdependent factors which need to come together. But if he is serious about tackling possibly the biggest economic, social and political issue of our time – the housing crisis – the Chancellor must use this month’s Budget to make a start.