When I was a kid, budget day was not the most exciting of days. For starters there was no children’s TV on – bumped in favour of grey men talking about tax. Then the Chancellor would get to the bit about booze, fags and petrol and a deathly household hush would descent, like the bit at the end of Poirot when he is about to reveal the murderer. To be honest the most exciting thing that happened in those days was you were bundled into the car in your pyjamas to go to the petrol station before prices went up at midnight.
But as someone who works in housing, and specifically as someone who works in trying to make sure that government understands the pivotal importance of housing in peoples’ lives, yesterday felt genuinely exciting. There was a sense of palpable excitement amongst colleagues and wider housing folk at the prospect of what was widely dubbed ‘The Housing Budget’.
Some colleagues compared it to Christmas – and the drip, drip, drip of positive announcements over the past month or two felt a bit like an Advent Calendar leading up to the big day.
Since we submitted our Budget asks to Government in September we have seen some really welcome and positive changes – including rent certainty (which allows housing associations to plan, borrow and develop), good news on how supported housing is funded and significant extra investment for truly affordable rents. By the time the Chancellor stood up yesterday it felt like we were really on the verge of something big.
So the question is did the Budget deliver everything we wanted? The short answer is no. Don’t get me wrong, there is much that is positive in the measures announced yesterday – changes to Universal Credit are very welcome and will make a difference, promises to look at planning are overdue and additional investment and guarantees will support delivery of more homes.
But when the Chancellor pulled his biggest rabbit out of the hat it turned out to be abolishing Stamp Duty for first time buyers rather than something that was truly game changing in terms of driving up supply.
Now I can see why the politics of this works – cutting taxes is something that will always get big cheers from the benches behind him and positive headlines in newspapers. But put simply, the abolition of Stamp Duty is simply not the magic bullet that will move us closer towards that ambitious and welcome headline figure of building 300,000 homes a year.
The first issue is that, realistically, whilst stamp duty is an unwanted extra expense it is not something that really acts as a significant barrier to home ownership for first time buyers. In a housing market where the average deposit required is over £30,000 and average stamp duty is around £1500 it is clear that for most people, whilst welcome, the difference is pretty marginal.
More fundamentally however, there is a real risk that, in a market with constrained supply, all that will happen is that purchase prices will simply increase because purchasers have already factored paying Stamp Duty into their calculations. In that sense abolishing Stamp Duty for first time buyers begins to look like it potentially advantages those selling homes rather than those buying them who pay, in total, what they had originally budgeted (which in most cases was the most that they could afford anyway).
If Stamp Duty isn’t the answer then what is? Well, instead of Stamp Duty, what the Chancellor should have pulled out of his hat with a final flourish, was a bold commitment to release public land to build the homes we so desperately need.
Whenever anyone has a discussion about land, they use that Mark Twain quote – ‘Buy land – they are not making it any more’ which is a great quote, but misses the point that the challenge is not that there is not enough land in total – but that there is not enough land that we are building houses on.
For all of the talk of there being no ‘magic bullet’, pretty much everyone agrees that the most significant barrier to building the homes we need is a long term supply of affordable land. Government needs to ensure that public land is used for housing, and that pressure is brought to make sure homes are build out where there are planning permissions.
That was what we really wanted to see in the Housing Budget. Instead we got a series of welcome but relatively small scale things. To continue the Christmas analogy we wanted Scalextric but we got socks and chocolates. Don’t get me wrong the socks are lovely, and the chocolates are delicious. But I REALLY wanted Scalextric.