Stamp duty giveaway ‘will push up house prices’

Small details and big facts in the Budget

By Alan McGuinness, Political Reporter

The Chancellor has given first-time buyers a boost by abolishing stamp duty on homes up to £300,000 in his Autumn Budget.

Philip Hammond had been expected to reveal measures to try to win back the young vote, and chief among these was the stamp duty giveaway – a move the Government says will save £1,660 on the average first-time buyer property.

But there have already been warnings from the official economic watchdog that the policy could be counter-productive.

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MIDDLEWICH, ENGLAND - MAY 20:  Construction workers build new houses on a housing development on May 20, 2014 in Middlewich, England. Official figures have shown that house prices have risen by 8% in the year ending in March. There have been calls by some experts for the UK Help to Buy scheme to scaled down as it boosts the property market.  (Photo by Christopher Furlong/Getty Images)
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The Office for Budget Responsibility has said the move is "expected to increase house prices" and the main beneficiaries will be those who already own a home.

As few as 3,500 additional home purchases a year will be made as a result of the policy, the OBR estimated.

Pledging to ensure Britain is "fit for the future", Philip Hammond also announced an emergency £2.8bn cash injection for the "under pressure" NHS – including £350m this winter – and £3bn to plan for Brexit.

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He said the economy "continues to grow, continues to create more jobs than ever before and continues to confound those who seek to talk it down" and pledged to "look forwards not backwards".

Housing was a prime focus, with Mr Hammond committing the Government to building 300,000 extra new homes a year by the middle of the next decade.

At least £44bn of capital funding, loans and guarantees to support the housing market will be provided, he told MPs.

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On the wider economy, the Chancellor revealed growth over the next five years has been downgraded because of poor productivity, which he said "continues to disappoint".

GDP is now expected to grow by 1.5% in 2017 – down from March's 2% forecast – 1.4% in 2018, 1.3% in 2019 and 2020, before experiencing an uptick in 2021 (1.5%) and 2022 (1.6%).

The OBR said the Budget was a "significant near-term fiscal giveaway" which would add £2.7bn to borrowing in 2018 and £9.2bn in 2019-20.

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It said: "The persistence of weak productivity growth does not bode well for the UK's growth potential in the years ahead."

Labour leader Jeremy Corbyn said Britain had been "let down" by the Budget, branding the Government "no longer fit for office".

Sir Vice Cable, leader of the Liberal Democrats, said Britain had gone from "top of the growth league to deep into the relegation zone".

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On the extra money for the NHS there was a decidedly muted reaction from inside the health service. One trust chief executive told Sky News: "It is not enough. We won't even be standing still at that level."

The Chancellor also moved to quell the controversy over the Universal Credit welfare reforms, with a £1.5bn package unveiled to cut the waiting time for payments to make it easier for claimants to get an advance.

Mr Hammond acted to assuage concerns from firms about changes to business rates, changing the measure of inflation that is used to calculate increases two years ahead of schedule.

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Other announcements included:

:: A rise in the National Living Wage from £7.50 an hour to £7.83 from April
:: The income tax personal allowance will rise to £11,850 from April, while the higher rate threshold will go up to £46,350
:: Most duties on alcohol will be frozen, but there will be an increase for high-strength "white ciders"
:: The annual fuel duty rise for both petrol and diesel vehicles will be scrapped, but drivers of new diesel cars will be hit with increased taxes unless they meet tough emissions standards

Treasury aides insisted Mr Hammond had not forfeited the right to the moniker "fiscal Phil" as a result of his Budget splurge, with the spending funded from "headroom" built up in previous announcements.

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