Housing

Tom Burgis

George Osborne

Welcome to our rolling coverage of the Autumn Statement.

George Osborne has missed his fiscal targets and cut corporation tax.

We’ll bring you all the day’s developments live. By Tom Burgis and Ben Fenton.

15.45: We’re winding up the blog now, but you can follow events as they unfold through constantly updating stories on the front page of FT.com

15.31: A representation of the “flamethrower of uncertainty” can be found in the documentation of the OBR. It is also known as a “fan chart”. I doubt George Osborne is a fan of it, though.

15.24: Chote speaks of the “flamethrower of uncertainty”- a favourite phrase, unsettlingly enough, of the OBR, which is a chart showing forecasts in a wide range that makes the chart lines look like a firebreathing dragon.

15.18: Chote says that the variation in the possible range in the forecast of net debt figures for the UK is a large number, but is “dwarfed by the scale of uncertainties” on the issuance of debt. I think that’s the second time he has said that in his address.

15.12: The Spectator is running a rather scary chart showing the lost output of the current “seven-year slump” in the UK.

15.07: Robert Chote, director of the Office for Budget Responsibility, is live now, going through his department’s figures that underpinned the bad news Mr Osborne has just had to deliver.

15.05: Gavyn Davies has blogged for the FT with his view on the autumn statement while the FT’s Lucy Warwick-Ching has collated some very interesting instant reaction from personal finance experts.

14.49: Hannah Kuchler on the FT’s UK desk has been keeping an eye on business reaction to the autumn statement.

She says:

The CBI, the employer’s organisation, urged the government to stick to its guns on deficit reduction to retain international credibility, saying it was no surprise that austerity would last longer than expected.

John Cridland, director-general, welcomed investment in infrastructure and support for exports, but said the proof was in the delivery. He said:

“Businesses need to see the Chancellor’s words translated into building sites on the ground.”

But the British Chambers of Commerce was less positive, declaring the statement not good enough for a country meant to be in a state of “economic war”.
The government is just “tinkering around the edges”, John Longworth, the BCC’s director general said, adding: “The Budget next March must make truly radical and large-scale choices that support long-term growth and wealth creation. That means reconsidering the ‘sacred cows’ of the political class, including overseas aid and the gargantuan scale of the welfare state. Only a wholesale re-prioritisation of resources, to unlock private sector finance, investment and jobs, will be enough to win the ‘economic war’ we are facing. The danger is that our political class is sleepwalking with its eyes open.”

14.40: Lionel Barber, the FT’s editor, just passed by the live news desk so we asked him what he thought of the autumn statement.

The Chancellor is in a hole, but the good news is that he’s stopped digging. The FT supports the government’s fiscal stance, but is there more to be done on monetary policy to boost growth? That’s the question.

14.26 Who says the British don’t like doing things the French way? Might we surmise from this tweet from the BBC’s Robert Peston’s interview with Danny Alexander, Osborne’s Lib Dem No2, that the UK’s crediworthiness might be going to way of its Gallic cousins’?

[blackbirdpie url="https://twitter.com/Peston/statuses/276330461142327296"]

Others are more chipper:

[blackbirdpie url="https://twitter.com/MJJHunter/statuses/276330252601524225"]

 

Jim Pickard

In a piece for tomorrow’s FT, I describe today’s two housing announcements – and their promise of 200,000 new homes and 400,000 new jobs – as “optimistic, verging on the far-fetched”.

But as one minister pointed out to me (as we trudged through the Manchester drizzle) the figures haven’t been given a timeline. He is right: no one has said that this will be achieved within a year or two, or even in the life of this parliament.

So what is the government doing?

  1. Firstly council house residents will be incentivised to use the existing “right-to-buy” scheme through bigger price discounts. This could generate funds to build new social housing on a one-for-one basis.The right-to-buy scheme is seen as a Thatcherite success but led to a fall in social housing stock: there is now a waiting list of about 5m individuals waiting to be housed. Right-to-buy deals have slowed to just a trickle (around 3,000 last year) partly because residents now typically pay around 90 per cent of the market price for their home. Bigger discounts should mean more more deals. Senior DCLG figures tell me that until the mid-90s the discount was around 30 per cent, which generated about 30,000 sales a year. Expect a return to that kind of

 

Kiran Stacey

Grant Shapps, the housing minister, announced on Thursday that social housing providers will build 170,000 new affordable homes over the next four years, 20,000 more than expected and a lot more than some doomsayers warned would be possible.

Unsurprisingly, the communities department hailed this as a great triumph, but there remain serious questions about whether there will be enough subsidised homes for everyone who needs one.

So what should we celebrate, and what is there to worry about in Thursday’s announcement? 

Jim Pickard

The National Housing Federation – which represents housing associations – will warn today that plans to build 270,000 affordable homes for low income families over the next decade could be axed as a result of the spending review.

The campaign group doesn’t know what’s in the CSR but is estimating that funding for new developments will be cut by up to 50 per cent; which is probably not far off the mark by my estimate. (The DCLG will slash spending on property grants; it’s also rumoured to be cutting its own staff by 40 per cent).

The National Housing Federation claims it has heard that housing is likely to be one of the biggest losers out Wednesday’s CSR – with the danger of building grinding almost to a halt. 

Jim Pickard

In the run-up to the general election George Osborne scored a big propaganda coup by enlisting the names of scores of business leaders in a letter criticising Gordon Brown’s planned rise in National Insurance.

(No matter that in Osborne’s subsequent Budget VAT went up by a similar amount to help plug the fiscal hole).

For Labour that stung; not least because some of the figures had sat at various times on its own advisory boards. David Miliband has since said, on several occasions, that he never wants Labour to enter a general election campaign with no business support. 

Jim Pickard

As I predicted this morning, the stamp duty holiday for first time buyers up to £250,000 has come with a major “sting” – an increase on the levy for people exchanging £1m-plus homes. 

Jim Pickard

When it comes to an Englishman’s home it seems there are certain things you can’t say. John Healey, housing minister, found this out to his cost yesterday when he explained that – for some people – repossession was not the worst option available to them.

Cue outrage in The Sun. And more outrage in The Express. Even the Mirror, which is rarely the first to attack the government, joined in with more than a hint of outrage

Jim Pickard

I’m not officially working today (am at home, in recovery from gastric flu). But I’ve just been passed something so fascinating I couldn’t help passing it on.

You may not remember but something called the “Homeowner Mortgage Support Scheme” was one of the flagship ideas in Gordon Brown’s Queen’s Speech in 2008. (Even Alex and I were quite excited at the time.) The idea was to help people defer mortgage interest for up to two years if they were struggling with payments. The scheme took ages to set up and – even when it was finally announced this spring – only half of lenders fully signed up to it. Even so, the government presented it as a major victory against repossession. 

Jim Pickard

The Times has splashed this morning on criticism of the government over its imminent alteration to the housing benefit system (which was in the April Budget) which will save £140m a year.*

Frank Field and others are protesting about the change which will mean that people will no longer be able to keep any surplus housing benefit over and above the cost of their rent. 

Jim Pickard

There’s a section at the back of the Building Britain’s Future document where Labour spells out key “deliverables” for the next decade.

Some of these are indeed likely. Others less so. Alex and I have picked out some of the more controversial ones. 

Jim Pickard

We are about to see the full details of Labour’s new policy of giving priority on council housing waiting lists to local residents.

This is an obvious dog whistle to working class voters who might otherwise vote BNP. 

Jim Pickard

Labour love to talk about the environment and housing – and the ecotown project combines both in a single grandiose project.

Even now, with the property industry in meltdown, no minister will admit that Gordon Brown’s cherished idea is heading for the grave.

I wrote this morning that a report by the DCLG itself admits that several of the projects would need massive public subsidies (tens of millions of pounds) to go ahead. On others, the maths is uncertain. Only three of the last eight (from 57 proposals and a shortlist of 15) are deemed to be definitely viable.

A flak from DCLG rang this morning to point out that I’d ignored another three schemes which weren’t on the shortlist but have been added to the list. Apologies, the relevant sentence was cut from the story by a sub-editor.

In fact the reality could be even worse than the government believes.