Chancellor £1.4bn funding injection to help thousands of families buy a home

(qlmbusinessnews.com via telegraph.co.uk – – Tue, 23 Nov, 2016) London, Uk – –

Construction
Omar Bárcena/flickr.com

Housebuilders will receive a major boost in the Autumn Statement today as the Government steps up its affordable housing drive to help address a chronic shortage.

Philip Hammond will use his first fiscal statement since becoming Chancellor to announce a £1.4bn funding injection to help thousands more families to buy a home.

It came as a jump in corporation tax receipts helped to reduce public borrowing last month to its lowest since 2008, handing a boost to Mr Hammond on the eve of the Autumn Statement.

Higher national insurance, VAT and a 24pc jump in corporation tax revenues pushed down public sector net borrowing, excluding public sector banks, to £4.8bn in October, down from £6.4bn a year ago.

This is the lowest October deficit since 2008, according to the Office for National Statistics (ONS), and well below economists’ estimates for a fall to £6bn.

The Chancellor will announce measures today to help renters and aspiring homeowners as part of a pledge by Theresa May, the Prime Minister, to ensure the economy “works for everyone”.

The Government estimates that 40,000 new homes will be built as a result of the funding injection, which will be used to help first-time buyers, existing shared owners who wish to move and former homeowners who can no longer afford to buy.

Mr Hammond will abandon the rigid framework set by the current Affordable Homes Programme, with the £4.3bn of current and £1.4bn of additional funding allocated “flexibly” between existing shared ownership and affordable rent schemes.

Previous plans indicated that 88pc of funds would be used to build at least 135,000 homes for shared ownership, which are targeted at families with incomes of £80,000 or less, or £90,000 in London.

Around 10,000 homes were expected to be built under the Rent to Buy scheme, where prospective buyers pay a discounted rent for five years while saving for a deposit.

Allocations will now depend on demand from local authorities and housebuilders.

The Chancellor’s announcement will be part of a package designed to help people’s money go further and boost living standards as the UK prepares to leave the European Union.

A modest infrastructure boost will be announced alongside a warning from the Government’s independent fiscal watchdog that slower growth due to the Brexit vote will reduce tax receipts and force up borrowing over the next five years to plug the gap between revenues and expenditure.
The Government has borrowed £48.6bn so far this financial year, according to ONS data.

While this is £5.6bn less than a year ago, the Office for Budget Responsibility (OBR), warned last month that the current borrowing target of £55.5bn for this fiscal year was “very unlikely to be met”.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, expects borrowing for the current financial year to be revised up by around £10bn.

Mr Hammond has already abandoned a goal to balance the books by the end of the decade and some economists believe the hit to the public finances could be as large as £100bn over the next five years.

The Chancellor will present new borrowing rules in the Autumn Statement that will give the Government flexibility to respond to fiscal shocks.

A spokesman for the Treasury said Mr Hammond remained “committed to fiscal discipline” and would “return the budget to balance over a sensible period of time”.

Separate data published by the Confederation of British Industry showed factory bosses reported their healthiest order books in November since before the Brexit vote.

Britain’s biggest business group said manufacturers were at their most optimistic about the near-term outlook in nearly two years.

However, its monthly survey showed many were poised to raise prices at the fastest pace in almost three years, reflecting the sharp fall in the value of the pound since the EU referendum result.

By Szu Ping Chan