This year more than ever, the Budget was as much about what it didn’t say as what it did.
The big news came on stamp duty and housing benefit: the politics of cutting costs for first-time buyers and neutralising headlines about claimants living in mansions.
They are not unrelated, since the stamp duty cut for first-time buyers will be paid for by a new 5% rate on sales of homes worth more than £1m. The biggest concentration of those is in central London boroughs like Westminster, many of them the self-same properties with the rents that generated all the headlines in the first place.
Reports ahead of the Budget suggested that stamp duty would be cut on all properties worth up to £250,000 and that the top 1% of rents in each area might be excluded from local housing allowance calculations. In fact, the stamp duty holiday will only apply to first-time buyers and it seems that only the top 1% of rents in England will be excluded.
That should mean the impact will largely be confined to the central London broad rental market area but it could lead to cuts in allowance rates of up to a third in boroughs like Westminster. Reports suggested payments would be capped at £1,100 a week.
For Lib Dem leader Nick Clegg that summed up a Budget that did nothing for affordable homes. ‘The Chancellor has added to that by a change to housing benefit announced today that will make life impossible for low-income families in high-price areas such as London,’ he said.
Liz Phelps of Citizens Advice describes the cut as ‘the least worst option’ but is worried that it could still lead to big problems. ‘The key question that we don’t have the answer to is what impact it’s going to have on affordable accommodation in central London,’ she says. ‘It’s really important that it doesn’t become a no-go area for people on benefit. It’s crucial to manage a change of that magnitude effectively to help people find something that’s affordable and give transitional relief.’
The other concern is that the change creates an easy mechanism for future housing benefit cuts. What’s to stop a future government looking at the £250m saving from excluding the top 1% and the total bill of £17bn and then deciding to exclude the top 5% or 10% of rents?
And cuts are of course the main thing that the Budget didn’t say. There were £11bn of efficiency savings, including £200m at Communities and Local Government that the department did its best to make sound pain-free.
Lurking unmentioned are the rest of the cuts that are to come (up to £25bn according to the Conservatives) and those stark warnings from the Institute for Fiscal Studies that protecting budgets like health and education will require cuts of around 25% in other areas and from the National Housing Federation of the risk of an 18% cut in the housing budget.
There was more good news yesterday with the extension of higher payments on support for mortgage interest and action on financial exclusion and there may be more today with an announcement due on council housing finance. But how much bad news is just around the corner?
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