A considered opinion on the UK government’s Autumn 2017 Budget and how it could affect you.
This was always going to be a difficult budget for Philip Hammond. He started with two major problems that virtually dictated that he try to preserve available cash reserves; the Office for Budget responsibility’s downgrading of its forecast productivity growth from 2% to around 1.5% for every one of the next five years, and the uncertainty created by BREXIT.
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He also faced the political need to do something to try to push back the growing popularity of the Labour party. In particular, he needed to show that he cares about disaffected young people, a major impetus in the surge in Mr Corbyn’s popularity, and the travails of the struggling (at least in their own minds) middle classes.
In the end he probably satisfied no one, but probably did not do much harm to anyone either.
Our professional body, the ICAEW, in its budget representations suggested that Mr Hammond should make no new tax changes but allow the succession of changes over the last few years to work through. He should have taken that advice. But no Chancellor can resist tinkering around to justify his day in the limelight, so we have a lot of fairly small changes, most of which achieve nothing other than to emphasise he his indecisiveness and unwillingness to take big decisions.
The two headline-grabbers were the imposition of CGT on non-resident investors and the abolition of stamp duty land tax (or stamp duty as he insists on calling it) for first-time buyers of starter homes. In the cold light of day neither seems sensible. If productivity has stalled why should we want to deter foreigners from funding the building of factories and offices to generate growth? The SDLT relief is hedged with restrictions, so its initial attractiveness is likely to quickly fade, and in any event, despite what the press keep saying, £2,500 of SDLT in an era when the price of the average house increased by £11,000 over the last year is not the real problem. Virtually everyone agrees that the real answer to the housing crisis is to significantly increase house building and the only way this is going to happen is to relax the sanctity of the green belt around our major cities. Until a government grasps that nettle, the tinkering with incentives to buyers who cannot afford to buy whatever the incentive, is largely irrelevant.