I get the impression that the new Prime Minister and his Chancellor, plus the entire human resource framework of HM Treasury and Number 10, will have been spending quite a lot of time recently looking for examples of the above in order to make his planned economic statement on the 17th November a little more palatable.
Judging by the ‘rolling of the pitch’ currently being carried out by the government, we can all prepare ourselves for some incredibly severe tax and spending measures which, as some have already styled it, may look like ‘Austerity 2.0’.
Delivering the news of both tax increases and spending cuts is hardly likely to make Jeremy Hunt flavour of the month, or indeed the year, so it would be very surprising if there wasn’t some attempt at a degree of positivity perhaps towards the back end of his statement, as he tries to end on ‘good news’.
Help for first-time buyers?
So, what might that mean? And will those ‘giveaway’ nuggets centre on the housing market, particularly for a demographic which has been front and centre for governments of many persuasions in recent times – the first-time buyer?
Politically of course, providing further support to first-time buyers seems like a ‘win-win’ situation. Especially given that Help to Buy has already effectively finished, and the government Mortgage Guarantee Scheme is due to at the end of this year.
The stamp duty threshold increases are, pretty much, the only measure remaining from Kwasi Kwarteng’s ill-fated ‘mini Budget’ – and only because they were introduced immediately. Given how important the housing market is to the overall UK economy, Hunt might feel he can’t lose if he looks at support for first-timers, and perhaps some further assistance to up supply and ensure purchase transaction numbers do not fall even further.
So, what might that mean in practice? Many have been suggesting a stay of execution for Help to Buy.
After all, it is only for first-time buyers and it has been a much more focused scheme – with regional price caps – in recent years. However, the end of Help to Buy has been much trumpeted.
As mentioned, it is now effectively closed anyway because registrations for new homes needed to have been made by the last day of October.
For me it’s a non-starter to bring this scheme back, and there are other schemes – perhaps most notably, Deposit Unlock – which are already up and running, with no taxpayer money required, and are in a strong position to do exactly the same job.
The best thing the government (and UK Finance) could do here would be to give their verbal support to Deposit Unlock and the other smaller schemes, and ‘encourage’ all those lenders who were part of Help to Buy to move seamlessly over to them.
Releasing taxpayer burden
However, Hunt may think an extension to the Mortgage Guarantee Scheme is not beyond the realms of possibility, plus it is unlikely to cost the Exchequer much anyway.
Again, I would prefer this scheme came to its natural end, especially as we have seen improvement in recent weeks as the markets calmed and lenders could see a much clearer future which allows them to offer high loan to value (LTV) mortgages.
If this can continue, Hunt might believe there is no need to spend further taxpayers’ money on this scheme, because there are private mortgage alternatives available from the likes of ourselves, which are more flexible and competitive.
Although I totally understand why lenders like the comfort of having the Mortgage Guarantee Scheme, even if the vast majority are not using it.
Upping bonus for Lifetime ISAs?
To that end, we may see no extension of such schemes, so what could happen?
Well, one relatively cheap way of showing some level of support to first-time buyers is to be more generous with savings incentives. Given that the Help to Buy ISA is also closed, Hunt may feel able to up the government’s bonus for those saving into a Lifetime ISA which is likely to be a relatively modest state giveaway.
In that way, the government could say they are furthering their support for first-time buyers. Plus, if it is coupled with a far greater push for more affordable home building, then it might think its work is done.
Whatever happens, it’s unlikely to be ground-breaking in terms of its first-time buyer impact. We might well be saying that at least something is better than nothing come November 17, but I suspect the headlines are already being written and they will not be pretty.
