MPs vote down mortgage prisoner SVR cap in Commons

MPs vote down mortgage prisoner SVR cap in Commons


The amendment was passed in the House of Lords nearly two weeks ago and would have allowed the government to set a maximum SVR for borrowers who were tied to inactive or unregulated lenders.

The cap would have been two per cent above the Bank of England’s base rate.

However, despite various MPs saying they were in favour of the amendment in Parliament, the majority voted to disagree with the measure.

The number of Conservative MPs following the whip voting to scrap the amendment totaled 355, while 195 Labour MPs voted in favour in conjunction with 72 MPs from other parties.


‘Sticking a plaster’ on the problem

Anthony Browne, Conservative MP for South Cambridgeshire said during the debate: “We agree that we need to help these people, but the question is: how do we do that? The cap of interest rates is, as people say, a sticking plaster—even its supporters say that. I can see the appeal of it, but this sticking plaster comes at great cost: Parliament would be setting out interest rates in primary legislation.

“That could lead to huge unintended consequences in lots of ways—for example, through the impact on financial stability that we heard about earlier on some of the firms. It would also set an extraordinary precedent, with the government doing price controls in that way.”

He added: “It is also really not the solution we need. Where someone is trapped in a horrible prison with their guards abusing them and they are very uncomfortable, would they want that prison to be made more comfortable and the guards to behave themselves, as this cap in effect proposes, or would they want to get out of the prison?

“They would want to get out of the prison. We need to make sure that mortgage prisoners can move to other mortgage providers.”

Government-backed loan could help if SVR cap is voted down – Mortgage Prisoners UK

Government-backed loan could help if SVR cap is voted down – Mortgage Prisoners UK


Lead campaigner Rachel Neale said capping the SVR to two per cent above the Bank of England’s base rate would be a short-term resolve for mortgage prisoners paying high rates on closed book loans. 

She said: “This is a real stop gap solution that until the government come back with a practical solution, either a mortgage-backed guarantee scheme like they’ve done with the first-time buyers or something like that will give us practical help.” 

Although she claimed that Conservative MPs had been instructed to vote down the amendment, Neale said passing it would be the government’s chance to correct issues of the past. 

Neale said: “Today could be an opportunity for the government to right the wrongs of the past. It would make a huge difference to people’s lives, those who are mortgage prisoners. 

“We don’t think from the noises that we’ve heard that the government are going to go for it, they’re going to try to block it. But it would also hopefully be given an opportunity to go back to the Lords where it will keep ping ponging.” 

Neale said she did not want another consultation or report to be opened into the mortgage prisoner situation as that would push the problem further down the road. 

However, she suggested if the government continued to not be forthcoming with a solution, the group would look into opening up a public inquiry alongside its litigation with Harcus Parker.


Targeted intervention

Seema Malhotra MP and co-chair of the All-Party Parliamentary Group (APPG) on Mortgage Prisoners said she hoped the amendment would be voted in. 

She added: “It will help and give relief to mortgage prisoners, and the campaign is growing in support with Martin Lewis and in Parliament.”      

Malhotra said the government needed to produce an alternative to the cap if it was voted against and collaboration with borrowers, industry bodies and regulators would be needed for a solution. 

She said: “We’re going to need to have something that is at least a good stop gap if other detailed solutions need to be worked up. Solutions have not been coming through fast enough. 

An SVR cap on closed book mortgages which is a targeted intervention is now essential to protect these mortgage prisoners.” 

This afternoon, MPs will debate the amendment which has gone back and forth between the House of Lords and Commons in Parliament. 

Earlier this month, Lords voted in favour of the cap which if passed, will be applied to two and five-year mortgage terms. 

To be eligible, mortgage prisoners must adhere to certain requirements such as being up to date with payments and having a remaining mortgage term of two years or more. 

Nearly 2,000 Help to Buy customers in arrears, government reveals

Nearly 2,000 Help to Buy customers in arrears, government reveals


This was in response to a written question John Healey, shadow secretary of state for housing, put to the Ministry of Housing Communities and Local Government. 

Housing minister Esther McVey said the total interest fee of arrears amounted to £189,000 at the end of November 2019, representing 2.7 per cent of the total amounts charged to customers’ accounts. 

McVey attributed the arrears to administrative errors.  

“The large majority of customers in arrears are only one or two payments behind and this debt very largely reflects short-term administrative issues with direct debit set-up at the start of the interest fee paying period,” she said. 

The region with the most Help to Buy customers in arrears was the North West with 352, followed by 270 in the South East. 

There were 241 in Yorkshire and Humber, 230 in the West Midlands, 221 in the East Midlands and 210 in the East of England. 

The fewest arrears were found in the North East, where there were 174 and London with 103. 

A spokesperson for Help to Buy at Homes England said: “It’s quite normal to have these issues and in this case it’s a small number of customers involving small sums of money. Many of them will be only a month behind with their payments. It’s also quite normal for financial institutions to have some out of date contact details for customers.

“These are historic issues and the vast majority of our customers experience an efficient, professional operation. Target will be contacting customers to resolve any data issues.”


Ongoing problem 

Help to Buy: Equity Loan scheme – progress review, a report by the National Audit Office (NAO) released in June 2019, found 739 households had fallen into arrears as of February 2019 which Homes England had again attributed to administrative issues. 

At the time, this represented five per cent of those who had taken out a Help to Buy equity loan. 

NAO’s report found that these homeowners had fallen behind with payments because the processes to collect interest were not set up when the loan was issued, and customers had not responded to contact from Target, the scheme’s loan administrator. 

Homes England said this was because Target had incomplete or out of date contact details for the buyers. 

At the time, arrears totalled £54,000, which was around four per cent of the £1.5m due. 

Mortgage Solutions has contacted Target for comment.


Building owners who fail to remove cladding will be publicly named

Building owners who fail to remove cladding will be publicly named


Jenrick said the “slow pace” of improving building safety standards would “not be tolerated”. He also announced measures to speed up the process including the appointment of a construction expert to review remediation timescales. 

Speaking in the House of Commons, Jenrick said where there is no clear plan to remove cladding, the government will work with local authorities to support them in enforcement.  

The government will also consider options to support the remediation of cladding to lessen costs to individuals or provide alternative funding routes. 


Bolstering building safety standards

The government is also consulting on extending the ban on combustible materials to buildings below 18 metres and seeking views on how risks are assessed within existing buildings to inform future policy. 

Further to this, a Building Safety Regulator will be established by the Health and Safety Executive (HSE) to help raise building safety and performance standards, including overseeing a new regime for higher-risk buildings.

It will work with other regulators to implement the new regime and Dame Judith Hackitt will chair a board to oversee the transition. 

Jenrick said: “The government is committed to bringing about the biggest change in building safety for a generation. Progress on improving building safety needs to move significantly faster to ensure people are safe in their homes and building owners are held to account. 

“Unless swift progress is seen in the coming weeks, I will publicly name building owners where action to remediate unsafe ACM cladding has not started. There can be no more excuses for delay, I’m demanding immediate action.” 


Grenfell inquiry 

The government has published its response to Phase 1 of the Grenfell Tower Inquiry, released in October, which it said would “rightly be scrutinised” by Members of Parliament. 

It said it would work closely with organisations to make sure changes are made to implement suggestions by the chairman of the Grenfell Tower Inquiry, Sir Martin Moore-Bick.

These included the banning use of combustible materials and the implementation of the Home Office’s upcoming Fire Safety Bill. 

The government said the Ministry of Housing, Communities and Local Government (MHCLG) had continued to work with the Association of Composite Door Manufacturers (ACDM) to ensure fire doors exceeded minimum standards and said it was progressing with policies regarding the testing and certification of construction materials. 

Phase 2 of the inquiry will examine the wider context of the fire, including building regulations, the response of the local and central government and the handling of concerns raised by tenants over the years. 

The MHCLG response said: “The Grenfell Tower fire remains one of the darkest days in our nation’s history.

“Nothing can bring back the family and friends who people have lost. Nothing can fully capture the heartache and anger that people rightly feel.  

“Our promise as a government is to work together to ensure that swift and decisive action continues to be taken to address the inquiry’s recommendations, so that no such tragedy can ever be allowed to happen again.

“We are committed to ensuring all residents are safe in their homes, and feel safe, now and in the future.” 


Industry attempts to address poorly built new builds ‘insufficient’, says MP

Industry attempts to address poorly built new builds ‘insufficient’, says MP


Speaking in the House of Commons on 16 January in the Protection for New Home Buyers debate she tabled, Green said she had seen “shoddy” and “dangerous workmanship” as well as a “lack of redress for homeowners” in relation to new build property developments. 

Green acknowledged efforts including the proposal for a new homes ombudsman, the Royal Institution of Chartered Surveyors’ intention to draft new guidance on the inspection of new builds, and of UK Finance’s disclosure form for new build properties, but said they were not enough. 

She said local authorities lacked resources for inspection and enforcement, leaving “unscrupulous developers” free to continue to build. 

Green also said there were a lack of repercussions for the developers of such properties, as she pointed out company law did not do enough to hinder them from setting up and dissolving companies for each new development. 

“One constituent has found neither Companies House nor the Insolvency Service very willing to act to prevent this from happening, even when the same developer has blatantly and repeatedly breached registration and company law requirements,” she added. 


Insurance complications

Green noted that buyers struggled to make claims on poorly developed properties as buildings warranty cover did not always provide the correct protection. She said as warranty providers carried out the role of inspector, it created a “conflict of interest” meaning insurers had an “incentive to suppress knowledge of defects”. 

She also claimed the National House Building Council (NHBC) liaised with housebuilders regarding which claims to accept without the policyholder’s knowledge so both parties could avoid incurring costs. 

Homeowners who want to challenge the refusal of a claim are unable to as the Financial Ombudsman Service has no jurisdiction to deal with complaints, Green said, resulting in many of them going down the more expensive, legal route. 

NHBC refuted the claims, as a spokesman said: NHBC is wholly independent of housebuilders. We are a non-profit distributing insurance company with no members or shareholders. Our policy and claims decisions are assessed and managed by NHBC alone.

Our stated purpose is to give home owners confidence in the construction quality of new homes, and our independence is essential for us to fulfil this. We have reached out to Kate Green MP directly to offer our support and discuss the issues she has raised.

Green suggested the position of leaseholders needed to be “strengthened” through new legislation which would make it compulsory for management companies and leaseholders to take out 10-year insurance policies which specified minimum levels of cover and the term of the insurance, and giving them third-party rights to claim directly under these policies.


Concerns to be addressed 

Luke Hall, Parliamentary Under Secretary of State at the Ministry of Housing, Communities and Local Government, said the government would be putting “residents at the heart of the new, stronger system of building safety”.  

He also said the introduction of the new homes ombudsman would ensure homebuyers were “treated fairly when things go wrong” and encourage developers to “up their game and get things right from the beginning”. 

Hall said the building safety Bill, which was proposed in the Queen’s Speech in October, would give residents a “stronger voice” and require buildings to go through a process to prove to the regulator that a building is safe and ready for occupation.  

“We are moving forward with legislation to reform the leasehold sector,” he continued.   

“This includes the ban on new leasehold homes, restricting future leases to ground rent of zero financial value and closing legal loopholes to prevent further unfair evictions. 

“The government welcome the action we have already seen from industry, especially the early adopters group, which has spearheaded the building safety charter.” 


Government rejects calls for FCA to request regulatory extensions

Government rejects calls for FCA to request regulatory extensions


This was in response to suggestions made by the Treasury Select Committee in its report ‘The Work of the Financial Conduct Authority: The Perimeter of Regulation’, published in August.  

In the report, the committee said the regulator should be given the power to recommend changes to its perimeter of regulation in order to “enhance its ability to meet its objectives” and “prevent consumer harm”. 

In response, the government said it did not see a case for providing the FCA formal power as it already engaged with the regulator regularly, resulting in a number of financial services activities coming under regulation. 


Data gathering 

However, the government also said it would be holding discussions with the FCA to consider giving it the authority to collect data from non-regulated entities. 

This was in response to the committee’s recommendation that as the Financial Policy Committee (FPC) had requested the power to obtain additional information from unregulated entities to help meet its objectives, the same should be replicated for the FCA. 

The government said as Parliament had decided the FCA should focus on regulating authorised firms, this would “add significantly” to its existing responsibilities, therefore reducing its ability to supervise regulated firms. 

It said this would be a “significant change to the FCA’s remit,” adding that “important considerations need to be taken into account” during its discussions on whether to allow the regulator to do so.


Consumer warnings 

As for the Treasury’s recommendation that the FCA should be able to provide warnings on financial services outside of its remit without feeling constrained, the government said the regulator already exercised this right on a regular basis, issuing 521 consumer alerts in 2018. 

In response, Catherine McKinnell MP, interim chair of the Treasury Committee, said: “It is disappointing that the government does not see the case for providing a formal power for the FCA to request changes to the perimeter.  

“It would formalise the relationship that the committee are told already exists between ministers, officials and the FCA, thus providing greater transparency to the process.”

She added: “The Treasury Committee will continue to raise these issues in our evidence sessions with HM Treasury and the FCA.” 


Housing minister: “Rents may rise after letting fees ban”

Housing minister: “Rents may rise after letting fees ban”

The proposal – to ban agents from charging fees to tenants – was first made by Chancellor Philip Hammond in the Autumn Statement last November, with the draft Tenants’ Fees Bill announced earlier in the summer.

The move was met with criticism from some corners of the market with Richard Lambert, chief executive officer at the National Landlords Association, claiming: “Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent. But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents.”

Yesterday a House of Commons debate on the subject was held with Sharma (pictured) admitting this could be the case.

He said: “While there may be increases in rents, they would be significantly smaller than the fees tenants are currently being charged. We will keep the impact on rents under review.”

Ying Tan, managing director of the Buy to Let Business, said: “In a strange way it’s good to hear Alok Sharma admit landlords may be forced to raise rents when the letting fee ban comes into play, as agents recoup their losses by hiking landlord fees. It shows that for the first time in a long while the government is starting to understand the market. The problem is this acknowledgement is too late. As I and many others have said all along, the industry should be consulted long before such proposals are announced.

“Unfair lettings fees should certainly be scrapped – and unscrupulous agents stopped – but an outright ban with no proposed alternative is likely to do more harm than good.”

During the debate it was revealed holding deposits will be exempt from the ban in order to deter tenants from registering in multiple or unsuitable properties.

Lenders back Bill on missing borrowers

Lenders back Bill on missing borrowers

MPs are currently considering the Guardianship (Missing Persons) Bill. If the Bill becomes law, it will allow for close relatives of missing people to oversee their financial affairs until the missing person is found.

The CML said that lenders are currently prevented by confidentiality rules and legal obligations from making “pragmatic arrangements” when a borrower disappears. As things stand, if a borrower goes missing, the property is essentially left ownerless and can fall into disrepair.

However, the trade body said that government guidance would play a crucial role.

Bernard Clarke, spokesman for the CML, said: “Guardianship would be a new concept to staff working for lenders, many of whom are unlikely to be aware of the Bill’s progress. If the Bill becomes law, it would therefore be helpful for the government to provide a quick, clear and reliable means of verifying a guardian’s right to have information – and to make decisions – about a borrower’s property and financial matters.”

He suggested that one way this could be handled would be for the office of the Public Guardian to keep a register of guardianship orders, in much the same way as the register of Deputies appointed under the Mental Capital Act 2005.

Support for ‘Claudia’s Law’

The bill has been referred to as ‘Claudia’s Law’, in memory of Claudia Lawrence who disappeared on her way to work at the University of York in 2009. Her father was told he would not be allowed to manage her financial affairs, and the bill has been brought forward by local MP, Kevin Hollinrake.

While it passed the second reading in the House of Commons unopposed, there are still several legislative stages to pass through before it can become law.

CML hits back at long-term lending allegations

CML hits back at long-term lending allegations

The association vehemently opposed comments made by Conservative MP for Colchester, Will Quince, in a debate on the Homelessness Reduction Bill in December, who said CML had sought to prevent longer tenancies to help lenders recover losses in case of landlord defaults.

In a blog post on its website the CML said: “We are not opposed to longer tenancy agreements and, although it is for individual firms to determine their own lending policies, an increasing number of lenders are now willing to offer mortgages to landlords who want to provide extended tenancies.”

In contrast, the CML said, since the financial crisis lenders had continued to make funding more readily available for housing in all tenures, particularly to landlords wanting to offer longer tenancies in the private rented sector.

CML wrote a letter to MPs explaining lenders did not require a landlord to change their tenant when a tenancy agreement comes to an end. Therefore, in practice, lenders’ terms did not preclude tenants from occupying a rental property for many years.

More lenders offering finance

Quince had told MPs on 14 December: “I am a former property lawyer, and I know the Minister also has considerable experience in this field. He will know that the stumbling block here is in fact the Council of Mortgage Lenders and insurers, which say that a tenancy of more than one year is not permissible in case the mortgage holder defaults and they need therefore to sell the property as quickly as possible to recover their losses. It is actually those two different groups that prohibit leases or assured shorthold tenancies of more than one year.”

But the CML pointed to research carried out by homeless charity Shelter, which last year published a list of lenders prepared to lend to landlords offering longer tenancies. These included Aldermore, Barclays, Leeds Building Society and The Mortgage Works.

Lenders responsible for more than half of England’s buy-to-let loan book allowed landlords to offer contracts of at least 24 months, with most permitting up to three years, the charity found, while some had no maximum tenancy period at all.

Shelter said: “Any landlord that wants to offer a longer tenancy should now be in a position to find a lender that will let them. And any renter that wants one should be able to ask their landlord for one with the confidence that mortgage conditions aren’t going to be as barrier.”

In its own research, the CML found more than a third of landlords were prepared to offer leases of more than 12 months on at least some of their properties but found demand from tenants was weak.

Agent bias

The CML pointed out the real problem with short-term bias may lie elsewhere; almost half of landlords used agents to find their tenants, CML’s research found.

It may be in the interest of agents to encourage shorter leases with more frequent renewals, it suggested. “It is possible that landlords’ perceptions of whether longer leases are offered – and of tenant demand for them – may be affected by the way some lettings agents operate,” the CML said.

It concluded: “The assertion that lenders are a barrier to longer tenancies is a myth. While it is for individual firms to determine their lending policies, our own survey and the list of lenders published by Shelter show that there is a significant number of lenders that are prepared to advance mortgages to landlords who want to offer tenancies for two or three years – or even longer.”

The Autumn Statement (in full)

The Autumn Statement (in full)

Here is the speech in full delivered today to a heaving House of Commons. 

Mr Speaker,

It is a privilege to report today on an economy which the IMF predicts will be the fastest growing major advanced economy in the world this year.

An economy with employment at a record high – and unemployment at an 11 year low.

An economy which, through the hard work of the British people, has bounced back from the depths of recession.

And an economy which has confounded commentators at home and abroad with its strength and its resilience since the British people decided, exactly five months ago today, to leave the European Union and chart a new future for our country.

That decision will change the course of Britain’s history.

It has thrown into sharp relief the fundamental strengths of the British economy that will ensure our future success:

The global reach of our services industries

The strength of our science and high-tech manufacturing base.

And the cutting-edge British businesses that are leading the world in disruptive technologies, But it’s a decision that also makes more urgent than ever the need to tackle our economy’s long-term weaknesses.

Like the productivity gap.

The housing challenge.

And the damaging imbalance in economic growth and prosperity across our country.

Mr Speaker,

We resolve today to confront those challenges head on.

To prepare our country to seize the opportunities ahead.

And in doing so, to build an economy that works for everyone…and where every corner of this United Kingdom is part of our national success.

Mr Speaker,

I want to pay tribute to my predecessor, my Rt Hon Friend the Member for Tatton.

My style will, of course, be different from his.

I suspect that I will prove no more adept at pulling rabbits from hats than my successor as Foreign Secretary has been at retrieving balls from the back of scrums.

But my focus on building Britain’s long-term future will be the same.

He took over an economy with the highest budget deficit in our postwar history.

And brought it down by two-thirds.

But times have moved on.

And our task now is to prepare our economy to be resilient as we exit the EU.

And match-fit for the transition that will follow.

So we will maintain our commitment to fiscal discipline.

While recognising the need for investment to drive productivity.

And fiscal headroom to support the economy through the transition.

Mr Speaker,

Let me turn now to the forecasts.

Since 2010, the Office for Budget Responsibility has provided an independent economic and fiscal forecast, to which the government must respond.

And I thank Robert Chote and his team for their hard work.

Today’s OBR forecast is for growth to be 2.1% in 2016; higher than forecast in March.

In 2017 the OBR forecasts growth to slow to 1.4%, which they attribute to lower investment and weaker consumer demand, driven, respectively, by greater uncertainty and by higher inflation resulting from sterling depreciation.

That’s slower, of course, than we would wish, but still equivalent to the IMF’s forecast for Germany, and higher than the forecast for growth in many of our European neighbours, including France and Italy.

As the effects of uncertainty diminish, the OBR forecasts growth recovering to 1.7% in 2018, 2.1% in 2019 and 2020, and 2% in 2021.

While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its current view is that the referendum decision means that potential growth over the forecast period is 2.4 percentage points lower than would otherwise have been the case.

The OBR acknowledges that there is a higher degree of uncertainty around these forecasts than usual. Despite slower growth, the UK labour market is forecast to remain robust.

We’ve delivered over 2.7 million new jobs since 2010.

This forecast shows that number growing in every year – another 500,000 over the OBR forecast – providing security for working people across the length and breadth of Britain.

Mr Speaker,

Over the past year, employment grew fastest in the North East; the claimant count fell fastest in Northern Ireland; pay grew most strongly in the West Midlands; and every UK nation and region saw a record number of people in work.

A labour market recovery that is working for everyone.

Mr Speaker,

Monetary policy has played an important role in supporting growth since the Referendum decision. But a credible fiscal policy remains essential for maintaining market confidence and restoring the economy to long term health.

In view of the uncertainty facing the economy, and in the face of slower growth forecasts, we no longer seek to deliver a surplus in 2019-20.

But the Prime Minister and I remain firmly committed to seeing the public finances return to balance as soon as practicable.

While leaving enough flexibility to support the economy in the near-term.

Today I am publishing a new draft Charter for Budget Responsibility, with three fiscal rules:

First, the public finances should be returned to balance as early as possible in the next Parliament, and, in the interim, cyclically-adjusted borrowing should be below 2% by the end of this Parliament.

Second, that public sector net debt as a share of GDP must be falling by the end of this Parliament.

And third, that welfare spending must be within a cap, set by the government and monitored by the OBR.

In the absence of an effective framework, the welfare bill in our country spiralled out of control, with spending on working-age benefits trebling in real terms between 1980 and 2010.

As a result of the action we’ve taken since 2010, that spending has now stabilised.

The cap I am announcing today takes into account policy changes since the last Budget, setting a realistic baseline reflecting all announced welfare policies.

And I confirm again that the government has no plans to introduce further welfare savings measures in this parliament beyond those already announced.

I now turn Mr Speaker, to the OBR’s fiscal forecasts, but first I will set out the key drivers of changes since the Budget:

The post-Budget changes to welfare and housing policies cost the Exchequer £8.6 billion over the forecast period;

Expected ONS classification changes have added £12 billion since Budget.

And tax receipts have been lower than expected this year, causing the OBR to revise down projected revenues in future.

Added to this is a structural effect of rapidly rising incorporation and self-employment, which further erodes revenues.

Combining these pressures with the impact of forecast weaker growth, and taking account of the measures I shall announce today, the OBR now forecast that in cash terms, borrowing is set to be:

£68.2 billion this year; falling to £59 billion next year; £46.5 billion in 2018-19; then £21.9 billion; £20.7 billion, and finally £17.2 billion in 2021-22.

Overall public sector net borrowing as a percentage of GDP will fall from 4% last year to 3.5% this year, and will continue to fall over the Parliament, reaching 0.7% in 2021-22.

This will be the lowest deficit as a share of GDP in two decades.

The OBR expects cyclically adjusted public sector net borrowing to be 0.8% of GDP in 2020-21, comfortably meeting our target to reduce it to less than 2% …

And leaving significant flexibility to respond to any headwinds the economy may encounter.

The OBR’s forecast of higher borrowing and slower asset sales, together with the temporary effect of the Bank of England’s action to stimulate growth, translates into an increased forecast for debt in the near-term.

The OBR forecasts that debt will rise from 84.2% of GDP last year to 87.3% this year, peaking at 90.2% in 2017-18 as the Bank of England’s monetary policy interventions approach their full effect.

In 2018-19, debt is projected to fall to 89.7% of national income – the first fall in the national debt as a share of GDP since 2001-02.

And it is forecast to continue falling thereafter.

Stripping out the effects of the Bank of England interventions, underlying debt peaks this year at 82.4% of GDP and falls thereafter to 77.7% by 2021-22.

Mr Speaker,

I have received representations from a range of external bodies.

Some of them calling for fiscal expansion; while others have suggested there is no need at all to respond to a changed economic outlook.

That reflects the challenge we face of resolving how best to protect the recovery, build on the economy’s strengths, yet at the same time respond appropriately to the warnings of a more difficult period ahead.

But with our debt forecast to peak at 90% next year, and a deficit this year of 3.5%, I have reached my own judgement.

It is a judgement based on a sober analysis of our fiscal position.

But also on a realistic appraisal of the weakness of UK productivity, and the urgent need to address our fiscal challenge from both ends:

Continuing to control public expenditure, but also growing the potential of the economy and protecting the tax base.

So we choose in this Autumn Statement to prioritise additional high-value investment, specifically in infrastructure and innovation, that will directly contribute to raising Britain’s productivity.

And the key judgement we make today is that our hard-won credibility on public spending means we can fund this commitment, in the short-term, from additional borrowing.

While funding all other new policies announced in this Autumn Statement through additional tax and spending measures.

That is the responsible way to secure our economy for the long term.

Mr Speaker,

The productivity gap is well known, but shocking nonetheless:

We lag the US and Germany by some 30 percentage points.

But we also lag France by over 20 and Italy by 8.

Which means in the real world, it takes a German worker 4 days to produce what we make in 5; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts.

That has to change if we are to build an economy that works for everyone.

Raising productivity is essential for the high-wage, high-skill economy that will deliver higher living standards for working people.

I can announce today a new National Productivity Investment Fund of £23 billion to be spent on innovation and infrastructure over the next five years.

Investing today for the economy of the future.

Let me set out for the House how this money will be used:

Mr Speaker, we do not invest enough in research, development and innovation.

As the pace of technology advances and competition from the rest of the world increases, we must build on our strengths in science and tech innovation to ensure the next generation of discoveries is made, developed and produced in Britain.

So today I can confirm the additional investment in R&D, rising to an extra £2 billion per year by 20-21, announced by my Right Honourable Friend, the Prime Minister on Monday.

Mr Speaker, economically productive infrastructure directly benefits businesses. But families, too, rely on roads, rail, telecoms – and, especially housing.

We have made good progress, with the number of new homes being built last year hitting an eight-year high. But for too many, the goal of home ownership remains out of reach.

In October, my Right Honourable Friend, the Communities Secretary launched the £3 billion Home Builders’ Fund, to unlock over 200,000 homes and up to £2 billion to accelerate construction on public sector land.

But we must go further still.

The challenge of delivering the housing we so desperately need in the places where it is currently least affordable is not a new one…

But the effect of unaffordable housing on our nation’s productivity makes it an urgent one.

My Right Honourable Friend, the Communities Secretary will bring forward a Housing White Paper in due course, addressing these long-term challenges.

But in the meantime, we can take further steps:

One of the biggest objections to housing development is often the impact on local infrastructure.

So we will focus government infrastructure investment to unlock land for housing…

With a new £2.3 billion Housing Infrastructure Fund to deliver infrastructure for up to 100,000 new homes in areas of high demand.

And, to provide affordable housing that supports a wide range of need, we will invest a further £1.4 billion to deliver 40,000 additional affordable homes.

And we will relax restrictions on government grant to allow a wider range of housing-types.

I can also announce a large-scale regional pilot of Right to Buy for Housing Association tenants.

And continued support for home ownership through the Help to Buy: Equity Loan scheme and the Help to Buy ISA.

Mr Speaker, this package means that over the course of this Parliament, the government expects to more than double, in real terms, annual capital spending on housing.

Coupled with our resolve to tackle the long term challenges of land supply.

This commitment to housing delivery represents a step-change in our ambition to increase the supply of homes for sale and for rent, to deliver a housing market that works for everyone.

Mr Speaker, reliable transport networks are essential to growth and productivity.

So this Autumn Statement commits significant additional funding to help keep Britain moving now, and to invest in the transport networks and vehicles of the future.

I will commit an additional £1.1 billion of investment in English local transport networks, where small investments can offer big wins;

£220 million to address traffic pinch points on strategic roads;

£450 million to trial digital signalling on our railways to achieve a step-change in reliability.

And squeeze more capacity out of our existing rail infrastructure

And finally, £390 million to build on our competitive advantage in low emission vehicles and the development of connected autonomous vehicles; plus a 100% first year capital allowance for the installation of electric vehicle charging infrastructure.

The Department for Transport will continue to work with Transport for the North to develop detailed options for Northern Powerhouse Rail.

My Right Honourable Friend, the Transport Secretary will set out more details of specific projects and priorities over the coming weeks.

Mr Speaker,

Our future transport, business and lifestyle needs will require world class digital infrastructure to underpin them. So my ambition is for the UK to be a world leader in 5G.

That means a full-fibre network; a step-change in speed, security and reliability.

So we will invest over £1 billion in our digital infrastructure to catalyse private investment in fibre networks and to support 5G trials.

And from April we will introduce 100% business rates relief for a 5 year period on new fibre infrastructure, supporting further roll out of fibre to homes and businesses.

We have chosen to borrow to kick-start a transformation in infrastructure and innovation investment.

But we must sustain this effort over the long term if we are to make a lasting difference to the UK’s productivity performance.

So today I have written to the National Infrastructure Commission.

To ask them to make their recommendations on the future infrastructure needs of the country.

Using the assumption that government will invest between 1% and 1.2% of GDP every year from 2020 in economic infrastructure covered by the Commission.

To put this in context, we’ll spend around 0.8% of GDP on the same definition this year.

I am also backing the Commission’s interim recommendations on the Oxford-Cambridge growth corridor published last week.

With £110m of funding for East West Rail, and a commitment to deliver the new Oxford to Cambridge Expressway.

But this project can be more than just a transport link.

It can become a transformational tech-corridor, drawing on the world-class research strengths of our two best-known universities.

So I welcome the Commission’s continuing work on delivery model options, and we will carefully consider its final recommendations in due course.

The major increase in infrastructure spending I’ve announced today will represent a significant increase in funding through the Barnet formula of:

Over £250 million to the Northern Ireland Executive.

£400 million to the Welsh government.

And £800 million to the Scottish government.

But public investment is only part of the picture.

About half of our economic infrastructure is financed by the private sector, and we will continue to support that investment through the UK Guarantees Scheme, which I am today extending until at least 2026.

Mr Speaker,

The new capital investment I have announced today will provide the financial backbone for the government’s Industrial Strategy, which the Prime Minister spoke about on Monday.

A firm foundation upon which my Rt Hon Friend the Business Secretary will work with industry to build our ambition of an economy that works for all.

And I can announce four further measures to back business.

I am doubling UK Export Finance capacity to make it easier for British businesses to export;

I am funding Charlie Mayfield’s business-led initiative to boost management skills across British businesses; and I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies, rather than growing to scale.

By injecting an additional £400m into venture capital funds through the British Business Bank, unlocking £1 billion of new finance for growing firms.

And I am launching a Treasury-led review of the barriers to accessing patient capital in the UK.

Mr Speaker,

This government recognises that for too long, economic growth in our country has been too concentrated in London and the south east.

That’s not just a social problem, it’s an economic problem.

London is one of the highest-productivity cities in the world and we should celebrate that fact.

But no other major developed economy has such a gap between the productivity of its capital city and its 2nd and 3rd cities.

So we must drive up the performance of our regional cities.

Today we publish our strategy for addressing productivity barriers in the Northern Powerhouse; and give the go ahead today to a programme of major roads schemes in the north.

Our Midlands Engine strategy will follow shortly, but I am today providing funding for the evaluation study for the Midlands Rail hub.

In addition, we are investing in local infrastructure in every region of England:

I can announce the allocation of £1.8 billion from the Local Growth Fund to the English regions:

£556 million to Local Enterprise Partnerships in the North of England, £542 million to the Midlands and East of England, and £683 million to LEPs in the South West, South East and London.

We will announce the detailed breakdown of allocations to individual LEPs shortly.

Devolution remains at the heart of this government’s approach to supporting local growth, and we recommit today to our City deals with Swansea, Edinburgh, North Wales and Tay Cities – and I can announce today we’re beginning negotiations on a city deal for Stirling.

So that every city in Scotland will be on course to have a City Deal.

To support new mayoral combined authorities in England, I can announce that we will grant them new borrowing powers to reflect their new responsibilities.

And while we continue discussions with London and the West Midlands on possible devolution of further powers.

I can announce today that London will receive £3.15 billion as its share of national affordable housing funding to deliver over 90,000 homes.

And that we are devolving to London the adult education budget, and giving London greater control over the delivery of employment support services for the hardest to help.

Mr Speaker, I have deliberately avoided making this statement into a long list of individual projects being supported.

But I am going to make one exception:

I will act today, with just seven days to spare, to save one of the UK’s most important historic houses: Wentworth Woodhouse near Rotherham.

It is said to be the inspiration for Pemberley in Jane Austen’s Pride and Prejudice.

Wentworth Woodhouse is now at critical risk of being lost to future generations.

A local effort has secured millions in funding – subject to the balance required being found by November 30th.

So we will provide a £7.6 million grant towards urgent repairs to safeguard this key piece of Northern heritage. I can also confirm distribution of a further £102 million of LIBOR bank fines to Armed Forces and Emergency Services charities…

…including £20 million to support the Defence and National Rehabilitation Centre at Stanford Hall in Nottinghamshire – and £3 million from the Tampon Tax Fund for Comic Relief to distribute to a range of women’s charities.

Mr Speaker,

We choose to invest in our economic infrastructure because it can transform the growth potential of our economy, as well as improving the quality of people’s lives.

That investment is only possible because the government is prepared to take the tough decisions to maintain control of current spending.

In 2010, public spending was 45% of GDP – this year it’s set to be 40%.

And since 2010 we’ve seen crime fall by more than a quarter;

The highest proportion ever of good or outstanding schools;

The number of doctors has increased by 10,000;

Pensioner poverty at its lowest level ever;

The lowest ever number of children being raised in workless households;

And the highest ever number of young people going on to study full time at university.

We have demonstrated beyond doubt that controlling public spending is compatible with world-class public services and social improvement.

But as the OBR’s debt projections demonstrate, we have more work to do to eliminate the deficit.

So departmental spending plans set out in the Spending Review last autumn will remain in place, and departmental expenditure in 21-22 will grow in line with inflation.

The £3.5 billion of savings to be delivered through the Efficiency Review announced at the Budget, and led by my Right Honourable Friend, the Chief Secretary, must be delivered in full.

I have, however, exceptionally agreed to provide additional funding to the Ministry of Justice to tackle urgent prison safety issues increasing the number of prison officers by 2,500.

Mr Speaker,

Having run two large spending departments in previous roles, I came to this job with some very clear views about the relationship between the Treasury and spending departments.

I want departments to be incentivised to drive efficiencies. And I want the Treasury to be an enabler for good, effective spending across government.

To kickstart this new approach, I will allow up to £1bn of the savings found by the efficiency review in 19/20 to be reinvested in priority areas and I have budgeted today accordingly.

Mr Speaker, we manage public spending so that we can invest in the public’s priorities.

And the government has underlined those priorities with a series of commitments and protections for the duration of this Parliament.

I can confirm that, despite the fiscal pressures, we will meet our commitments to protect the budgets of key public services and defence;

We will keep our promise to the world’s poorest through our overseas aid budget,

And we will meet our pledge to our country’s pensioners through the triple lock.

But as we look ahead to the next Parliament, we will need to ensure we tackle the challenges of rising longevity and fiscal sustainability.

And so the government will review public spending priorities and other commitments for the next Parliament in light of the evolving fiscal position at the next Spending Review.

Mr Speaker I now turn to taxation.

Since 2010 the government has put a business-led recovery at the heart of our plan, we’ve cut corporation tax from 28% to 20%, sending the message that Britain is open for business.

The additional investment in productivity and infrastructure that I have announced underscores that message…. And the raft of investments in the UK announced since the referendum – by Softbank, Glaxo, Nissan, Google and Apple amongst others, confirms it.

My priority as Chancellor is to ensure that Britain remains the number one destination for business – creating the investment, the jobs and the prosperity to protect our long-term future.

I know how much business values certainty and stability, and so I confirm today that we will stick to the business tax roadmap we set out in March.

Corporation tax will fall to 17%, by far the lowest overall rate of corporate tax in the G20.

We will deliver the commitments we have made to the oil and gas sector;

the Carbon Price Support will continue to be capped out to 2020;

and we will implement the business rates reduction package worth £6.7 billion.

I can confirm today that having consulted further, my Right Honourable Friend, the Communities Secretary will lower the transitional relief cap from 45% next year to 43%, and from 50% to 32% the year after.

And I will also increase the Rural Rate Relief to 100%, giving small businesses in rural areas a tax break worth up to £2,900 per year.

Mr Speaker,

In return for our competitive rates, the tax base must be sustainable.

From April 2017 we will align the employee and employer National Insurance thresholds at £157 per week.

There will be no cost to employees, and the maximum cost to business will be an annual £7.18 per employee.

Insurance premium tax in this country is lower than in many other European countries, and half the rate of VAT.

In order to raise revenue, which is required to fund spending commitments I am making today, it will rise from 10% currently, to 12% from next June.

At the same time I can confirm the government’s commitment to legislate next year to end the compensation culture surrounding whiplash claims – a major area of insurance fraud – saving drivers an average of £40 on their annual premiums.

Mr Speaker, technological progress is changing the way people live, and the way they work;

The tax system needs to keep pace. For example, the OBR has today highlighted the growing cost to the Exchequer of incorporation.

So the government will consider how we can ensure that the taxation of different ways of working is fair between different individuals, and sustains the tax-base as the economy undergoes rapid change.

We will consult in due course on any proposed changes.

In the meantime, the government will take action now to reduce the difference between the treatment of cash earnings and benefits.

The majority of employees pay tax on a cash salary. But some are able to sacrifice salary and pay much lower tax on benefits in kind.

This is unfair, and so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else.

Following consultation with stakeholders, ultra-low emission cars, pensions saving, childcare and the cycle to work scheme will be excluded from this change. And certain long-term arrangements will be protected until April 2021.

For pensions that have been drawn-down, I will also reduce to £4,000 the Money Purchase Annual Allowance, to prevent inappropriate double tax relief.

The government is committed to tackling tax evasion, avoidance and aggressive tax planning, and the UK tax gap is now one of the lowest in the world.

But we must constantly be alert to new threats to our tax base – and be willing to move swiftly to counter them.

At the Budget we committed to removing the tax benefits of disguised earnings for employees, and I am now going to do the same for the self-employed and employers, raising a further £630 million over the forecast period.

We will shut down inappropriate use of the VAT flat rate scheme that was put in place to help small businesses;

We will abolish the tax advantages linked to Employee Shareholder Status in response to evidence it is primarily being used for tax-planning purposes by high-earning individuals;

And we will introduce a new penalty for those who enable the use of a tax avoidance scheme that HMRC later challenges and defeats.

These measures – and others set out in the Autumn Statement document – raise around £2 billion over the forecast period.

Mr Speaker, there is understandable public concern that the pitch is tilted in favour of large multinational groups which are able to use cross-border structures to manage their tax liabilities.

Following detailed consultation, I can confirm that we will implement our new restriction on tax relief for corporate interest expenses, and reform the way that relief is provided for historic losses.

These measures, scored at Budget 2016, will help to ensure large businesses will always pay tax in years where they make substantial profits.

They will also mean that businesses cannot avoid tax by borrowing excessively in the UK to fund their overseas activities.

They take effect in April, and raise over £5 billion from the largest businesses in the UK.

Mr Speaker, I said that the tax system must be fair and that means rewarding those who work hard by helping them to keep more of what they earn.

There is one tax reform the government has pursued since 2010 to improve the lot of working people. Raising the tax-free personal allowance.

When we entered government in 2010 it was £6,475.

Now, after 6 years it is £11,000, and will rise to £11,500 in April.

As a result, we have more than halved the tax bill of someone with a salary of £15,000 to just £800.

That’s a massive boost to the incomes of low and middle earners.

Since 2010 we’ve cut income tax for 28 million people and taken 4 million people out of income tax altogether.

And I can confirm today that, despite the challenging fiscal forecasts, we will deliver on our commitment to raising the allowance to £12,500, and the higher rate threshold to £50,000, by the end of this Parliament.

Once £12,500 has been reached, the personal allowance will rise automatically during the 2020s in line with inflation, rather than the National Minimum Wage as currently planned.

It will be for the Chancellor to decide from year to year whether more is affordable.

As well as taking millions of ordinary people out of tax, the government introduced the National Living Wage and gave a pay rise to over a million workers.

The government has also introduced 15 hours a week of free childcare for all 3 and 4 year olds, and we will double that for working families from September.

The government’s education reforms have raised standards and expanded opportunity with 1.4 million more children now in ‘good’ or ‘outstanding’ schools.

And the new capital funding I have provided today for grammar schools will help to continue that trend.

The government, Mr Speaker, has pledged to invest in our NHS and we are delivering on that promise: backing the NHS’ Five Year Forward View plan for the future with £10 billion of additional funding a year by the end of 2020-21.

But we recognise that more needs to be done to help families make ends meet and to ensure every household has opportunities to prosper.

Today I can announce the National Living Wage will increase from £7.20 to £7.50 in April next year. That’s a pay rise worth over £500 a year to a full-time worker.

Mr Speaker,

Creating jobs, lowering taxes and raising wages addresses directly the concerns of ordinary families. And the revenue-raising measures I have announced today enable me to go further to help families on low wages:

Universal Credit is an important reform to our benefits system and is designed to make sure work always pays. We want to reinforce that position.

From April, we can reduce the Universal Credit taper rate from 65% to 63%.

This is effectively a targeted tax cut worth £700m in 21-22 for those in work on low incomes;

It will increase the incentive to work and encourage progression in work;

And it will help 3 million households across our country.

Mr Speaker,

We believe that a market economy is the best way of delivering sustained prosperity for the British people.

We will always support a market led approach; but we will not be afraid to intervene where there is evidence of market failure.

We will look carefully over the coming months at the functioning of key markets, including the retail energy market, to make sure they are functioning fairly for all consumers.

In the private rental market, letting agents are currently able to charge unregulated fees to tenants.

We have seen these fees spiral, often to hundreds of pounds.

This is wrong. Landlords appoint letting agents and landlords should meet their fees.

So I can announce today that we will ban fees to tenants as soon as possible.

And we will consult on how best to ban pensions cold calling and a wider range of pension scams.

We can also help those who rely on income from modest savings to get by.

Low interest rates have helped our economy recover, but they’ve significantly reduced the interest people can earn on their cash savings.

So we will launch a new, market-leading savings bond through NS&I.

The detail will be announced at the Budget, but we expect our new Investment Bond will have an interest rate of around 2.2% gross and a term of 3 years.

Savers will be able to deposit up to £3,000, and we expect around 2 million people to benefit.

Mr Speaker,

The announcements I have made today lower taxes on working people; boost wages; back savers; and bear down on bills.

In early 2017, we will begin the roll out of tax-free childcare across Britain, providing a saving of up to £2,000 per child.

And once it’s rolled-out, we will keep it under review to ensure it’s delivering the support they need to working families.

There is one further area of household expenditure where the government can help.

The oil price has risen by over 60% since January; and sterling has declined by 15% against the dollar.

That means significant pressure on prices at the pump here in Britain.

So today we stand on the side of the millions of hardworking people in our country by cancelling the fuel duty rise for the seventh successive year.

In total this saves the average car driver £130 a year and the average van driver £350.

This is a tax cut worth £850 million next year, and means the current fuel duty freeze is the longest for 40 years. Mr Speaker, I have one further announcement to make.

This is my first Autumn Statement as Chancellor.

After careful consideration, and detailed discussion with the Prime Minister, I have decided that it will also be my last.

Mr Speaker I am abolishing the Autumn Statement.

No other major economy makes hundreds of tax changes twice a year, and neither should we.

So the spring Budget in a few months will be the final spring Budget.

Starting in autumn 2017, Britain will have an autumn Budget, announcing tax changes well in advance of the start of the tax year.

From 2018 there will be a Spring Statement, responding to the forecast from the OBR, but no major fiscal event.

If unexpected changes in the economy require it, then I will, of course, announce actions at the Spring Statement, but I won’t make significant changes twice a year just for the sake of it.

This change will also allow for greater Parliamentary scrutiny of Budget measures ahead of their implementation.

Mr Speaker, this is a long-overdue reform to our tax-policy making process and brings the UK into line with best practice recommended by the IMF, IFS, Institute for government and many others.

Mr Speaker,

The OBR report today confirms the underlying strength and resilience of the British economy….

This Autumn Statement responds to the challenge of building on that strength, while also heeding the warnings in the OBR’s figures, as we begin writing this new chapter in our country’s history.

It re-states our commitment to living within our means;

And it sets out our choice to invest in our future.

It sends a clear message to the world that Britain is open for business;

And it provides help to those who need it now.

So Mr Speaker, we have made our choices.

We have set our course.

We are a great nation.

Bold in our vision.

Confident in our strengths.

And determined in our ambition to build a country that works for everyone.

I commend this Statement to the House.