Grim Autumn Statement
The Chancellor’s Autumn Statement makes for grim reading. Growth forecasts are down, the Chancellor is missing at least one of his own fiscal targets, austerity will be further extended, public spending and welfare cuts will also be extended, and there is to be only limited action to promote growth (most of which was announced back in September). The Government is still thinking about Lord Heseltine’s recommendations for a surge on growth. What stimulus we are getting is to be paid for by cuts elsewhere or by the G4 receipt which is not yet in the Treasury’s coffers. For a full appreciation of the fiscal and economic implications I suggest you go to the IFS and NIESR.
Mr Osborne has turned his back on many potential opportunities to get the economy moving. I will pick up on just one. In its pre-Statement submission the NHF proposed (again) that VAT should be cut to 5% on social housing renovation work. I would go further. I would extend it to all housing repair, renovation and extension work. This targeted cut to VAT would have a major boost to the economy. It would amount to a substantial reduction in landlords’ and home-owners’ costs for major repair and improvement work. People would actually have some encouragement to spend money. A lot of this money would also go to small businesses who are struggling in the current economic stagnation. It would also create jobs as this type of work – pound for pound – is at the most labour-intensive end of construction. Money would be spent on fixtures and fittings to the benefit of the retail sector and the building components and materials supply chain. The overall tax loss would be nothing like the headline reduction in the VAT rate and it is conceivable that income to the Treasury would increase. Somebody should do the sums.
The Chancellor, however, has chosen not to do this. Instead the Treasury has apparently encouraged the present DCLG proposal to relax for a temporary period the permitted development limits on house extensions. It is argued that this “cutting of red tape” will encourage people to build extensions that would not otherwise go ahead and would save them money on professional fees. My suspicion is that most people will prefer to have someone competent produce the drawings before they go ahead with such a major item of expenditure. Also, the majority of extension applications are approved – with some proposals being improved in the process. The major effect of the apparently Treasury-inspired proposal could just be to annoy a lot of normally Tory-voting people who suddenly find themselves living nextdoor to an obtrusive house extension that they have not had any influence over.
So you have to wonder why the Chancellor does not do the obvious thing to encourage more investment in our existing housing stock. And you have to wonder where he is getting his advice from on housing and planning matters.