Not everyone battered Wednesday’s budget as heartily as Sadiq Khan, who denounced chancellor Philip Hammond’s effort as “the most anti-London in a generation” and described his spending plans as showing “contempt for Londoners”. But quite a few people who, unlike the Mayor, don’t have voters to please, didn’t exactly enthuse about it either. It was a budget of pretty cold comforts for the capital.
Hammond maintained the record of successive governments of failing to do anything bold on housing in general, let alone anything much to address the particular circumstances of the capital. True, his scrapping of stamp duty for first-time buyers on the first £300,000 of properties priced up to £500,000 recognised that high prices here are exceptionally high. The Financial Times reported that official figures put the average first-time buyer price in London at over £422,000 and that the reform would save buyers an average of £11,119.
But Richard Brown of Centre for London commented: “Reducing stamp duty for first-time buyers won’t get to the root of the problem and will be less beneficial for Londoners who face higher house prices to start with. People who struggle to save for a deposit and who can’t fall back on the bank of Mum and Dad will remain at the bottom of the pile. Once again, measures to boost demand fail to consider the London context.” The RSA’s Anthony Painter made a similar point on Twitter. “Market boosting measures not enough,” he wrote. He also observed: “The prime need is for affordable homes, especially in London and the South East.”
Brown was more welcoming of other moves on housing by Hammond, describing as “positive” a relaxation of the cap on local councils’ freedom to borrow money for housebuilding; allowing larger council tax penalties – up to 100% more – to be imposed on owners of properties left empty; consulting on setting minimum densities for housing developments around railway stations; and introducing “measures to capture land value”. However, Shelter’s Toby Lloyd, writing of the budget’s national impacts, thought the extra borrowing freedom “modest” and “far short of the revolution in council house building that we and others had hoped for”.
Those others include London’s boroughs collectively, of whatever political colour. Lewisham Mayor Sir Steve Bullock, in his capacity as the cross-party London Councils executive member for housing, said the change will have, “A limited impact as councils must bid to borrow more and will have to wait until 2019/20 to use any additional powers they are granted. The amount they can borrow is also capped at £1bn across all councils”. He added that the failure to allow far more borrowing freedom “will hinder efforts to build at scale and pace to increase housing supply in the capital”.
On the stamp duty change, Sir Steve said, neutrally, that its long term impact “remains to be seen” and, while welcoming the “empty homes premium”, observed that “many property owners who are keeping their properties empty will only respond to significantly greater penalties”. He also called on government to provide London’s councils with the resources they need to meet the cost of remedial fire safety measures post-Grenfell – “at least £402m” – and said that that additional funding and a taskforce for homelessness prevention schemes will not be enough to help “turn the tide” on homelessness in London, where a majority of the country’s homeless people live.
The budget wasn’t all about housing, as far as London was concerned. London Councils chair Claire Kober, also leader of Haringey Council, welcomed Hammond’s response to boroughs’ concerns about the impact of Universal Credit, namely the abolition of the seven day waiting period and improvements to housing cost payments (both also welcomed by Shelter), though she stressed that “a number of problems remain”. A recent study by the Smith Institute along with Britain Thinks unearthed worry, arrears and “desperate stories” from Londoners in Southwark and Croydon undergoing the transition to the new system.
Kober also welcomed confirmation of further devolution of business rates to the capital – an issue On London examined recently – as did Richard Brown, who said it will “help to concentrate the minds of the boroughs on growth”. But Brown also expressed disappointment: “This budget has not delivered the full scale devolution of land taxes that London needs to make for a fairer city and fund much needed infrastructure”.
Sadly, this came as no surprise. And with Labour’s national leadership too having little to say on any radical decentralisation of power as part of a post-Brexit age, a devolution revolution to London and other UK cities still seems far away.
Richard Brown also knows about London songs. Anthony Painter also knows about Universal Basic Income. Less excitingly, the chancellor’s budget speech is here.