Of course, if I’m being honest the answer to this question is ‘we don’t really know’. However, we won’t let that stop us from widely speculating about what the Chancellor’s statement on Wednesday (25th November) will contain for agents and the wider PRS, so here goes.
What is the Autumn Statement?
Before we start, and in case you’re not entirely familiar with the purpose of the Autumn Statement: it is essentially an annual update on the government’s plans for the UK economy. There isn’t much difference between the Autumn Statement and the Budget except that the former doesn’t tend to have many major announcements or contain as much detail. And generally, the announcements made during the Autumn Statement tend to be of less significance.
The one main difference between the Autumn Statement and the Budget is that during the Budget the Chancellor is allowed to drink alcohol. This might sound like parliamentary fable, but it is in fact true and it’s the only time that alcohol is allowed in the House of Commons. For example, Ken Clarke apparently had a soft spot for whisky whilst stationed at the despatch box, while Benjamin Disraeli favoured brandy.
Anyway, no such tradition applies to the Autumn Statement and, even if it did, we know that from previous Budgets Mr Osborne prefers not to drink on the job.
So back to business…and we’ll start with what we know.
More cuts to welfare
One thing we know for sure is the Chancellor has reached an agreement over the DWP’s budget ahead of Wednesday’s statement. We also know that cuts to welfare seem to be an important staple of Budget and Autumn Statement announcements over the past 5 years. After the furore surrounding the Chancellor’s plans to cut tax credits earlier this month, Mr Osborne is under pressure to dilute his plans and it’s highly likely he’ll be considering further cuts to welfare as an alternative.
The housing benefit budget now costs the Treasury a reported £25bn and there are a few rumours about what Mr Osborne may be considering, including:
- Making all housing benefit claimants pay the first 10% of their rent from their own funds
- Further reducing access of housing benefit recipients from 30% to 20% of market value homes, or
- Simply reducing the welfare cap further.
All of which would generate significant savings for the Treasury. If this occurs, then the impact will be felt in high pressure markets such as London, Oxford and York.
More supply of housing
The housing crisis has also been a fairly consistent theme in the Chancellor’s thinking and while there may not necessarily be any ‘new’ announcements about housing supply, we should at least expect more details about previous promises to provide 20k new starter homes and the ‘Help to Buy ISA’ which is due to launch next week – 1st December. It’s also possible that the Chancellor will outline further detail on his promise to convert outdated and empty prison buildings into housing.
Will agents be immune?
After the Summer Budget ‘assault’ on landlords and mortgage interest relief, you might think that further cuts or announcements that affect the PRS would be too soon. If an announcement was to be made it would surely involve further regulation.
It’s unlikely but we mustn’t rule it out: remember, there’s no current Conservative opposition in the House and with the Chancellor a leading candidate for future Prime Minister, backbenchers will not be over willing to put his nose further out of joint after the tax credit debacle.
And with that in mind agents might not be immune from this Autumn Statement, but in all honesty, the question should be: is anyone safe?