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  1. ITV Report

Budget 2017: Reaction to key policies of the Chancellor's statement

Philip Hammond's key policies focused on housing, Brexit and the NHS. Credit: AP

Chancellor Philip Hammond delivered his annual budget speech to parliament covering spending on the NHS, Brexit and housing.

Here is the response to some of his key policies:

  • First time buyers
Philip Hammond set out plans to abolish stamp duty for first time buyers. Credit: PA

Philip Hammond's most talked about policy was relief for first-time buyers with plans to abolish stamp duty on properties up to £300,000.

The government said the plans would benefit 1 million first time buyers and save an average of £1,600 per property.

But the Office for Budget Responsibility (OBR) warned that the main gainers from the government's stamp duty cut will be those who already own a home.

It said the consequence of introducing the relief would be to increase house prices by around 0.3% and most of the effect is expected to be in 2018.

The relief would also distort the housing market at house prices around £500,000, the OBR said.

Stamp duty is unchanged above this mark so homes priced just below the threshold could be more appealing to buyers.

Housing experts said that while the Budget provides relief for first-time buyers, the moves will not unblock the whole of the housing chain.

Sarah Beeny, owner of estate agent, Tepilo.com, said she believes the move is unlikely to make much difference to the housing market overall.

A reduction in stamp duty for second steppers and downsizers would make a much bigger difference, allowing people to move up and down the market more freely and cost-effectively - and freeing up first-time buyer and family homes for the right people.

– Sarah Beeny, Tepilo

It might enable a first-time buyer to purchase a new sofa but will it really make the difference between being able to buy a home or not?

– Jonathan Harris, Anderson Harris mortgage brokers

Tom Kibasi of the left-wing think tank IPPR and Sam Dumitriu of the right-leaning Adam Smith Institute said cutting stamp duty was not enough.

Mark Hayward, chief executive of the NAEA Propertymark said the move will increase the demand for first-time buyer properties, adding: "If we don't have the supply it will push prices up."

"We have seen this in areas where Help to Buy is offered."

Paula Higgins, chief executive of campaign group the Homeowners Alliance, called for a stamp duty cut for downsizers.

She said: "Freeing up larger family homes is essential for the fluidity of the market but there is currently no incentives to downsize and a lack of suitable properties to move to."

Changes to stamp duty land tax rarely work entirely in the way governments intend them to.

This could lead to some prices going up, and sellers digging their heels in on price when dealing with first-time buyers - working exactly against what it intended to do. Plus more sales can lead to house prices going up, if demand outstrips supply.

– Jeremy Raj, Irwin Mitchell Private Wealth

While, in theory, 95% of first time buyers are winners from the removal of stamp duty on first time purchases, home ownership will only become a reality for generation rent if more affordable housing is unlocked in the system.

This can only be achieved by a complete review of the whole housing system.

– Rob Walker, PwC
The government plans to deliver 300,000 new homes. Credit: PA
  • Housing

Mr Hammond's promise of £15.3 billion in new financial support for housebuilding over the next five years would take total investment to at least £44 billion.

This includes £1.2 billion for the government to buy land to build more homes, and £2.7 billion for infrastructure that will support housing to meet a target of delivering 300,000 new homes.

The Home Builders Federation welcomed these measures but described the target of 300,000 new homes as "extremely challenging" requiring further policy interventions.

Stewart Baseley, executive chairman of the Home Builders Federation said: "The measures [will] assist by stimulating demand and helping broaden the supply base of new homes. But much more needs to be done, in particular with regards to the planning system, if the target is to be met."

The Chartered Institute of Housing welcomed the commitment as "significant progress" but said it was crucial that affordable homes are built.

"We have to make sure that any new funding supports the building of new homes that meet the varied needs of individuals and families across the UK," said deputy chief executive Gavin Smart.

"For many people social rents, which are much cheaper than private rents, remain the only truly affordable option and more must be done to support this crucial form of housing."

Other measures including £20 million for Help to Rent schemes were welcomed by homeless charity Crisis.

  • The NHS
Experts said funds for the NHS pledged in the Budget may not be enough. Credit: PA

Acknowledging the NHS is "under pressure", the Chancellor said that £350 million would be committed immediately to allow trusts to plan for this winter.

An additional commitment of £2.8 billion was pledged to NHS in England in 2018 and another £1.6 billion in 2019.

Sir Malcolm Grant, chairman of NHS England, said:

"The extra money the Chancellor has found for the NHS is welcome and will go some way towards filling the widely accepted funding gap.

"However, we can no longer avoid the difficult debate about what it is possible to deliver for patients with the money available. The NHS England board will need to lead this discussion when we meet on November 30."

Professor Sir Bruce Keogh, national medical director for NHS England said the money will not plug the funding gap and warned longer waits will be unavoidable.

Mr Hammond raised the prospect of increases in NHS staff but only if productivity is improved leading to a backlash from public sector unions.

Dave Prentis, general secretary of Unison, said the Budget was "deeply disappointing" adding it has left the public sector "gasping for air".

The hopes of NHS staff may have been raised slightly, but there's no actual money on the table.

This is still a long way from the across-the-board pay rise needed to save our public services.

Dedicated public service employees deserve so much more than pats on the back. It's time they and the hospitals, schools and councils they work for saw the colour of the Chancellor's money. It's time for the Government to pay up now.

– Dave Prentis, Unison

But Janet Davies, general secretary of the Royal College of Nursing, said that the Chancellor had "clearly listened" to nursing staff campaigning for fair pay.

"The NHS has been running on the goodwill of its staff for too long, and with more talk of reform and productivity, Hammond runs the risk of insulting nurses who regularly stay at work unpaid after 12-hour shifts. Their goodwill will not last indefinitely," she said.

Robert Chote of the Office for Budget Responsibility. Credit: PA
  • Growth forecasts

The OBR cut forecast growth for 2017 from 2% to 1.5%, the Chancellor said following changes to estimates of productivity and business investment.

The OBR said that it will drop further to 1.3% by 2020 and then rise to 1.5% in 2020 and borrowing will be 2.4% of GDP rather than its previous predictoin of 2.9%.

"As expected, real GDP growth has slowed noticeably this year. The fall of the pound following the EU referendum has pushed up consumer price inflation, squeezing household incomes and spending and acting as a drag on the economy," OBR chairman Robert Chote said.

"Nonetheless the government is on course to hit its targets for borrowing and debt in 2021 but with less room for manoeuvre than it had back in March. This also means its long-term objectives of balancing the budget also looks even more challenging now than it did then."

Think Tank Resolution Foundation said the growth downgrade has "huge implications" for family finances.

Their analysis suggests that disposable incomes are expected to be £540 lower by 2023 than forecast in March due to weaker pay growth.

It said annual pay was forecast to be £1,000 lower and consequently the UK faced a 17-year downturn before wages return to 2008 levels.

While the result for the public finances is grim, the Chancellor has chosen to take the extra borrowing on the chin and indeed to borrow more, including welcome new action on housing.

The outlook for family finances however is worse. Our incomes are expected to be £540 lower than previously thought and pay is not set to return to pre-crisis levels until the middle of the next decade.

– Torsten Bell, Director of the Resolution Foundation
The Chancellor reduced Universal Credit waiting time. Credit: PA
  • Universal Credit

The Chancellor cut the wait for initial payment for Universal Credit claimants from six to five weeks came after unions and charities warned that a long wait before the first payment caused hardship.

Citizens Advice welcomed the changes and improvements to the advance payments system.

Chief Executive of Citizens Advice Gillian Guy said: "These changes should make a significant difference to the millions of people who will be claiming Universal Credit by the time it’s fully implemented. We’ll continue to keep a close eye on the roll-out of Universal Credit and make sure they do.

"The next step will be to make changes to work incentives, so that no one is left worse off under Universal Credit than they would be under previous benefits."

However, Chief Executive of The Children's Society Matthew Reed said that the policy did not go far enough.

The six week waiting period for Universal Credit has been plunging families into hunger, destitution and problem debt. Cutting this by a week and extending advance payments – which immediately get families into debt – simply does not go far enough and it will leave too many parents desperately trying to find a way to feed their children and pay for other essentials.

The Chancellor proudly claimed that he ‘cares for the vulnerable’, sadly there was very little evidence beyond these words to convince young people and low income families that his vision for the future of Britain is one they can share in.

– Matthew Reed, The Children's Society

Today’s announcement will help to ease the initial problems that many people face when moving over to Universal Credit, but the Government has decided to push ahead with big cuts to the amount of money people will receive. By failing to end the benefits freeze, the Government will oversee almost half a million extra people in poverty by the end of this Parliament.

– Campbell Robb, chief executive at the Joseph Rowntree Foundation (JRF)

The Chancellor was also met with criticism from charities for pushing ahead with welfare cuts.

Campbell Robb of the Joseph Rowntree Foundation (JRF) said the Budget should have offered more to struggling families.

"The Chancellor promised to fix the foundations of the economy, but people struggling to make ends meet needed far more than this Budget offered," he said.

Today’s announcement will help to ease the initial problems that many people face when moving over to Universal Credit, but the Government has decided to push ahead with big cuts to the amount of money people will receive. By failing to end the benefits freeze, the Government will oversee almost half a million extra people in poverty by the end of this Parliament.

The Government’s big spending commitments for stamp duty giveaways and tax cuts prioritised higher earning households, with little support for people who need it most.

– Campbell Robb, Joseph Rowntree Foundation

Other charities said that social care and help for families were ignored.

At least £3 billion has been set aside for a 'no deal' Brexit. Credit: PA
  • Brexit

The Chancellor's Budget included funds of at least £3 billion to prepare for the prospect of failing to secure a Brexit deal with Brussels.

At his Budget, Mr Hammond said that Brussels should not "doubt our resolve" as he put money aside to ensure the country is "prepared for every possible outcome".

The Chancellor's actions were criticised by Liberal Democrat leader Sir Vince Cable, who said the money was "disappearing down a Brexit black hole".

Sir Vince said: "It tells you everything you need to know about this Government's priorities that more funding has been found for Brexit than for our struggling NHS, schools and police.

"Meanwhile, the Government's strategy remains so vague that we still don't know what the final damage to our economy and living standards will be."

Labour MP Chuka Umunna, a leading supporter of the pro-EU Open Britain campaign, said: "We were promised £350 million more a week for the National Health Service, but instead public money is being swallowed up by Brexit."

  • Education

The Chancellor announced specific measures including funding for maths initiatives but teaching unions said the sector had been left without investment.

Unions said the Chancellor's statement failed to address funding cuts.

Kevin Courtney, joint general secretary of the National Education Union, said: "The Chancellor has failed to reverse the real terms education cuts; failed to provide new money to fully fund all areas of education; failed to level-up funding to address historic underfunding; and failed to guarantee the investment needed for future years."

Geoff Barton, general secretary of the Association of School and College Leaders, said it welcomed any additional spending, such as investment in maths and computer science, but warned "this is a drop in the ocean compared to what is needed to safeguard educational standards".

But new education measures were welcomed by free school founder Toby Young as "great news".

  • Vehicle excise duty (VED)
Plans for a fuel hike were scrapped. Credit: PA

While fuel duty set for April was scrapped, a Vehicle Excise Duty (VED) was introduced aimed at encouraging drivers to opt for cleaner vehicles.

Mr Hammond also announced plans to give funding for electronic cars a boost.

This came following increasing pressure on the Government to take action on reducing pollution.

Mr Hammond said: "The tax system can play an important role in protecting our environment.

"We owe it to our children that the air they breathe is clean."

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, warned that car builders would not be able to meet the requirements to avoid the VED hike.

He said: "It's unrealistic to think that we can fast-track the introduction of the next generation of clean diesel technology, which takes years to develop, in just four months.

"This Budget will also do nothing to remove the oldest, most polluting vehicles from our roads in the coming years."

  • National Living Wage

An increase in the national living wage by 33p an hour to £7.83 for over 25s was broadly welcomed.

However, the new national living wage will still be lower than the voluntary "real" living wage of £10.20 an hour in London and £8.75 outside the capital.

Bryan Sanderson, chairman of the Low Pay Commission said: "This is good news for the millions of low paid workers who are paid at the minimum rates."

  • Pensions

The pensions industry welcomed the Budget, describing it as giving certainty to savers.

Budget documents show the annual Isa subscription limit for 2018-19 will remain unchanged at £20,000.

Tom McPhail, head of policy at Hargreaves Lansdown, said a lack of big changes "is a welcome relief after years of political interference and the salami-slicing of reliefs and allowances".

Royal London said: "It's good to see a Chancellor has for once followed what the industry has long called for - to leave pensions Isas or other savings and investment vehicles well alone.

"This will give savers some certainty going forward while the country faces the uncertainty of Brexit."