Budget 2017: May says stamp duty cut will give first-time buyers 'a boost up the housing ladder'

Theresa May has defended the Government's move to abolish stamp duty for first-time buyers, saying she wants to "reignite the dream of home ownership".

It comes amid some concerns the cut announced in the Chancellor's Budget could push up house prices.

"We want to ensure that the young generation - that today perhaps worries about never getting their foot on the housing ladder - will have that extra bit of help to do so, " the prime minister said.

"But we also need to build the homes the country needs and we want to see 300,000 additional homes being built every year."

"That will be the highest rate of additional home-building since 1970."

Mrs May also said Philip Hammond had done a “very good job” setting out how “we will ensure we have an economy fit for the future”.

“Both the Chancellor and I agree that what the Budget was about was jobs for people up and down the country, ensuring people are in work with that income for their family.

Mrs May added: "It’s about building the homes that they need, and it’s about ensuring we seize the opportunities for the future."

Earlier, Philip Hammond dismissed concerns scrapping stamp duty for first-time buyers will impact house prices.

The Budget announcement permanently raises the price at which a property becomes liable for stamp duty to £300,000 for first‑time buyers, in an attempt to help young people buy their first home.

But the Office for Budget Responsibility (OBR) predicted the move would push up prices by around 0.3% - meaning many first-time buyers would have to pay more than they otherwise would while the main gainers would be people who already owned a property.

The OBR also suggested that only around 3,500 additional homes would be sold as a result of the incentive.

Speaking to ITV News the morning after his Budget speech, the Chancellor said the OBR predictions did not take into account other measures announced on Wednesday. These included a pledge to build 300,000 new homes a year on average by the mid-2020s.

Labour said it backed the stamp duty cut as it was in its election manifesto, but without more extensive housebuilding it "will only drive up prices".

Mr Hammond said it was "completely untrue" to suggest that the stamp duty announcement was not what it seemed.

"It's a measure that will help a million first-time buyers, saving them around £1,700 each," he said.

Labour said more needs to be done to fix the housing crisis. Credit: PA

"What the OBR did was look at the effect of the stamp duty reduction alone and it forecast that if nothing else happened, that would cause house prices to rise by a minuscule 0.3%.

"But that's not the world we live in. There was a big package yesterday that will increase the number of houses being built, that will stimulate the housebuilding sector.

"So the effect that the OBR modeled yesterday will not happen in the real world."

Shadow chancellor John McDonnell told ITV News the stamp duty cut could increase house prices unless more homes are built quickly.

"The promises that have been set out in the Budget yesterday means yes we will get rid of stamp duty.

"But if you don’t match that with building homes on quite a scale quickly what will happen is house prices will go up.

“We’re in danger now of a policy being introduced on stamp duty which will actually increase prices and everyone will lose out as a result of that."

Mr McDonnell added: "What I didn’t see in the Budget yesterday was any real investment in what we need both in terms of social housing, properly affordable housing, or in housing distributed in a way which help give a decent roof over everyone’s head."

In the Budget it was revealed that the OBR had issued a grim set of economic forecasts, downgrading its predictions for growth for each of the next five years as a result of the UK's continuing poor productivity performance.

With growth forecast to average just 1.4% over the period, OBR chairman Robert Chote said it looked "unlikely" Mr Hammond would achieve his target of eliminating the deficit in the public finances by the mid-2020s.

Mr Hammond said that the economy was facing "uncertainty" at the moment which he hoped would start to dissipate once there was more clarity on what sort of Brexit deal the UK will get.

Labour's shadow chancellor insisted more borrowing for investment in infrastructure is needed to increase productivity.

"When you borrow for investment and infrastructure, what you do is you grow the economy, and that’s how you tackle the deficit," Mr McDonnell said.

The Chancellor announced investment in the NHS and housing. Credit: PA

Another key announcement in the Budget was an extra £2.8 billion for the NHS in England, £350 million as which will be made available immediately to allow trusts to plan for this winter.

NHS bosses had hoped for a figure closer to £4 billion and have warned the package may not be sufficient.

Mr Hammond said: "We've put in the amount of money that we judge the NHS will need over the next couple of years."

Other Budget announcements included:

  • A £1.5 billion package to cut the waiting period for Universal Credit payments and to make it easier for claimants to receive an advance

  • An extra £3 billion will be set aside over the next two years for Brexit preparations

  • New diesel cars failing to meet the latest emissions standards will face a tax increase in April

  • The National Living Wage will rise 4.4% in April, from £7.50 an hour to £7.83

  • The Government will investigate how the tax system and charges on single-use plastic items can reduce waste