Billed as the make or break budget, the one which would define Brown & Darlings tenancy of Number 10 and 11, the question is did they deliver?
The backdrop to this quintessential speech is an economy where different polls, reports and stats look like they are saying different things. We all know about the bad news, but there have also been some tentative signs of improvement recently.
Only today we saw figures from the CML that showed a further bounce in mortgage lending, joining a growing consensus that the worst of the housing crisis may now be behind us. On the surface these latest figures appear to support this theory.
Although seasonal factors are certainly influencing this increase in mortgage lending, the general view that the dark clouds may be slowly lifting are further supported by estate agents experiencing an increase in the number of applicants registering in the past few months and recent reports such as the HM Revenue & Customs stating that house sales have jumped 40% in March.
What we need now is for the Government and the banks to play their part. Initiatives such as the Homeowner Mortgage Support Scheme are a step in the right direction, although the details may rule out many and only a fraction of the lenders have actually guaranteed their support for it, but today’s Budget provided the perfect opportunity for the Government to make a bold statement and show that it is serious about helping restore confidence in the property market.
So what happened?
The headlines will be on the staggering amount of borrowing, some £600 billion odd over the next 5 years and it will be interesting to see how the City responds to those figures. Also, hikes in income tax, and cuts in tax allowances for higher earners, although opinion polls suggest the time is right to introduce such measures, ( I’m whispering this bit from my office in the heart of the City).
For the housing market however, there is not much to write home about. Yet again the Chancellor has missed a trick with regards to Stamp Duty. Merely extending the nil rate band on purchases up to £175,000 is like putting a band aid on a gaping wound, and a more fundamental reworking should have been introduced.
Saving 1% on £175,000 is not going be a massive incentive, and to put my London Mortgage Broker hat on for a sec, makes bugger all difference here.
An extra £80m given to HomeBuy Direct, the Government’s shared equity mortgage scheme, and the fact that Construction firms will get £500m of extra finance to help them borrow to build more homes is nice, but again I am not sure it really gets to the crux of the issues.
More encouraging is the fact that new mortgage backed securities will be underwritten by the Government which should make more of a direct difference.
Without being overtly political, like some other commentators, I can’t help feeling more than a little frustrated after this budget.
On the one hand, I do not believe they could have really done much more to help the situation with the global response and the amount of spending on bailouts etc. . However I still think that, and this was perhaps Cameron’s most poignant point in his entertaining repost, (I say that through gritted teeth), they did not fix the roof whilst the sun was shining and simply spending our way out of trouble is not the main answer.
I do not for one minute believe that the Tories would have done much different, or had the political nous to mastermind a global response, but as Sir Alan Sugar might say “you held the reigns mate, so don’t go palming the blame off on anyone else sunshine”.
I’ll leave it up to you then to decide whether Mssrs. Brown and Darling will be around to actually implement all of these changes.
In summary, although there is a growing consensus of good news, as alluded to above, this is still barely a whisper at present. What is needed now are some bold strokes, bolder than the contents of this budget, both by the Government and indeed the lenders themselves, to banish the clouds and turn the whispers into a cacophony of sound.