Mini Budget – Mixed Messages, Industry Response

We have a scenario where the government are trying to turbo charge the economy with huge tax cuts while the Bank of England are trying to put the brakes on with high interest rate rises.  I think many of us will find this scenario very confusing.

Are the measures announced in the mini-budget by the government today sending mixed messages? Does the left hand know what the right is doing?

The measures announced will help put more money into the economy in the short term. However, it does not solve the main issue for many of us which is soaring interest rates and a cost of living crisis. If interest rates continue to rise quickly, many borrowers will have far less disposable income and there will be many who may be unable to pay their mortgages.

The Stamp Duty cut will be welcomed by home buyers as everybody purchasing a new home will benefit. The announcement is especially good for first time buyers and those living within London and the South East who can claim a discount (relief) on purchases up to £625,000.”

Adrian Anderson, Director, Anderson Harris

“The government has gambled on growth and if this brings confidence to the those operating in our sector then it is good news, but I remain to be convinced with much of the detail yet to be revealed. The announcement on investment zones and cuts in stamp duty is to be welcomed. However, many of the planned tax cuts are merely a continuation of current policy or a reversion to where we were last year – the corporation tax rise they have reversed is not even in force yet, and National Insurance only rose in July. So how will more of the same bring about change and boost growth? Energy, materials, and labour are the main challenges for our sector, and as far as those operating in it are concerned this is a sticking plaster budget when the patient needed major surgery.

We needed to see investment in retrofitting existing building as a long-term aim to save energy, more tax breaks for training, and a relaxation of immigration rules for specialist trades to help expand an industry that is approaching 250,000 vacancies. I appreciate that this was only a holding statement from a new government, but I don’t believe it will inject the confidence we need.  Ironically, with sterling recently at a 37 year low, there has never been a better time for foreign capital to invest in Britain.”

Graham Harle is CEO of Gleeds

“The property market is undoubtedly integral to the UK economy, and its value extends far beyond SDLT tax receipts for the Government, given what it means for developers, investors, agents and service providers. Once again, as turbulence has struck, the Government has reacted quickly to support the market, just as they did with the Covid-19 stamp duty holiday.

“It will be interesting to see what impact this has from an investment perspective. For instance, we have seen retail investors deterred from buy-to-let purchases due to higher tax bills, but will this SDLT cut offer enough incentive to reverse that trend? I am not sure – the complexity and high cost of traditional property investment continues to alienate many, so we could see more people go down alternate routes, like fractional investing in real estate.”

Jatin Ondhia, CEO, Shojin

“One of Whitehall’s worst kept secrets this week, the confirmation of the stamp duty cut, is nonetheless significant. Like Johnson and Sunak’s actions during the pandemic, today’s mini budget underlines the new-look Government’s determination to maintain a buoyant property market.

“But the true impact of this move remains to be seen. One common theme of the stamp duty holiday in 2020-21 was that sellers inflated asking prices to account for buyers’ stamp duty savings. Will we see the same again? It is likely, to an extent at least. But this time around we have rising interest rates impacting the amount buyers can borrow, so that will also shape the way that house prices move.

“I think more action should have been taken to incentivise developers, investors and homeowners to improve properties’ sustainability. Buyers and renters want greener homes, while the energy price crisis has demonstrated the need to improve how energy efficient buildings are. So, further financial incentives to encourage owners to lower the carbon footprint of their property would have made perfect sense at this time. We should expect this to be a recurring theme in the months to come.”

Paresh Raja, CEO MFS

“This is a triple miss by the Chancellor – a missed opportunity to reduce our dependency on expensive gas, to create hundreds of thousands of jobs across the country and to cut our carbon emissions. It is a shame that the Chancellor has not targeted stamp duty reductions for those who make their homes more energy efficient.”

Ashden’s position is that:

* The Fiscal statement does not include any new support for the energy efficient retrofit of buildings. Without this, our dependence on expensive gas will continue and the government will face an open-ended commitment to support energy suppliers, with the bill footed by tax payers. The UK has the leakiest buildings in Western Europe and a retrofit revolution will slash carbon emissions, make energy cheaper and provide an economic boost, creating hundreds of thousands of new jobs across the country.

Cara Jenkinson, Cities Manager at climate solutions charity Ashden

“What does today’s mini-budget mean for local government? Like every other sector, local government is deeply invested in the nation’s prosperity. Both in relation to its own finances but also in the extent to which it needs to provide support to residents and the general well being of the populations it serves.

The Chancellor set out a very clear statement of intent this morning: lower taxes, streamline regulation and get government out of the way for growth to follow.

For local government, the most striking manifestation of this approach is the focus on new investment zones. It’s reassuring to see that these are being developed in consultation with local authorities but many questions remain. What will the governance arrangements for these zones look like and how will local democratic control be maintained? Is this really a locally driven process or is it the Government picking winners in place of developing a national growth strategy? Will the promised “expression of interest process” really be open and transparent? What are the assessment criteria?

Many in the sector will feel that they have seen elements of this approach before and will worry that it’s just another set of funding hoops to jump through.

It’s also striking that, to an even greater degree than the devolution measures proposed in the Levelling Up Bill, the focus is on growth, infrastructure and investment incentives. All are important. But there’s nothing here about public service reform or democratic engagement and we know from the devolution deals of 2014/15 that if that’s not there from the beginning you end up needing to retrofit it later. What is the government’s vision for these?

More fundamentally, local government will be worrying about its immediate financial viability. Councils are in crisis right now and a promise of future growth does not alleviate that. For more than a decade councils have taken on massive financial pain in the name of balancing the national books and reducing the deficit. These principles no longer seem to hold at a national level but councils still need to balance their books each and every year. Many are worried about their ability to do this and will be looking at today’s announcement and worrying that once again they have been left out and left behind.”

Jonathan Carr-West, Chief Executive, Local Government Information Unit (LGIU)

 said: “Today’s announcement to accelerate infrastructure delivery and introduce investment zones along with stamp duty changes are all factors that will boost the construction industry. However, with a quarter of a million workers already forecast to be needed by 2026, it is more important than ever to see investment in skills and training and continued collaboration between CITB, industry, and government to meet construction’s skills needs.”

Tim Balcon, CITB’s Chief Executive