The Autumn Budget is coming up and I’m not sure what I’m more looking forward to: a clear economic strategy or the merciful end to the speculation that has dominated the headlines in recent months.
I have a lot of thoughts about where this Budget could go (and where I hope it doesn’t). I was going to share a bit about that, but at the end of the day, I can’t see the future, and no one else can either.
So, I thought it best to avoid predictions and warnings and instead look at how this chaotic run-up to the Budget has impacted homebuyers – and what it can tell us about the UK today.
Budget blues
I can’t recall the last time a Budget was preceded by this much noise. And the typically rabid behaviour of the British press has only become frothier thanks to myriad rumours and certainly accidental, not-at-all-planned ‘leaks’.
But the ensuing chatter isn’t only annoying; all this ‘discourse’, to describe it charitably, appears to be having a material economic impact, particularly on the housing market.
Mind the affordability gap
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According to Rightmove, 17% of prospective buyers have pulled or paused their home buying plans due to uncertainty over the Budget, and the average new seller asking price fell by 1.8% month-on-month in November.
People are so worried about this Budget that they’re willing to delay buying a home. This is really remarkable; given that very few people buy homes for fun, this means that people are willing to continue renting, or living with one-too-few bedrooms, or uncomfortably far from work – problems that buying might ideally solve – until Rachel Reeves speaks.
In my view, this is a bad outcome for buyers. Because you need a place to live. Prevailing wisdom should not have changed: if you want to own, try to buy. If you want to move, try to move. Your home is your home. It will be your home through several Autumn Budgets. Homeownership is about your long-term plans, not today’s taxation issue.
That this Budget fear has so influenced behaviour says a lot about consumer confidence and where we are as a country.
On the other hand
At this point, we’ve experienced many run-on decades of austerity.
Poverty and homelessness rates are rising. Inflation is sticking. And the housing crisis, we all know, rages on. Just last week, the BBC was live-blogging from courthouses where repossession and eviction cases were being heard.
So, we’re told over and over that Britain is full of economic and cultural potential (and, for the record, I absolutely believe this to be the case).
But people are clearly suffering. Consumers are afraid.
There are huge opportunities in this country, but even bigger gaps in who has access to those opportunities. The distance between the haves and the have-nots feels wider than it has ever been in my lifetime.
But there is more at play here. And it’s our job as lenders and brokers to help consumers understand and find confidence even in uncertain times.
Building on broken foundations
This government inherited an economy and taxation system that has been patched and plastered together over the last 80 years. Not since the Beveridge Report has an encompassing and coherent economic and social welfare plan been put in place.
Since then, much of that welfare plan has been unsystematically and erratically altered, leaving bizarre and unfit measures in place.
Think of the childcare benefit – specifically, the two-child cap, or the salary cap. Then compare that to heating allowances for millionaire pensioners. These are not part of any strategy. They are accidents. And they are symptomatic of a machine that is broken, but has so far been too big to fail and too daunting to actually reform.
I think we can all agree on what we’re after: a social security net that supports everyone equitably, an economy and tax system that rewards ambition and innovation, and an environment defined by mobility and opportunity for us and future generations.
But all of these things have a cost. And so much of how the government raises money in this country is systemically flawed and inefficient. Really – when MPs themselves are getting tripped up on tax law, you know things are bad.
So how do we get to that ideal world? By putting our weight behind this government and working toward it together.
Bias to action
We have to recognise the difficult position the government is in. And there is nothing that the Chancellor will be able to promise on 26 November that will please everyone – or even most people.
But behind all of the negativity and headlines, we should look for the positive and embrace it.
Focus on the good and champion it.
We know the government wants to support the building of new homes. We know they want to make it easier for lenders to lend, and that they’re working with the regulator to help make this happen. We know they want to support those who need it most.
But as the government works to balance necessary and somewhat painful action with all of the terrible headlines they will inevitably get, it is very important that lenders and brokers become steady, sensible voices if we are to actually support the people who rely on us for guidance and advice.
And it’s critical that we take every opportunity they give us to improve how we operate – to refine our policy and criteria, to improve our affordability models, and to launch new propositions – in support of everyday people.
I am hopeful that this Budget will give us a few more tools to do so.
We deserve better than where we are right now, but fretting about it won’t get us there. We need to get behind this government, and behind the UK – if not what it is today, then what it could be tomorrow.
