Does The Chancellor’s Budget Actually Help Young People?

We watched Spreadsheet Phil's speech so you don't have to...

Autumn budget help young people stamp duty housing

by Vicky Spratt |
Published on

The Chancellor of the Exchequer (aka Spreadsheet Phil) and Prime Minister sat side by side today as he unveiled his annual budget. In what seemed to be an attempt to shake of his boring fiscal image, the Chancellor seemed to be vying for a new moniker: Funny Phil. He poked fun at Jeremy Corbyn and even roped in the PM in his comedy skit. May reached up from her chair to hand Hammond a packet of cough sweets, a hilarious reference to her coughing fit at conservative conference earlier this autumn.

Jokes aside, what do you need to know?

Last year, Hammond used the Budget (then known as the Autumn Statement) to announce a ban on letting fees. Since then, after years of turning the other cheek, the Conservative Party have had their sights firmly set on housing. It was front and centre of Theresa May’s cursed speech at Conservative Party Conference and Communities Secretary Sajid Javid has tactically been signalling that he is aware of the serious inequity being caused by this countries housing crisis since he got his job last year.

In part, this is because it became very clear after last year’s general election that the Conservatives were going to struggle to win over younger voters. Generation Rent, as we are known, are growing up and we’re no longer just young professionals who can’t afford our own homes, we’re young families. Shelter ran the numbers and found that private renters swung to Labour last summer, while home owners stayed Conservative. Proof that failing to win a majority last year was a game changer for the government can be found in the fact that there was next to nothing in this year’s budget for pensioners.

The British Dream of owning your own home is unrealistic for many young people now. The Conservatives know this presents a serious threat to the future of their party, after all, you’re hardly going to think of yourself as a Conservative if you’ve got nothing to conserve, are you?

And so, today, solving (or attempting to solve) the housing crisis and making life easier for young people was at the top of the agenda for the Chancellor. How did he do?

1. The Millennial Rail Card

The news that the young person's rail cardwas going to be extended was leaked. People accused the Conservatives of ‘bribing’ younger voters. The truth is that rail travel in this country is extortionate, it can cost more to take a train from London to Manchester than to fly to Europe. For anyone who’s ever worried about whether they can afford to go home and visit their family or travel for work, the extension of the 16-25 rail card will come as a relief. Sure, it won’t solve all of our problems but it will make things just a little bit easier.

**Debrief Score: A for effort **

2. Building More Houses

As everyone knows there is no quick fix for a housing crisis which has been allowed to fester for decades by politicians. It’s interesting that Hammond referred to the problem as ‘a housing challenge’ today in attempt to make it sound like a problem that could be solved.

Part of his solution was to announce £44 billion worth of investement for housing over the next five years. He said ‘young people will feel very concerned about their prospects in the housing market’ because ‘prices are increasingly out of reach for many’. Hammond wants this money to be used to ensure that there are 300,000 homes being built every years by the mid 2020s. If he manages that, it will be the most houses we’ve built as a country since the 1970s.

This is good. However, there are still questions to be asked about how we ensure new homes are actually affordable for people. At present, ‘affordable housing’is classed at 80% of the market rate but when market rates are extortionate and far more expensive than what people can afford, lowering the cost by 20% barely touches the sides.

**Debrief Score: Hammond said ‘our pledge to the next generation is that the dream of home ownership will become a reality once again’. He can have a C+, he’s on the right track but needs to be more ambitious if he wants to smash it next time. **

3. Cutting Stamp Duty For First Time Buyers

OK. We’ve saved the best until last. Hammond announced that, effective immediately, he would abolish stamp duty for first time buyers on properties worth up to £300,000. That will save people £5,000. He will also extend this to the first £300,000 of properties worth up to £500,000.

The Office for Budget Responsibility have warnedthat the real winners here will be not first time buyers but existing home owners. Why? They say the stamp duty cut will only serve to increase house prices further. In any case, this won’t help those who can’t afford to save for a deposit because their rent eats up so much of their earnings. This does feel like another boost for young people who have access to the Bank of Mum and Dad which does nothing for those on middle and low incomes. More than this, it certainly isn’t going to do anything to help renters who watch nearly two thirds of their income disappear into their landlord’s pocket every month.

**Debrief Score: see us after school, Phil. **

On Budget day, we asked Debrief readers what stable and affordable housing would mean to them, here’s what they said:

**Emii, 29, Glasgow: **

‘Everything else in my life points to the fact that I should now be financially comfortable, but I’m still living month to month. I think owning my own home would give me a sense of financial security - my savings would be savings, not a pitiful attempt at trying to scrape together a deposit or a ‘fear fund’ in case the landlord asks us to leave. I’ve also started a business on the side and I think having my own home would mean I could focus my financial efforts in investing in my business rather than in a landlord’s pension pot.’

**Bex, 28, Bexleyheath **

‘The state of housing really makes me dismal for future generations. I have a 13 year-old sister and she is even saying she will be living at home forever because she cannot fathom how much housing costs. At 13 she is insanely worried about money because of the news she hears, she honestly believes the only way she can buy a house is if she becomes a doctor. Seriously. What a goal but also what an intense crushing pressure.’

**Milly, 29, London **

‘I share a one bed with my boyfriend in London, and we're pretty comfortable month to month affording the rent, and doing the majority of things we want. What REALLY terrifies me though, is the lack of stability. If I lost my job suddenly, just one month without being paid could make me unable to pay my rent, and render us both homeless...’

‘I'm fortunate enough to live reasonably comfortably month to month, but still worry every day about what happens if something goes wrong; I feel huge guilt for spending money on on 'unnecessary' things (e.g. the snazzier than I strictly need gym membership I've just taken out) because I feel that I should be putting it into savings 'just in case'. It's frustrating because I'm earning a good wage for how old I am, and don't feel that I should have to put my life on hold in order to have savings, but it really feels like one or the other - have a good time and very little savings/money to buy, or eventually be able to buy somewhere (probably a bit crap) after having spent months, if not years, sitting in, looking at four rented walls...

Like this? You might also be interested in:

Attention: The Millennial Railcard Is Coming

How To Avoid Falling Into Lena Dunham's First Person Feminism Trap

Brexit Could Make Eating 5-A-Day Unaffordable

**Follow Vicky on Twitter ****@Victoria_Spratt **@Victoria_Spratt

This article originally appeared on The Debrief.

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