Oh dear. The Chancellor of the Exchequer has been a bit scatty and made a technical breach of the Ministerial Code by sending me a draft of his Autumn Statement via his personal email. I think he meant to send it Harry Cole. Anyway, here it is:
Madam Deputy Speaker,
As the House is all too well aware, we face a time of exceptional economic challenges due to Vladimir Putin’s illegal war in Ukraine. My Right Honourable Friend the Prime Minister and I have made clear that this will mean some difficult choices. We warned that painful decisions will have to be taken. We said that taxes will have to rise and there will have to be public spending cuts; that these measures would be unpopular and that there are no soft options.
I am pleased to be able to update the House with the welcome news that I have managed to come up with a soft option after all. Public spending will not have to be cut. Taxes will not have to rise. The changes I outline today should be very popular – especially with the young people whose extravagant habit of eating avocado on toast has caused them to have difficulty getting onto the housing ladder.
I will fill the fiscal black hole with a substantial release of surplus public sector land for development. The Ministry of Defence alone owns 849,000 acres of land. Network Rail, an “arm’s length” public body of the Department for Transport, owns 128,000 acres. Total state ownership of land is not even properly tallied but is highly likely to exceed two million acres. Not all is surplus to requirements, of course. Nor is it all viable for development. But a substantial amount of it is. That is why I can today announce a five year target of annual land sales of 100,000 acres per year with outline planning permission for house building. Given that one acre of development land provides comfortable space for ten family homes that would mean a million new homes being built each year for the next five years. An additional five million new homes would be transformational in alleviating the housing shortage we currently face.
The average price of a home is £292,000. However, most of the cost of a new home is not the construction, but the land with planning permission. So selling land with development rights would be worth around £150,000 per house or £150 billion each year for the million houses being built. The Government recognises the importance of consent for development and so would offer incentives to encourage local authorities, and the communities they represent, to offer approval for development opportunities. We will work with Create Streets and the Prince’s Foundation for Building Community to offer plans for beautiful developments that foster cohesion and civic pride. Extra funding will be provided to enhance roads and other transport infrastructure, schools, and GP surgeries, and environmental projects so that existing residents will gain rather than feeling burdened by the additional population.
Local authorities that allow homes under this scheme will have a quadrupled New Homes Bonus – which will allow them to ease Council Tax and Business Rates and spend more on local services. Where appropriate, local authorities will also be able to include adjoining land that they own to the new developments – as will other landowners such as the Church of England – receiving a relevant proportion of the proceeds.
First-time buyers with an annual income of below £100,000 a year (or couples buying jointly with combined annual earnings of under £150,000) will be offered a discount of a maximum of £87,000 – equivalent to the right to buy discount for council tenants. This offer will be available for a quarter of the homes being sold – the remainder being sold on the open market.
Given these discounts and incentives, the proceeds to the Exchequer will be diminished but will still prudently be expected to exceed over £100 billion a year.
I recognise that the substantial increase in the housing supply will be likely to reduce house prices in real terms over the five year period. This might cause some dismay among existing home owners over the value of their principal asset diminishing in value. However, with the fiscal headroom I will introduce a couple of measures that I hope will cheer them up a bit. First of all, I will abolish Stamp Duty, from April, at a cost of £14 billion a year. This will ease the cost for those buying a home while also sustaining house prices. I have also decided to abolish Inheritance Tax at a cost of £6 billion a year – so even if you have a bit less nominal wealth you have more of the stuff cascading down the generations.
The proceeds will also allow for some spending increases. I will allocate £5 billion for the NHS to pay for those waiting for an unreasonable period of time to be treated privately. We have 3.2 million pensioners over 80 in this country. I will give them an extra thousand pounds each this winter, at a cost of £3.2 billion, for their fuel bills as they are especially vulnerable. With all the new construction work that will be taking place I recognise the skills shortage we face and the concerns about increased immigration. So another £3 billion a year will go on training and apprenticeship schemes for this pressure.
This still leaves room to reinstate the tax reductions announced by my Right Honourable Friend the member for Spelthorne on September 23rd. I have decided they were rather good after all.
I believe that this ambitious homes programme will have a wider impact, increasing growth and thus tax revenues. I would like to be able to include this in my figures, but the Office for Budgetary Responsibility has told me I can’t. So I had better not go there. However, even by prudently making no such assumptions, the measures I have outlined today will allow for an annual reduction in the Public Sector Net Cash Requirement for the coming financial year of over £50 billion.
I commend this statement to the House.
OK. I fooled you. That’s not really what the Chancellor will announce. But would it not solve some of our most pressing problems if he did?