Economic stability high on Budget's agenda but mortgages neglected

12 March 2008 / by Rachael Stiles
Economic stability in the face of the global credit crisis and the environment seem to have shared centre stage in this year's Budget, but the mortgage market did not receive the attention that some hoped it would.

Alistair Darling's first budget was always going to feature heavily the present financial climate in light of the situation which has unfolded in the markets over the last 12 months, so it comes as little surprise that in his statement today he was adamant that the UK will "maintain stability through the world economic slowdown", and that it is in a good position from which to do so, boasting "low inflation" and "Record levels of employment."

According to the Chancellor, "Britain is better placed than other economies to withstand the slowdown in the global economy", and this year's Budget will help to "secure stability in these times of global economic uncertainty".

He offered some comfort to those who have been most adversely affected by the rises in their fuel bills, promising, in addition to the Winter Fuel Payment scheme, a one-off £100 payment to householders over the age of 80, and £50 to those over the age of £50 in 2008-2009, benefiting around nine million households.

Funding will be provided for the Green Homes Service to advise consumers on how they can do their bit to reduce carbon emissions, waste and water consumption. Furthermore, there will be an ambition for all non-domestic buildings to be zero-carbon by 2019.

The Budget brought good news for motorists – the proposed plan to increase the duty on fuel by 2p per litre from April 2008 will be postponed until October 2008, but company cars will face higher taxation if they are not fuel-efficient.

The duty on alcohol will increase by six per cent from March 17th 2008, and in the fight against single-use carrier bags, the Government will introduce new legislation that will impose charges on retailers if they do not take voluntary action to reduce the number of bags they provide.

The Budget outlined how the British household has benefited from the personal tax and benefit measures which have come into effect since 1997. By 2010, households will be an average of £1,250 a year better off; families with children will be £2,000 better off; and families with children which are in the poorest fifth in the nation will be £4,500 better off.

Mr Darling proposed the implementation of measures to ease the availability of affordable housing and see more easily-accessible long-term fixed rate mortgages, but was unclear about how the Government would go about doing this.

Michael Coogan, director of the Council of Mortgage Lenders, was disappointed with the Chancellor's lack of cohesive action towards the current problems in the mortgage market. "There was little of immediate concrete substance for the housing or mortgage markets in this Budget." he said. "While there may prove to be benefits in the long term, the Chancellor ducked the pressing nature of some of the issues that are facing the markets right here and now."

And Martin Ellis, Chief Economist at Halifax has voiced his disappointment that the Chancellor did not take the opportunity to address the stamp duty thresholds.

"The stamp duty thresholds have not kept pace with the increase in house prices for many years now. Stamp duty is hitting more homebuyers where it hurts, in their pockets. It is also becoming an issue again for First Time Buyers," he said.

"The government has raised the 1% threshold in recent years; unfortunately, more needs to be done. That is why we have, for many years, called on all political parties to raise the stamp duty thresholds to compensate for house price inflation over the past decade and to commit to index the thresholds for house price inflation in the future"

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