Chancellor Rishi Sunak has resisted changing any property taxes in the short term, but has used his Spending Review statement to introduce substantial spending on housing.
In a speech dedicated to short-term public spending, Sunak warned the House of Commons that while the pandemic emergency was ongoing, “our economic emergency has only just begun”.
“Even with growth returning, our economic output is not expected to return to pre-crisis levels under the fourth quarter of 2022” said Sunak, who went on to warn that the economy even in 2025 was forecast to be three per cent smaller than originally expected.
Unemployment was predicted to rise to a peak of 7.5 per cent - or 2.6m people - in the second quarter of next year, around the time that furlough ends.
The speech ignored possible changes to Capital Gains Tax, which had been the subject of speculation in the past week. But he said: "Following the introduction of the temporary cut in stamp duty, house sales rose 15.6 per cent in August - helping to protect nearly three quarters of a million jobs in the housing sector and the wider supply chain."
And in terms of capital spending he pledged £20 billion to support new housing from 2020-21, including the introduction of a £7.1 billion National Home Building Fund on top of a £12.2 billion affordable homes programme. As is usual with such statements, Sunak gave headline pledges - details are to follow in the coming days.
Sunak’s other statements to MPs this afternoon included:
- pay freeze across most of the public sector apart from the NHS, but 2.1m who earn below £24,000 a year will get a rise of at least £250;
- National Living Wage up by 2.2 per cent to £8.91p an hour;
- £3 billion for a Restart Programme helping over one million people who have been out of work for over a year;
- Economy will contract 11.3 per cent this year, the largest such fall for three centuries; but economy forecast to grow 5.5 per cent in 2021 and 6.6 per cent in 2022;
- The government is spending £55 billion to tackle Coronavirus in 2021-22 (so in addition to the current £225 billion expenditure in 2020-21);
- Schools spending set to rise by £2.2 billion with every pupil seeing a year-on-year funding increase of at least two per cent;
- £400m for Home Office for additional police and £4 billion for additional prison places;
- 0.7 per cent overseas aid spending will be reduced to 0.5 per cent;
- defence spending rising by £24 billion over the next four years;
- £2.4 billion more for Scotland, £1.3 billion for Wales and £900m for Northern Ireland;
- a new UK infrastructure bank, to finance infrastructure projects from next spring, alongside the private sector.