Specialist finance industry outlines what they hope to see in the Spring Statement

The chancellor of the exchequer, Rishi Sunak, is set to present this year’s Spring Statement in parliament tomorrow (23rd March).

This follows the Bank of England’s decision to increase the bank rate by 0.25 percentage points to 0.75%, as inflation is expected to reach 8% in Q2 2022.

It also follows imminent rises in energy costs and National Insurance tax, announced earlier this year by Ofgem and the government, respectively.

Ahead of Wednesday’s Spring Statement, specialist finance experts have revealed the key areas they hope the chancellor will address during his speech.

Cost-of-living measures

Between the surge in energy and other commodity prices, constantly growing inflation and impending tax rise, many believe the country is currently facing a cost-of-living crisis.

This is why numerous specialist finance experts are calling for Sunak to address the elephant in the room and announce measures to support those impacted.

"Rising inflation and interest rates are affecting both homeowners and homebuyers, impeding the amount they can borrow and save, so I would like to see firm action from the government to protect people's finances from the worst of these economic trends, be it through financial support or temporary tax breaks,” said Paresh Raja, CEO at MFS.

“In turn, Sunak can help ensure that industries like ours do not suffer adversely in the months to come, but instead can continue to play a central role in the UK's post-pandemic economic recovery.”

William Lloyd-Hayward, group chief operating officer at Brightstar Group, added: “The council tax rebate is not enough for many families across the UK — there is a need for real support for people as we face the looming cost-of-living crisis, likely to impact more households than the last financial crash.”

Tomer Aboody, director of property lender MT Finance, commented: “With global concerns such as Covid and the situation in Ukraine having a direct impact on western economies, Sunak must look to help curb the inflation rise and manage people’s costs.

“It’s only a matter of time before inflation increases to such a level, along with higher interest rates, that means people cannot afford their monthly outgoings.

“The government must also win back some loyalty it may well have lost over the past couple of years by helping businesses, the self-employed, and all taxpayers.”

James Hamblin, BDM at KSEYE, said: "The unprecedented cost-of-living crisis is becoming very real; everyone faces massive increases in fuel, energy & food bills.

"Rising inflation has also resulted in higher interest rates, with three rises within the past six months adding to the squeeze on finances. In these circumstances, the chancellor hasn’t got much to work with.
"While the prospect of mandating limits on energy bills increases, as has been seen across Europe, is extremely unlikely, the most that may happen is a temporary removal of VAT on energy bills.

"All in all, it is reasonable to anticipate that the main focus of the Spring Statement will be on households. We can just hope that the property sector doesn't have to bear an uneven share of the burden."

Jonathan Sealey, CEO at Hope Capital, noted: “The announcement on Wednesday is going to be instrumental in terms of what the coming months will look like for the housing market and economy as a whole. 

"With inflation rising and as a result, a significant amount of pressure being put on household budgets, it is paramount adjustments are made. What these changes will look like however is the question of the hour.

"With house prices and the increase in living costs escalating, it is likely we will see more activity over the next few months from those who are further up the property ladder, compared to say, first-time buyers. Therefore, with more and more people not being in a position to get onto the property ladder, it is crucial options are available which will support all types of borrowers and in turn, help the property market move forward in the right direction.
"Ultimately, change is a door to opportunity and no matter what is announced tomorrow, the role of lenders and brokers alike will be key in ensuring opportunities are created for investors and developers.”

Meanwhile, Todd Davison, managing director at Purbeck Personal Guarantee Insurance, emphasised the requirement for rebates in business rates or special, small business subsidies to support SMEs dealing with increased energy costs, in addition to helping them move to renewable energy. 

Roxana Mohammadian-Molina, COO at Blend Network, also highlighted the need for financial support for property developers which have been struggling by the rising cost of energy and construction materials.

Stamp duty and other tax incentives/cuts

Among the most wished-for measures experts would like the chancellor to announce on Wednesday are tax reductions or incentives — particularly stamp duty land tax.

Alan Fletcher, partnership director at Invest & Fund, said: “One of the topics pertinent to our industry may be the potential to remove the stamp duty surcharge.

“There are two conflicting lines of thought on this; some believe that it will further stimulate the market by encouraging private investment, as many feel that smaller landlords have been taxed out of the market in recent years. 

“The other side of the argument is that it could further exacerbate the regional housing crisis when supply issues are potentially already driving up the prices. 

“Whichever route the chancellor goes down, it needs to be finely balanced between the commercial and the practical.”

Tomer added: “The stamp duty holiday was a huge success, boosting the housing market and other economies connected to it during incredibly difficult times. 

“We’ve been calling for reform to the stamp duty system for some time, particularly with regard to removing it for downsizers in order to encourage them to move and free up larger family homes for those trying to climb up the ladder. 

“It would be extremely welcome if the chancellor used his Spring Statement to do something about that.”

Mark Harris, chief executive at SPF Private Clients, commented: “Affordability is only going to become more of an issue as property prices continue to rise at a far greater pace than wages. 

“It is hugely worrying that capital cities such as London are becoming beyond the means of your average first-time buyer, unless they have significant financial help from the Bank of Mum and Dad. 

“Removing the stress test for mortgage borrowers will help but, given that first-time buyers are the lifeblood of the market, stamp duty reductions and other incentives — such as workable government schemes — are also necessary to help boost this [part] of the market.”

Meanwhile, other experts, including Damien Druce, commercial director at Black & White Bridging and Alastair Hoyne, principal at Finanze, have called for VAT and fuel tax freezes.

“It looks like the chancellor is wedded to the increases in National Insurance contributions, so if he decides to implement them, I would like to see a pause on VAT payable on energy bills and a freeze on fuel duty,” suggested Damien.

“I realise that the government has been quick to put measures in place when we were in lockdown and, while it cannot go on shelling out, these measures would help families and, equally importantly, be seen to help without directly depleting the Treasury’s coffers.”

Alastair added: "The chancellor has a near impossible job to do, namely cover the cost of the government’s spending in light of the pandemic and ongoing crisis — internationally and at home. 

“Perhaps the government can show its support by reducing fuel duty and suspending VAT on fuel to make it cheaper, as well as increase the nil-rate band on inheritance so many wouldn’t need to incur those extra death duties. 

“They could even look to increase the tax-free allowance — but that would really be pushing it.”

Anna Bennett, marketing director at Catalyst Property Finance, noted: “Many MPs are calling for a cut in fuel duty to balance the dramatic rise in energy prices at the pumps, so it will be interesting to see if this much-needed relief is provided, and if it’s enough to have an impact.”  

Planning reform and investment in labour 

Many experts are hoping the chancellor will reveal solutions to tackle labour shortages and improve the property planning system.

Ed Rimmer, CEO at Time Finance, said: “The House of Commons front benchers like to remind us that the government delivered on Brexit, but what does this really mean for businesses? Labour shortages continue to plague many industries and any steps taken to plug these gaps have all been insufficient and too short-term. 

“A long-term strategy has been severely lacking from the government; it needs to share with businesses its plan for the future of the UK’s workforce, both in terms of its size and skills.”

James Mole, co-founder at J3 Advisory, commented: “If any area of the economy wants to flourish, not only does the cost-of-living crisis need to be urgently addressed but, as the demand for housing continues unabated, we need to find ways to make the planning process easier — especially for smaller developers. 

“Planning reform has been on the chancellor’s agenda for years it seems, but we appear to be no closer to any concrete measures coming into place.  

Last year, reforms were said to be undergoing a ‘rethink’ so it would be great if Sunak had more to add in Wednesday’s speech — something to give us hope that planning is not only being taken seriously but also moving towards the reform we keep being promised.”

Marcus Dussard, sales director for specialist mortgages at Hampshire Trust Bank (HTB), added: “Any indications that the planning system will be further reformed and simplified would be welcome. 

“Planning is still far too complicated and nimbyism still prevails in many areas of the country. 

“I can’t see how the housing crisis will truly start to be tackled when local authorities are allowed to consistently fail to meet their homebuilding targets.”

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