Much to Ed Balls’ annoyance, George Osborne presented the kind of Autumn Statement which left very little, if any, room for socialist vitriol. Indeed, Balls’ had to revert to the personal, which in itself is surely an indirect admission of defeat. But he got this wrong too, as I am sure that Osborne’s hairdo is much better now than it has ever been.
I think that the interesting points to come out of this statement are the things which have yet to be said, i.e. – how is all of this going to be paid for? Sure, adjustments to pension death benefits and the slab structured Stamp Duty Land Tax are a massive boost to savers and spenders in the “here and now”, but this equates to a significant cut in tax revenue for HMRC. Ultimately, what goes around comes around, so once the election dust has settled, this will need to be quickly addressed and the easiest way of doing it in my opinion is to increase income tax.
While I’m on the subject, quite why local councils still raise tax on the basis of house prices as at April 1991 is completely beyond me. The highest band of H, relates to properties worth £320,000 and above. Bearing in mind what has happened with house prices since 1991, it is certainly about time that these bands were revalued. In so doing, local authorities would be able to preside over locally generated funding as opposed to being overly reliant on central government hand-outs. In all likelihood there would be some sort of outcry from homeowners in London and the South East protesting against the disparity of Council Tax bills elsewhere in the UK. As a Londoner living in the North of England, it is interesting to see how out-of-reach even the previously undesirable areas have become for young homeowners. This crazy situation cannot go on forever and something will eventually have to give. How can you have professionals like Lawyers, Accountants and Doctors being priced out of areas you couldn’t pay me to live in?
Osborne’s Stamp Duty overhaul, it is said, will benefit 98% of homebuyers. There is a part of me that is pleased, but there’s a bigger part which has grave concerns over the extra boost this will give to an already massively overheated market. In my opinion, there is nothing other than a very hard landing in store, maybe not now, but definitely at some point during the next parliament, whichever colour that may be.
Speaking of “overheated”, the FTSE100 looks too expensive at the time of writing and I am fully expecting 2014 to finish around the 6,500 mark. My daughters both want a new bike each for Christmas, so whilst I’m not expecting a Santa Rally on the markets, we live in hope that Santa can fit a couple of new Raleighs down our chimney. Happy Christmas and a peaceful New Year to all my readers.