IEA - Interventionist Budget will not have desired effect on living costs
IEA reacts to Autumn Budget 2017
Commenting on the 2017 Budget, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“The Budget featured a vast array of spending commitments without a great deal of clarity on how they will be funded. Several of them are ill-thought-out and minuscule measures. A young person’s railcard is a device to make it easier for people in their 20s to travel from a house they cannot afford to a well-paid job they do not have.
“The announcements made on housing fall desperately short of what is needed to fix the market. A cut in stamp duty for first time buyers is misguided; it might help some, but mainly at the expense of others – including second-time buyers such as growing families who are not obviously any less worthy of support.
“Instead of simply reviewing planning of undeveloped land, the government should be completely overhauling current restrictions and liberalising our planning system to free up land for houses to be built. This is exactly the silver bullet the Chancellor was looking for to solve the housing crisis.
“The Government will still be running a measurable deficit in 2023, meaning the target for a balanced budget will have been missed by at least eight years. Even if the target of eliminating the deficit by the mid-2020s is met, it will have been a quarter of a century since the government last balanced its books. The Chancellor does deserve some credit for his commitment to continue these reductions though, given the gloomy economic forecasts from the OBR.
“The Chancellor should also be commended for avoiding some obvious pitfalls – such as the lowering of the VAT threshold – and resisting calls to ratchet up most excise duties and end the cap on public sector pay. He should, however, have considered an end to national pay setting to allow greater flexibility.”
Notes to editors:
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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
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