IEA responds to the budget
Dr Kristian Niemietz, Head of Political Economy, commented on the announcements on housing and home ownership
“The Chancellor’s announcements on housing miss the point. The crucial bottleneck of the housing market is land supply: we are simply not releasing enough land for housing development.
“As long as that bottleneck remains in place, pumping more money into housing construction – whether that is the announced £12bn for affordable homes, the 1% interest rate cut for loans to build social housing, or the £400m for building on brownfield sites – will simply push up land prices even further. It will therefore ultimately make little difference to housing affordability.
“If the government had the courage to sort out the above-mentioned supply-side bottleneck (on which the Chancellor, unfortunately, had virtually nothing to say), it could quite easily improve housing affordability across the board, while saving taxpayers’ money in the process.”
Commenting on decision to keep the freeze on fuel duty, Dr Richard Wellings, IEA Head of Political Economy, said:
“This Budget is reasonably positive for motorists, with money allocated for potholes and road upgrades.
“The decision to keep the freeze on fuel duty is the right one. Fuel duty is effectively a tax on business and trade as it drives up travel-to-work expenses and the costs of doing business. The government would do well to look at further reductions to boost economic activity in the longer term.”
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