For many of us, the dream is a detached home with a garage and an acre of land, according to the most searched property terms of the last year. The dream is out of reach for most people, and so is another popular item – an annexe – which entered the top four in Rightmove’s list for the first time in 2023.
This could be one reason why the gambling industry generates annual sales of £15.1bn, and £4.2bn in tax for the exchequer.
Richard and Debbie Nuttall are among the millions who crave a home that is better than the one they currently occupy and so turn to gambling to have a chance of making their dream come true.
After they won £61m on the EuroMillions lottery last week, Debbie told the Lancashire Post she was after a bigger garden, a greenhouse and extra land for their dog, Monty, to enjoy.
In his March budget next week, Jeremy Hunt is expected to tell prospective Tory voters that he will give them a better chance of getting on the property ladder, with a mix of fresh subsidies and tax breaks, allowing the young at least to forgo the need to buy a lottery ticket in the hope of securing a deposit.
In what will be one of the chancellor’s last chances to influence the coming general election, Hunt is expected to attempt to distract attention from rising income taxes with a series of measures to please homeowners.
The Treasury has for decades believed that the property market is at the heart of the economy. Without it beating strongly, Treasury officials believe, there is little hope for growth across much of the UK’s commercial and industrial landscape.
Property is a powerful economic aphrodisiac thanks to the spending it induces once contracts are exchanged. It also qualifies as a bellwether of wellbeing now that it has come to represent both shelter and the one form of investment most people understand.
Hunt considered introducing a 99% mortgage, with the deposit underwritten by the state, as a way to bring first-time buyers back to the market after a collapse from the heady days of spring 2021.
In March that year, a cut in stamp duty and billions of pounds of excess furlough funds pushed the number of transactions in the UK above 200,000 a month. Today, transactions languish below 90,000, and the number of purchases with a mortgage is about 50,000.
Hunt’s scheme is reminiscent of George Osborne’s Help to Buy, which the former chancellor unveiled in 2013. It became notorious for pushing up house prices and lining the pockets of property developers. A 99% mortgage will do the same – and so would reducing stamp duty.
It was Rishi Sunak’s idea to cut stamp duty in 2022, to get the market going after Covid lockdowns had convinced many their future lay outside an urban centre. So a stamp duty giveaway cannot be ruled out. Other measures to subsidise already rich housebuilders are also likely in the desperate rush to generate activity before the Conservatives face voters at the polls.
Hunt’s thinking is even less clear when he hints that tax cuts more broadly will be part of a package in the budget aimed at boosting growth. In particular, he is under pressure to resolve the problem faced by parents who, once they reach an income of £50,000 a year, begin to pay higher-rate tax and lose child benefit.
To reduce the high marginal rate such parents face will take cash the chancellor doesn’t have. Likewise, an across-the-board income tax or national insurance cut, similar to the one he pushed through in November, is unaffordable under his own financial rules.
A plan to freeze personal tax thresholds is already set to run to 2028, and any cut in tax rates will only limit the impact of this measure. Personal taxes will still rise.
The chancellor has limited headroom if he is to meet a rule that means bringing down the debt-to-GDP ratio in the final year of a five-year forecast.
To give himself a little more latitude, he is expected to take a tough line on public spending. Yet his calculations here will be akin to fiction, as they will be based on almost no discussion with departmental managers about whether the savings can be achieved. It will be the kind of fantasy budgeting that, among businesspeople, only Del Boy Trotter would recognise.
Hunt could find himself standing up in parliament with the intention of delivering a sober budget, only to look as delusional as those searching for a dream home without the means to buy one.
Unlike Richard and Debbie, the chancellor cannot win the lottery. He can only dream of such an outcome. In the meantime, he should be truthful about what is possible. Anything else is a gamble.