Blow for Philip Hammond as Government's own spending watchdog savages stamp duty plan
Philip Hammond’s plan to scrap stamp duty for some first-time buyers began unravelling after the Government’s own spending watchdog said it was open to abuse, would drive up house prices and only benefit a small number of people.
In a major blow for the Chancellor, the Office for Budget Responsibility gave his flagship announcement - set to cost taxpayers around £600m a year - a "high uncertainty rating".
Under the plan, which formed the centrepiece of Mr Hammond's Budget speech, first-time buyers on properties worth up to £300,000 will no longer pay any stamp duty.
The tax break will also be available on the first £300,000 of homes worth up to £500,000 in high price areas such as London.
Treasury officials said it would benefit around one million first-time buyers and save them £1,160 each on average.
Mr Hammond said: "We send a message to the next generation that getting on the housing ladder is not just a dream of your parents’ past but a reality for your future."
But in a scathing assessment, the OBR said: "We have assumed that the cost of introducing the relief will be to increase house prices - in this case by around 0.3%."
They added: "Thus, the main gainers from the policy are people who already own property, not the first time buyers themselves."
The OBR went on: "The costing assumes a small number of additional first-time buyer purchases (around 3,500) but that these will displace other purchases by those who would have bought and paid the main rate of stamp duty.
"It is also possible that non-first time buyers will abuse the relief. The measure is expected to increase house prices. It receives a high 'uncertainty' rating."
Shadow Housing Secretary John Healey mocked Mr Hammond saying on Twitter that it “must be a new record for unravelled budget: big stamp duty announcement demolished by OBR before Cx finishes his speech.”
Responding to Mr Hammond’s Budget address in the Commons Labour leader Jeremy Corbyn said: "With this government delivering the worst rate of housebuilding since the 1920s... any commitment would be welcome.
"We need a large-scale publicly funded housing programme, not this government's accounting tricks."