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George Osborne Autum Statement is relying building boom & unveiling mortgage Help To Buy ISA details

Chancellor George Osborne will vow to double the national housing budget when he presents his five-year spending plan later today, despite new warnings that the Treasury is facing a £30bn “black hole” in its finances.

In a statement to parliament combining the Spending Review and the Autumn Statement, Osborne will say that public financescome down to choices about what your priorities are. I am clear: in this Spending Review, we choose housing. Above all, we choose homes that people can buy.

Osborne is expected to reveal plans for at least £6.9bn of government investment in housebuilding initiatives, including £2.3bn to directly fund developers building the government’s “starter homes”.

But economists have issued a fresh warning this morning over the government’s plans, saying Osborne will be £30bn out on his surplus target.

The Centre for Economics and Business Research (CEBR) said today the Office for Budget Responsibility – the government’s fiscal watchdog – was over-estimating how quickly the economy could grow.

Nonetheless, David Cameron has promised to build 200,000 “starter homes” – new, discounted properties for first-time home buyers – by the end of the decade. The properties are expected to be sold to first-time home buyers under the age of 40 at a 20 per cent discount off the market value. While the programme would not be means-tested, property values would be capped at £450,000 in London and £250,000 in the rest of the country.

The starter home model has previously come under criticism from housing groups, which say it will do little to help low-income earners. Campbell Robb, CEO of the housing charity Shelter, said last Month that starter homes will “too often only be ‘affordable’ for higher earners, not the millions of people working hard for an average wage who will be left stuck in expensive private renting”.

But the chancellor will double down on his commitment to the scheme later today, saying it is a “bold plan” to address the country’s “crisis of home ownership”.

Osborne will also commit £4bn to housing associations, local authorities and developers to subsidise 100,000 shared ownership homes, and another £200m to support the delivery of 10,000 homes for a new scheme in which tenants will be able to save for a deposit through rental payments.

Another £400m will be set aside to support housing associations and developers building homes for older people or people with disabilities.

Osborne’s announcement of additional investment in housing is expected to come amid deep cuts to government departments, as the government tries to balance the books and achieve a £10bn surplus by 2020.

It is expected that additional details about the Help to Buy ISA may also be revealed, ahead of its introduction on December 1. 
ig cuts to tax credits for low-earning households -- was blocked in a rare rebellion by Britain's upper house last month.

Osborne has largely stuck to his guns and cut spending in many areas of government in order to bring down the huge deficit he inherited in 2010. He endured deep unpopularity until the economy picked up in 2013.

Osborne originally intended to have eliminated the deficit by now but has only managed to halve it. At nearly 5 percent of economic output in the last financial year, he says it still poses a real threat to Britain's economic security.

"If our country doesn't bring the deficit down, the deficit could bring our country down again," he said earlier this month.

The Treasury said the chancellor would unveil "the biggest affordable house building programme since the 1970s".
It will include:

  • £2.3bn paid directly to developers to build so-called "starter homes", aimed at first-time buyers, who will get a 20% discount on prices up to £450,000 in London and £250,000 elsewhere
  • £4bn to help build 135,000 "Help to Buy: Shared Ownership" homes for households earning less than £80,000 (or £90,000 in London)
  • £200m for 10,000 new homes that tenants can live in for five years at reduced rents while they save for a deposit. They will then have "first right" to buy the home
  • £400m to help build 8,000 specialist homes for older people or those with disabilities

Osborne wants to cut government departmental spending to under 17 percent of economic output by the end of the decade, its lowest share since at least 1999, according to the Institute for Fiscal Studies, a non-partisan think tank.

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