Budget boost for homes

By THIS IS MONEY
Updated: 13:09 EST, 5 December 2005

A PLAN to help thousands of young families to own their own homes was unveiled by Gordon Brown in his Pre-Budget Report to the House of Commons this afternoon.

Couples will be able to buy a house even if they can only afford 75% of the asking price. The remaining 25% will be bought by their lender and the Government, who will become silent partners.

The plan was the clear headline-grabbing proposal in the Pre-Budget Report that saw the Chancellor, who has been famously celebrated for his prudence, being forced to admit that his forecast for economic growth at the time of the main Budget in March was hopelessly optimistic.

Last March, the Chancellor forecast the economy would grow at between 3% and 3.5%. Today he said the figure would be 1.75%, blaming the 'virtual doubling' of global oil prices. This had been 'the toughest and most challenging year for the economy,' he said.

However, he said that next year, growth would rise to 2-2.5%. and 2.75-3.25% in the following two years.

Deputy Prime Minister John Prescott ia to publish new planning guidelines to increase the rate of house building. Local authorities will be obliged to accelerate planning consent and asked to bring forward brownfield sites for development.

A consultation will be launched on proposals for a local 'planning gain supplement' giving local councils a share in the profit made by landowners on areas gaining planning permission. This is the heavily-leaked windfall-tax on landowners that could bring the Treasury £3bn a year.

On council tax, the Chancellor said, £305m will be made available in 2006 and £508m in 2007 to help keep bills down.

Help for pensioners and the young were two other major features of the Report. Mr Brown announced plans to put another £300m over three years into the Warm Front programme to provide pensioner households with insulation and central heating. The winter fuel allowance would be fixed in future at £200 except for the over-80s who would receive £300.

A tax on unclaimed assets – usually long-forgotten accounts - held by banks and building societies will provide the funding for an ambitious National Youth Community Service scheme to aid with gap-year volunteering plus part-time and full-time community service. Each local authority will receive £500,000 over the next two years to get the scheme of the ground. Mr Brown also announced the establishment of a national sports foundation.

The Chancellor also announced plans to boost training in 50,000 companies to help 300,000 new employees.

The Pre-Budget Report gives an update of the state of the economy and public finances, and sets out the direction of Government policy in the run up to the spring Budget.