Autumn statement – consumer credit industry reaction

Chancellor Jeremy Hunt has announced his Autumn Statement. The Chancellor began his speech by saying he had more than 100 measures to incentivise and support businesses in what he described as the ‘biggest business tax cut in modern British history.

StepChange has welcomed the unfreezing of Local Housing Allowance (LHA) and uprating of benefits in line with September’s inflation figure, however, with no confirmation on further cost of living support for households, the charity says it’s important the Government doesn’t give with one hand and take with the other.

Responding to the Chancellor’s Autumn Statement, David Postings, Chief Executive of UK Finance, said “The Chancellor’s Autumn Statement today demonstrates a continued commitment to growth, which is essential for businesses and people across the country. We welcome this focus, the change to making full-expensing of investment permanent and the wide-ranging announcements on housing which will help people with the cost of their homes.”

“It is vital that people have the housing they need and we’re pleased to see the commitment to increase Local Housing Allowance, something UK Finance has long called for. Greater housebuilding and an extension of the mortgage guarantee scheme will also help more homebuyers get on or move up the housing ladder.”

“We welcome plans to introduce more flexibility and simplification of ISA rules and look forward to working with government on implementing changes to help more people save for the future.”

“The new remit for the Financial Reporting Council to promote the growth and competitiveness of the UK economy is an important development and is in line with objectives recently given to financial services regulators.”

Richard Lane, Director of External Affairs at StepChange Debt Charity, said “The unfreezing of Local Housing Allowance (LHA) will be a welcome boost to many renters unable to keep pace with a frenzied rental market. We’ve seen record rent rises over the past year, and housing benefit was simply not keeping up. Our recent polling revealed that more than one in three private renters are relying on credit to afford rent. It’s also good to see the Chancellor recognising the need to uprate benefits in line with inflation. However, it’s important that the government doesn’t give with one hand and take with the other. Those on the lowest incomes feel the effect of high inflation the most, and there was no confirmation from the Chancellor that any cost of living support would be extended beyond April 2024, which is a blow to financially vulnerable households. This includes the Household Support Fund, which is due to end in March and is an essential lifeline for people struggling to make ends meet. It must be made permanent.”

“Energy bills also remain much higher than they were two years ago, with the average amount of energy arrears among new clients StepChange clients rising steadily in this time. Support, both in terms of a coordinated write off of debts incurred over the past two years for those who can’t pay, alongside a social tariff for those on low incomes, is badly needed. Without interventions on energy debt and a real terms rise in benefits the cost of living crisis will cast a long-shadow on household finances for years to come.”

Mark Gilliver, Chief Growth Officer at Target Group said: “As tech innovators in the mortgage market, we welcome the Chancellor’s support for technology and R&D. As he said, the UK has grown to become the third largest tech sector in the world. The proposed new tax relief programme should help the mortgage industry to innovate further and faster, to provide a better experience for lenders, brokers and customers and help to make the mortgage process more seamless.”

“It was good to see the Chancellor’s pledge to increase the Local Housing Allowance to support the lowest income families; this will be good for tenants and good for landlords who are leaving the private rental sector in droves. We are disappointed however, that the Autumn Statement did not take bolder steps to reform the housing market. While the news to speed up planning permission should help increase the supply of new homes, it just doesn’t go far enough. With news every day of people not being able to get on the housing ladder, and a shortage of places for people to live, there’s a need for a significant overhaul of how the market works.”

David Cheadle, acting Chief Executive at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said “The Chancellor is right to have listened to calls to unfreeze the Local Housing Allowance, at a time when millions of renters are struggling with high housing costs. And while January’s headline National Insurance cut will be dwarfed by the impact of frozen allowances, reductions in National Insurance contributions paid by people who are self-employed will be a significant help to this group, which is so often over-looked. ”

“Disappointingly, however, the Chancellor missed his opportunity to provide much-needed, more targeted help for people who are trapped in debt this winter as a result of the high cost of living.” 

 “With energy costs set to increase again and energy debt at a record high, the absence of any further help with energy costs from the Autumn Statement is particularly stark. The government must urgently rectify that situation through a Help To Repay scheme to help the one in four people with energy debts who are currently unable to repay – and extend the Household Support Fund beyond April to continue this vital support at a local level.” 

Andy Mielczarek, Founder and CEO of SmartSave, a Chetwood Financial company, said:”It was good that the Chancellor’s statement included a focus on the savings market. Modernising rules and regulations around savings products is a necessity as economic conditions change, so announcing reforms was a must after years of rampant inflation and a devastating cost-of-living crisis.”

“The Chancellor’s wider emphasis on putting more money in people’s pockets through wage increases and tax cuts bodes well for people’s finances, but overlooking their ability to save effectively would have been a grave omission. With some saving providers offering inflation-beating rates, now is the time for action – not only by the government, but also by consumers, on whom the onus remains to make savvy financial decisions.”

“Many banks are still failing to pass better rates onto customers, so it is up to savers to shop around for the best products and providers that can enable them to meet their long-term financial goals.”

John Phillips, CEO of Spicerhaart and Just Mortgages said “Despite the industry’s long wish list of announcements, it’s safe to say many will feel disappointed by the lack of support for the housing market. After all, this is a key driver in the success of the wider economy. While a two per cent tax cut to the employee national insurance rate may keep more money in people’s pockets and improve income ratios for new mortgages, it doesn’t quite go far enough to address the clear affordability challenges facing homeowners.”

“With an election on the horizon and homeownership still a clear aspiration for many, it would have been great to see more support in this area, particularly through a government-backed low deposit scheme or for the likes of Shared Ownership. News of planning reform and measures to increase the number of houses are welcome, although we are still some way off solving the chronic challenge of undersupply.”

“Those self-employed brokers will be pleased to see they too feature in the chancellor’s tax cuts, as well as businesses. It’s less good news though for landlords who would have hoped for similar relief, especially as many weigh up their options, skim down their portfolios or sell up entirely. Changes to the local housing allowance will help reduce some of the burden of high rents for the most vulnerable. However, we mustn’t forget the prospect of landlords disposing of rental properties, which has major implications on rental prices. This significantly reduces the opportunity for many renters to realise their ambition and join the property ladder themselves.”