Jeremy Hunt’s Autumn Statement is smoke and mirrors

This will not actually mean a tax cut for households hit by a continued freeze in the thresholds for income tax, although it does at least benefit workers (who pay NI and income tax) rather than landlords and shareholders (who only pay income tax).

And the cuts in NI and business tax are made possible in the first place by more sleight of hand: as the accompanying report from the Office for Budget Responsibility reveals, they only add up thanks to unfeasibly large cuts in public services and a freeze (aka significant real-terms cut) in capital spending after the next election.

Needless to say, that leaves next to no room for investment in new social homes or the decarbonisation of the existing stock even though the real cost of both continues to be squeezed by inflation.

Instead, beneath the surface of the statement, there are signs of a desperate search for policies that are not affected by the squeeze on public spending.

The biggest news for housing associations is that the £3bn Affordable Homes Guarantee Scheme will be expanded by a further £3bn.

The scheme works by providing longer-term, lower-cost fixed-rate debt to associations (which does not count as public spending) to enable them to deliver more new affordable homes than would otherwise have been the case.

“The Telegraph’s backlash to the idea, which it calls ‘toxic for Tory suburbia’, has already begun”

The background documents claim that the expansion will help deliver 20,000 new homes.

And, in what looks like a tweak in the original criteria, the scheme will not just be available for new build homes but also for “improving the quality and efficiency of thousands more”.

This is good news, but the loans only partially compensate for the absence of actual new money and the costs of decarbonisation, building safety, materials cost inflation and all the other factors squeezing landlords’ budgets.

Councils had complained loudly ahead of the Autumn Statement about the huge costs they are facing for accommodating homeless families (thanks in part to the LHA freeze) and refugees.

The LHA increase is good news for them for this year at least, and they will also get some cheaper borrowing from an extension of discounted rates from the Public Works Loans Board for another year.

There is some new money in the form of £450m for a third round of the Local Authority Housing Fund (LAHF) that the government says will deliver 2,400 new homes. It appears to have tweaked the criteria to include temporary accommodation as well as homes for Afghan refugees.

Similarly, an extra £120m for homelessness prevention will include support for Ukrainian refugees who cannot remain in sponsorship. Both of these increases are welcome but fall well short of the scale of the problem.

House builders stand to benefit from a fresh attempt to speed up planning decisions, while smaller developers will be eyeing up an expansion of permitted development to include dividing houses into two flats where there is no change to the facade.

It will be interesting to see the detail on this when the consultation is published in the New Year. Previous experience with permitted development in converting offices into tiny flats is not a good precedent and where I live there seems to be no problem chopping houses into bedsits. The Telegraph’s backlash to the idea, which it calls “toxic for Tory suburbia”, has already begun.

However, a report from the Intergenerational Foundation in 2016 suggests a potential worth exploring. It estimated that 4.4 million households in England have enough living space to create an extra home via subdivision.

Help is also promised to free up homes caught by rules on river pollution with a Local Nutrient Mitigation Fund to unlock 40,000 homes over the next five years. This falls well short of the 100,000 homes the government said were blocked by nutrient neutrality during its failed attempt to amend legislation in September.

So it’s hard to escape an impression of smoke, mirrors and sleight of hand when it comes to this Autumn Statement.

“The LHA freeze pencilled in for 2025 and beyond will restart the whole depressing cycle all over again: LHA shortfalls generate rent arrears that generate evictions that generate homelessness that generates costs that threaten to bankrupt local authorities”

Overall, it creates room for tax cuts by pencilling in huge cuts in spending for after the next election that are simply not deliverable. The crisis in social care will continue, exacerbated by an increase in the minimum wage without any extra funding to pay for it. Whoever wins the next election will have some tough choices to make.

To finish where I began, the freeze in LHA is set to start again almost as soon as it ended, but even that only gets to part of the problem.

LHA rates will be restored to the 30th percentile next year but even that is still a cut to the 50th percentile that was the benchmark in 2010.

Finding somewhere affordable to rent within LHA rates will become temporarily easier next year but it will still be a struggle in many areas, especially for those looking for new tenancies whose rents are rising at up to twice the rate of existing ones.

Meanwhile the increases in LHA and benefits in general will also bring even more people within scope of the benefit cap. Last year the cap was increased, in a one-off move that leaves it still way below where it was when originally announced 10 years ago. That was not repeated this year, so many tenants will still face shortfalls against their rent that can only be plugged with discretionary housing payments.

The freeze pencilled in for 2025 and beyond will restart the whole depressing cycle all over again: LHA shortfalls generate rent arrears that generate evictions that generate homelessness that generates costs that threaten to bankrupt local authorities.

Because we have been here before. LHA rates were restored to the 30th percentile in 2019 after years of freezes and below-inflation increases only to be frozen again in 2020.

Just like then, the Treasury employs the same euphemistic language that “LHA rates will be maintained at this higher level in cash terms afterwards” to obscure the renewed freeze.

Just like then, there is no new investment in social housing at genuinely affordable rents that would permanently cut spending on LHA.

Just like then, we know what comes next unless the next government breaks the cycle.

Jules Birch, columnist, Inside Housing