Osborne extends home buy help

Help to Buy was the signature policy of Mr Osborne’s 2013 Budget and this year’s announcement will see some homebuyers continue to get help for an extra four years until 2020.

Critics of Help to Buy have argued the policy fuels demands for homes without doing enough to increase supply, adding to the risk of a new housing bubble.

The four year £6bn extension will only apply to the branch of the scheme which helps people buy newly-built houses.

The Chancellor also unveiled plans for a new ‘garden city’ of 15,000 homesa at Ebbsfleet, in Kent.

“This means more homes, this means more aspiration for families, this means economic security and economic resilience because Britain has got to get building,” he said.

“Families who today may be in good jobs, they simply cannot afford to buy a house. I am not, as the Chancellor prepared to let that rest.”

But the measures were dismissed as a “damp squib” by Shadow Chancellor Ed Balls who warned that unless the action was taken to curb the mortgage guarantee element of Help to Buy, it would simply serve to stoke property prices.

He said that taxpayer support for home-buyers should be restricted to properties worth less than £400,000 rather than £600,000 at present.

The Morley and Outwood MP said: “We’ve got the lowest level of house-building since the 20s.

“The Government is not doing enough to invest in affordable homes and the economics of this is if you boost demand with Help to Buy and don’t do enough on supply, the price goes up, it’s harder to get into the housing market, the economy becomes more unbalanced and the cost of living crisis gets deeper.

“If George Osborne really wants to make a difference he would have been much more radical on house-building in the last three years and today - and he’s not been; it’s a damp squib.”

Conservative backbenchers have been putting pressure on the Chancellor to take action in the Budget to stop more of middle England being caught by the higher rate tax band.

The Coalition has trumpeted the raising of the basic rate tax band which has taken tens of thousands of low earners out of the income tax system altogether.

But the failure to raise the higher rate threshold - which this year is due to go up by just one per cent - more quickly means that a growing number of people are being caught.

Mr Osborne, however, has rejected calls for action on the higher rate.

“My priority has been to increase the personal allowance. That is what I have done in budget after budget. What that means is, yes, you are taking the low paid out of tax - which has been a long-standing Conservative ambition - but you are also helping those on middle incomes,” he said.

“It is only people right at the top, people on incomes of over £100,000 who don’t get the benefit. I think it is a very effective instrument for making sure that hard-working people keep more of their money and I am very proud to be part of a Government that has delivered that.”

Former Chancellor Lord Lamont said that one in six taxpayers now fell into the 40p rate compared with just one in 20 when it was first introduced first introduced in 1988 with the total to hit six million next year.