Chancellor puts North at heart of finance statement - but massive cuts are coming

George Osborne's plan to cut stamp duty may not affect average buyers in the North East, analysis shows

 

George Osborne insisted his plans to boost the North were “at the heart” of his Autumn Statement, as he announced plans for a science centre in Newcastle, a centre for advanced manufacturing in Sedgfield and a “Great Exhibition” to celebrate the great art, culture and design of the North.

But his key statement on the nation’s finances also confirmed that local councils face years of further deep cuts.

And the Chancellor’s big surprise, changes to Stamp Duty leading to lower bills for many buyers, will have limited impact on the North East because low property prices in the region mean many home buyers don’t pay the duty anyway.

The Autumn Statement also confirmed that outdated Pacer trains still in use on some routes in the North East will be replaced.

Mr Osborne told the Commons that his goal was to create “a more balanced national economy” and that meant creating a northern powerhouse “as a complement to the strength of our capital city, where we bring together our great cities of the North.”

He announced £20m for a Ageing Science centre in Newcastle, to “back the brilliant work on ageing being conducted at Newcastle University”.

There was also £28m for a world-class research and development centre, to be called the National Formulation Centre, that will specialise in the development of products such as medicines and chemicals, based in Sedgefield.

Hannah McKay/PA Wire Chancellor of the Exchequer George Osborne, holding a copy of the Autumn Statement, leaves the Treasury in London for the House of Commons, where Osborne will deliver his Autumn Statement
Chancellor of the Exchequer George Osborne, holding a copy of the Autumn Statement, leaves the Treasury in London for the House of Commons, where Osborne will deliver his Autumn Statement
 

And documents published by the Treasury also revealed plans for a Great Exhibition in the north.

But local authorities face at least five more years of further dramatic cuts in spending, the Autumn Statement confirmed. Funding from the Treasury for local services is to be cut by more than a fifth by 2019-20.

The figures are included in forecasts published by the Office for Budget Responsibility, the official Treasury watchdog, as part of the statement. It predicted that the main grant provided to local councils will fall from £60.3bn in 2014-15 to £50.5bn in 2019-20.

Mr Osborne insisted: “I do not hide from the House that in the coming years there are going to have to be very substantial savings in public spending.”

This would mean cuts of £13.6bn in 2015-16, as previously announced, and “two further years where decisions on this scale will be required”.

He added: “We’re going to have to go on controlling spending after those years if we want to have a surplus and keep it.”

Another key announcement was a change to stamp duty, previously charged on homes costing more than £125,000.

Buyers eligible for the tax paid one per cent or more of the purchase price. In future, stamp duty will only be paid on the portion of the price which is above the threshold, leading to significant reductions for some properties.

However, an analysis of house prices shows that average prices in the North East are below the £125,000 threshold anyway, which means many buyers will not be affected as they pay no stamp duty.

The Chancellor of the Exchequer, George Osborne delivers his Autumn Statement to MPs in the House of Commons, London
The Chancellor of the Exchequer, George Osborne delivers his Autumn Statement to MPs in the House of Commons, London
 

Average house prices are £120,545 in Newcastle, £124,338 in North Tyneside, £123,766 in Northumberland, £99,837 in South Tyneside and £85,438 in Sunderland.

Nonetheless, buyers of more expensive homes will make savings as long as the property is worth less than £937,000.

Responding to questions from Conservative MP Guy Opperman, MP for Hexham, and Labour Sedgefield MP Phil Wilson, the Chancellor also said there would be help for airports in the North if they were hit by a potential cut in air passenger duty in Scotland, following the announcement that aviation duty will be devolved to the Scottish government.

Responding to the statement, Newcastle East MP Nick Brown pointed out that the Chancellor had announced Britain was awarded the lead role in the next international effort to explore the planet of Mars, adding: “The Chancellor spoke more about Mars than he did about the North East of England. His Northern Powerhouse is located over 100 miles to the South of Tyne and Wear.

“His statement contained no commitment to any type of workable regional policy in the context of further Scottish Devolution. This is grotesquely one-sided. Even his stamp duty changes were focussed on London and the South East.”

But Liberal Democrat MP Sir Alan Beith, who represents Berwick, said: “The Autumn Statement sticks to our strategy to deal with the deficit, enabling us to release funds for key Liberal Democrat priorities that bring fairness and a stronger economy.

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