Hammond's fiddling sees him through

Philip Hammond can't have been looking forward to this week's Budget. Having to kick things off with miserable Office for Budget Responsibility forecasts for GDP growth, productivity and public debt isn't the kind of thing chancellors dream of. But in the end, with a little fiddling of the fiscal rules, it all went off OK.

He made the right changes to Universal Credit. He produced some extra spending for the NHS. He made it clear the government is doing what it can to back up UK Plc with a rise in the tax credit on offer for spending on R&D; £3bn for Brexit preparation; support for the electric and driverless car sectors (he reckons they'll be on the road by 2021 hooray!); a good investment in maths and computer-science education; and a doubling of the Enterprise Investment Scheme (EIS) allowance for those investing in high-risk knowledge businesses. He sent a firm signal to tax-avoiding multinationals about the supremacy of sovereign countries over corporate boards when it comes to deciding tax bills.

Finally, a few sensible things on housing. We aren't sure he needs to focus so intensely on getting housebuilding numbers up to 300,000 a year it isn't clear that the UK really has that bad a housing shortage. But his support for small and medium-sized housebuilders is welcome (our big housebuilders might be less rubbish if they had more competition), as is his focus on building on high-demand urban land and his promised reform of the planning system.

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So far, so good. However, Hammond also introduced one new measure that made us worry: a stamp-duty holiday for first-time buyers. FTBs will now pay no stamp duty on the first £300,000 of the purchase of a house as long as the total cost is under £500,000. This isn't all bad in that it gives them a new advantage over their long-term competitors, buy-to-let investors. A house that costs an FTB £300,000 will cost a B2L investor £314,000.

Investors should take note of this by the way: add the cut in stamp duty for FTBs to another of the chancellor's new measures (allowing councils to double council tax on holiday homes) and it is clear they are not much loved by the government at the moment.

But it isn't all good for FTBs either.House prices rise to the levels people can afford to pay, so the cut in stamp duty can be expected to ensure that the main winners from it will be those that already own them, as the OBR points out. This is a feelgood policy that isn't going to feel good for very long. If Hammond really wants to make houses more affordable for the young, he needs to abandon policies which actually push prices up (selective stamp duty cuts, help-to-buy) and wait instead for rising interest rates to do the job for him which in the end they surely will.