Simon Jenkins
by Simon Jenkins
Help to Buy should be dubbed Help to Vote. George Osborne yesterday promised his party to deliver half a million “hard-working” electors from the dungeons of housing debt to the sunny uplands of Help to Buy. He would shower them with £12 billion of other people’s money. He could summon the spirits of Toryism past, but will they come?
The coalition’s Help to Buy policy has about as many friends as the Iraq war. With house prices heading back to their 2009 peak, throwing subsidies at the soft underbelly of housing demand looks crazy. Osborne is creating a potential “bad bank” stacked with what, by definition, are marginal mortgages. The IMF, the Institute of Directors, the Commons Treasury committee, the former governor of the Bank of England and every economic commentator thinks the policy is mad. Vince Cable puts his finger to his temples. Business investment is still a third below its pre-recession level. Why spend billions on the one sector that seems not to need it?
To be fair to Osborne, he dreamed up this scheme two years ago in a desperate search to “kick-start” demand. It was better than printing money for the banks to store in their vaults. House-building is an economic talisman that had all but stalled. The first round of Help to Buy last year appeared to work, with new building up by 10 percent on the year. Nor is there is a sign of a house price surge outside the south-east. According to the Office of National Statistics, this year’s rise is 3.3 percent, and that is driven partly by a tidal wave of foreign funk money pouring into inner London.
Osborne’s officials are also doing their best to discipline the offer. The subsidised 15 percent deposit on a mortgage is relatively expensive, and is just for seven years. In other words, if Osborne must stand on the street corner handing money to people, I would rather it went to a few hard-pressed households ready to channel it into the real economy. I would certainly rather it went to them than to the other favourite recipients of his billions, the warship builders, HS2 consultants and windfarm owners.
For all that, the Help to Buy scheme vividly demonstrates the madcap world of British housing finance. The privately owned home has sat at the heart of political argument since the days of Margaret Thatcher. She considered home ownership a right. “Getting on the ladder” was a ritual of growing up. Rent, paid by most Europeans for somewhere to live, was “money down the drain”. Thatcher subsidised ownership to the hilt with mortgage tax relief, ignoring the fact that most mortgage-holders were in effect renting their homes from building societies. The accrued value usually lay inert until retirement, or until it passed to lucky offspring. Housing subsidies are either pension subsidies or a colossal child benefit for the next generation rich. Any voyage through post-industrial Britain is one of despair at the failure of housing and planning policies to use land efficiently, to regenerate cities and infill suburbs. Ministers charging about the country forcing councils to put toy town estates in Cotswold villages is neither here nor there.
The coalition has made some strides. It is right to make it easier to change buildings to residential use, and allow a degree of “garden grabbing”. For the first time a government has tried to tackle the misallocation and under-occupancy of social housing, albeit hamfistedly with a bedroom “tax”. Housing subsidies should go to the poor. Labour did nothing on this score.
The truth is that Britain’s housing finance is a mess. Housing is like crime, a realm of policy that is gripped not by reason but by political psychology. Osborne may indeed summon his spirits from the dungeons, but will they come?
THE GUARDIAN
by Simon Jenkins
Help to Buy should be dubbed Help to Vote. George Osborne yesterday promised his party to deliver half a million “hard-working” electors from the dungeons of housing debt to the sunny uplands of Help to Buy. He would shower them with £12 billion of other people’s money. He could summon the spirits of Toryism past, but will they come?
The coalition’s Help to Buy policy has about as many friends as the Iraq war. With house prices heading back to their 2009 peak, throwing subsidies at the soft underbelly of housing demand looks crazy. Osborne is creating a potential “bad bank” stacked with what, by definition, are marginal mortgages. The IMF, the Institute of Directors, the Commons Treasury committee, the former governor of the Bank of England and every economic commentator thinks the policy is mad. Vince Cable puts his finger to his temples. Business investment is still a third below its pre-recession level. Why spend billions on the one sector that seems not to need it?
To be fair to Osborne, he dreamed up this scheme two years ago in a desperate search to “kick-start” demand. It was better than printing money for the banks to store in their vaults. House-building is an economic talisman that had all but stalled. The first round of Help to Buy last year appeared to work, with new building up by 10 percent on the year. Nor is there is a sign of a house price surge outside the south-east. According to the Office of National Statistics, this year’s rise is 3.3 percent, and that is driven partly by a tidal wave of foreign funk money pouring into inner London.
Osborne’s officials are also doing their best to discipline the offer. The subsidised 15 percent deposit on a mortgage is relatively expensive, and is just for seven years. In other words, if Osborne must stand on the street corner handing money to people, I would rather it went to a few hard-pressed households ready to channel it into the real economy. I would certainly rather it went to them than to the other favourite recipients of his billions, the warship builders, HS2 consultants and windfarm owners.
For all that, the Help to Buy scheme vividly demonstrates the madcap world of British housing finance. The privately owned home has sat at the heart of political argument since the days of Margaret Thatcher. She considered home ownership a right. “Getting on the ladder” was a ritual of growing up. Rent, paid by most Europeans for somewhere to live, was “money down the drain”. Thatcher subsidised ownership to the hilt with mortgage tax relief, ignoring the fact that most mortgage-holders were in effect renting their homes from building societies. The accrued value usually lay inert until retirement, or until it passed to lucky offspring. Housing subsidies are either pension subsidies or a colossal child benefit for the next generation rich. Any voyage through post-industrial Britain is one of despair at the failure of housing and planning policies to use land efficiently, to regenerate cities and infill suburbs. Ministers charging about the country forcing councils to put toy town estates in Cotswold villages is neither here nor there.
The coalition has made some strides. It is right to make it easier to change buildings to residential use, and allow a degree of “garden grabbing”. For the first time a government has tried to tackle the misallocation and under-occupancy of social housing, albeit hamfistedly with a bedroom “tax”. Housing subsidies should go to the poor. Labour did nothing on this score.
The truth is that Britain’s housing finance is a mess. Housing is like crime, a realm of policy that is gripped not by reason but by political psychology. Osborne may indeed summon his spirits from the dungeons, but will they come?
THE GUARDIAN
