Help to Buy will inflate another housing bubble

One major part of the scheme, hurriedly brought forward by three months in an attempt to counter Labour’s populist announcements, is potentially toxic.

The Conservative Party has spent the past fortnight accusing Labour of reviving 1970s-style socialism in the form of policies such as a temporary freeze in energy prices. The irony is that it has done so while undertaking the largest-ever state intervention in the housing market. With the introduction of its Help to Buy scheme, the government that arrived in office committed to rebalancing the economy away from its reliance on property and private debt has adopted a policy that will encourage the reverse.

The first part of the scheme, which came into effect in April, is a justified intervention. By allowing buyers to borrow 20 per cent of the value of a new-build home worth up to £600,000, the government is seeking to incentivise housebuilding, which last year stood at its lowest level since the 1920s. After six months, it has had some success. In September, construction activity grew at its fastest rate since November 2003, helping to stimulate growth and employment.

It is the second part of the scheme, hurriedly brought forward by three months in an attempt to counter Labour’s populist announcements, that is potentially toxic. George Osborne, ostensibly a fiscal conservative, has issued £12bn of state guarantees for up to £130bn of mortgage lending. The offer applies to all properties, whether new-build or not, and will allow buyers to purchase homes worth up to £600,000 provided they make a deposit of at least 5 per cent.

In an attempt to emulate the success of Margaret Thatcher, whose Right to Buy council house scheme increased the Tories’ electoral fortunes among low- and middle-income groups, David Cameron has presented the intervention as one aimed at supporting first-time buyers. He declared during the Conservative conference: “As Prime Minister I am not going to stand by while people’s aspirations to get on the housing ladder are being trashed.”

Yet the early signs are that Help to Buy will do less to aid would-be buyers than Mr Cameron suggests. Those banks participating in the scheme are offering interest rates around 5 per cent, above the level that many can afford when average earnings are still 1.7 points below inflation. As such, the policy risks acting primarily as a subsidy for existing homeowners seeking to trade up or to borrow against the value of their property. Mr Osborne’s decision to set the cap for aid at £600,000, when the average house price is £172,000, is evidence that he is more concerned with creating a pre-election feel-good factor among Tory-leaning owners than he is with aiding firsttime buyers.

Even as it allows some to make it on to the ladder, the scheme risks blocking the route for others by further widening the gulf between prices and earnings.

David Cameron meets two first time buyers as the Government launches the Help to Buy scheme. Image: Getty

This article first appeared in the 11 October 2013 issue of the New Statesman, Iran vs Israel

Sky News screengrab
Show Hide image

In her first interview of 2017, I pressed the Prime Minister for Brexit clarity

My week, including running out of cat food, reading Madeleine Thien – oh, and interviewing Theresa May on my show.

As the countdown to going live begins in your ear, there’s always a little rush of adrenalin. Especially when you’re about to launch a new Sunday morning political programme. And especially when you’re about to conduct the Prime Minister’s first interview of 2017. When you hear the words, “Cue Sophy,” there’s a split-second intake of breath – a fleeting moment of anticipation – before you start speaking. Once the show is under way, there’s no time to step back and think; you’re focused on what’s happening right now. But for that brief flicker of time before the camera trained on you goes live, you feel the enormity of what’s happening. 

My new show, Sophy Ridge on Sunday, launched on Sky News this month. After five years as a political correspondent for the channel, I have made the leap into presenting. Having the opportunity to present my own political programme is the stuff that dreams are made of. It’s a bit like having your own train set – you can influence what stories you should be following and which people you should be talking to. As with everything in television, however, it’s all about the team, and with Toby Sculthorp, Tom Larkin and Matthew Lavender, I’m lucky enough to have a great one.

 

Mayday, mayday

The show gets off to a fantastic start with an opportunity to interview the Prime Minister. With Theresa May, there are no loose comments – she is a cautious premier who weighs up every word. She doesn’t have the breezy public school confidence of David Cameron and, unlike other politicians I’ve met, you don’t get the sense that she is looking over her shoulder to see if there is someone more important that she should be talking to.

In the interview, she spells out her vision for a “shared society” and talks about her desire to end the stigma around mental health. Despite repeated pressing, she refuses to confirm whether the UK will leave the single market as it leaves the European Union. However, when you consider her commitment to regaining control of immigration and UK borders, it’s very difficult – almost impossible – to see how Britain could remain a member. “Often people talk in terms as if somehow we are leaving the EU but we still want to kind of keep bits of membership of the EU,” she said. “We are leaving. We are coming out. We are not going to be a member of the EU any longer.” Draw your own conclusions.

 

Women on top

This is probably the kind of thing that I should remain demurely quiet about and allow other people to point out on my behalf. Well, screw that. I think it’s fantastic to see the second female prime minister deciding to give her first interview of the New Year to the first woman to front a Sunday morning political show on television. There, I said it.

 

Escaping the bubble

In my view, every journalist should make a New Year’s resolution to get out of London more. The powerful forces that led to the political earthquake of 2016 came from outside the M25. Every week, I’ll be travelling to a different part of the country to listen to people’s concerns so that I can directly put them to the politicians that I interview. This week, it was Boston in Lincolnshire, where the highest proportion of people voted to leave the European Union.

Initially, it was tricky to get people to speak on camera, but in a particularly friendly pub the Bostonians were suddenly much more forthcoming. Remain supporters (a minority, I know) who arrogantly dismiss Leave voters as a bunch of racists should listen to the concerns I heard about a race to the bottom in terms of workers’ rights. Politicians are often blamed for spending too much time in the “Westminster bubble”, but in my experience journalists are often even worse. Unless we escape the London echo chamber, we’ll have no chance of understanding what happened in 2016 – and what the consequences will be in 2017.

 

A room of one’s own

Last December, I signed a book deal to write the story of women in politics. It’s something I’m passionate about, but I’ll admit that when I pitched the idea to Hachette I had no idea that 2016 would turn out to be quite so busy. Fitting in interviews with leading female politicians and finding the time to write the damn thing hasn’t been easy. Panic-stricken after working flat out during the EU campaign and the historic weeks after, I booked myself into a cottage in Hythe, a lovely little market town on the Kent coast. Holed up for two weeks on my own, feeling a million miles away from the tumultuous Westminster, the words (finally) started pouring on to the page. Right now, I’m enjoying that blissful period between sending in the edited draft and waiting for the first proofs to arrive. It’s nice not to have that nagging guilty feeling that there’s something I ought to be doing . . .

 

It’s all over Mao

I read books to switch off and am no literary snob – I have a particular weakness for trashy crime fiction. This week, I’ve been reading a book that I’m not embarrassed to recommend. Do Not Say We Have Nothing, by the Canadian author Madeleine Thien, tells the haunting story of musicians who suffered during the Cultural Revolution in China. It’s also a chilling warning of what happens when anger towards the elite is pushed too far.

 

Political animals

However busy and exhilarating things are at work, my cat, Ned, will always give me a reality check. In the excitement of the first Sophy Ridge on Sunday, I forgot to get him any food. His disappointed look as he sits by his empty bowl brings me crashing back down to earth. A panicked dash to Sainsbury’s follows, the fuel warning light on all the way as I pray I don’t run out of petrol. Suddenly, everything is back to normal.

“Sophy Ridge on Sunday” is on Sky News on Sundays at 10am

Sophy Ridge is a political correspondent for Sky News.

This article first appeared in the 12 January 2017 issue of the New Statesman, Putin's revenge