Lib Dem MPs speak out against Osborne’s extra £4bn benefit cuts

Chancellor faces backlash from backbenchers after criticising those who see welfare as a “lifestyle

Left-wing Liberal Democrat MPs have expressed outrage after the Chancellor, George Osborne, told the BBC that he planned an additional £4bn cuts to benefits. Coupled with the £11bn already announced, this amounts to a cut of 6 per cent of the total welfare budget.

In a remarkable attack on the current system of benefits -- and many of the people on them -- Osborne said:

The welfare system is broken. We have to accept that the welfare bill has got completely out of control and that there are five million people living on permanent out-of-work benefits. That is a tragedy for them and fiscally unsustainable for us as a country. We can't afford it any more.

Of course, people who are disabled, people who are vulnerable, people who need protection will get our protection, and more.

But people who think it's a lifestyle choice to just sit on out-of-work benefits -- that lifestyle choice is going to come to an end. The money won't be there.

It was a marked contrast to Nick Clegg's muted tone earlier in the day, when he said that tough decisions were necessary, but that these cuts were not "dramatically different" from those planned by Labour.

Three Lib Dem backbenchers have so far expressed their anger, taking issue as much with the aggressive tone of Osborne's remarks as with the further cuts.

Bob Russell, MP for Colchester, has tabled an urgent question on the extra cuts. He told the Today programme:

Yes, let's deal with the welfare cheats. But the notion that they are responsible for all the ills of the nation is in fact a smokescreen and it's not very ethical.

Two other Lib Dems, Mike Hancock and Tim Farron, also pledged to vote against the cuts. Hancock told the Guardian:

This goes right to the heart of the benefit system in this country. He has a lot of questions to answer and this is not the right way to do things.

Farron also spoke out, saying:

The government needs to demonstrate that those who got us into this mess are going to more than bear the brunt and that the most in need will not be targeted. We need to scrutinise where the cuts are made.

It's not just Lib Dems who will be disgruntled by Osborne's remarks, either. The Work and Pensions Secretary, Iain Duncan Smith, is engaged in sensitive negotiations with the Treasury over his proposals to spend more money initially to reform the welfare system and create more work incentives.

Osborne's grandstanding rhetoric -- which stopped just short of talking about "benefit cheats" -- helps no one.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.