The three biggest Cameron U-turns

The Tory leader’s U-turns on VAT, child benefit and spending cuts.

Following the coalition's decision to guarantee funding for Bookstart (having pledged to end state support), the Telegraph's Benedict Brogan notes that David Cameron is becoming a master of the political U-turn.

He cites ten examples, including free milk, school sports, the non-abolition of the 1922 Committee and the "cast-iron guarantee" to hold a referendum on the Lisbon Treaty. Yet even Brogan's list doesn't begin to cover Cameron's policy reversals. Here are three of the biggest U-turns that he forgot to include.

1. VAT rise

There are just eight days to go until VAT rises from 17.5 per cent to an all-time high of 20 per cent but, as recently as the election campaign, Cameron was still insisting that the Tories would not raise the tax.

Here's what he told Jeremy Paxman in an interview on 23 April:

We have absolutely no plans to raise VAT. Our first Budget is all about recognising we need to get spending under control rather than putting up tax.

Before that, in April 2009, Cameron promised he would not raise a tax that "hits the poorest the hardest". He said:

You could try, as you say, to put it on VAT, sales tax, but again if you look at the effect of sales tax, it's very regressive, it hits the poorest the hardest. It does, I absolutely promise you. Any sales tax, anything that goes on purchases that you make in shops tends to . . . if you look at it, where VAT goes now it doesn't go on food obviously but it goes very, very widely and VAT is a more regressive tax than income tax or council tax.

2. Child benefit cuts

The coalition's surprise decision to abolish universal child benefit attracted the anger of several Lib Dem ministers. And with good reason. During a pre-election Cameron Direct event, the Tory leader issued this "read my lips" pledge:

I'm not going to flannel you, I'm going to give it to you straight. I like the child benefit, I wouldn't change child benefit, I wouldn't means-test it, I don't think that is a good idea.

But with the Treasury warning that the plan to end the benefit for all higher-rate taxpayers is "unenforceable", Cameron may yet be forced to perform another U-turn.

3. No cuts to front-line services

On the weekend before the general election, Cameron memorably told Andrew Marr that a Conservative government would not cut any front-line services. He said:

What I can tell you is, any cabinet minister, if I win the election, who comes to me and says: "Here are my plans" and they involve front-line reductions, they'll be sent straight back to their department to go away and think again. After 13 years of Labour, there is a lot of wasteful spending, a lot of money that doesn't reach the front line.

But with front-line police facing cuts, an 80 per cent reduction in the university teaching budget and, today, new warnings of NHS cuts, Cameron's claim has quickly unravelled.

George Eaton is political editor of 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.