The turbulent priest intervenes

Rowan Williams calls for a Tobin tax and other measures to address the protesters' "moral agenda".

The turbulent priest is back to cause more trouble for the government. In his initial statement on the St Paul's protest, Rowan Williams pointedly noted that "the urgent larger issues raised by the protesters ... remain very much on the table". His thoughtful article in today's Financial Times is an attempt to address them.

Lamenting that there has been "little visible change in banking practices" since the crisis, the Archbishop calls for a Tobin tax on financial transactions as a part of a series of measures to reflect "the moral agenda" of the protesters. It is a welcome and long overdue recognition that, whether or not one agrees with their tactics, the protesters' cause is just. As Williams writes, their protest has been welcomed "by an unexpectedly large number of people as the expression of a widespread and deep exasperation with the financial establishment that shows no sign of diminishing". At the same time, he concedes that many of their demands are "vague", insisting: "it is time we tried to be more specific".

With this mind, he sets out a three-point programme, largely based, in an act of ecumenicism, on the document published by the Pontifical Council for Justice and Peace. Williams calls for "early government action" to separate retail and investment banking, for the creation of an obligation for banks to "help reinvigorate the real economy" and, most strikingly, for a "Robin Hood Tax" on financial transactions. His intervention is significant not least because, as City AM reveals today, George Osborne, despite his protestations to the contrary, is minded to oppose a Tobin tax even if it is applied globally. In a private letter to bank chiefs, the Chancellor wrote: "I agree there would need to be further discussions about whether any FTT model offers an efficient mechanism to raise revenue."

It is not, you sense, a view that Williams has any sympathy with. He writes:

The objections made by some who claim it would mean a substantial drop in employment and in the economy generally seem to rest on exaggerated and sharply challenged projections - and, more important, ignore the potential of such a tax to stabilise currency markets in a way to boost rather than damage the real economy.

Williams's article, like his coruscating New Statesman leader earlier this year, will trouble some conservatives. But it would be absurd for the leader of the Anglican communion not to respond to a protest that raises urgent questions of fairness and social justice. As it has before, with the 1985 publication of Faith In The City, an excoriating critique of Thatcherism, the Church should lead the debate. Williams's article is an admirable attempt to do so.

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.