Morning Call: pick of the papers

The ten must-read pieces from this morning's newspapers.

1. It's welfare, not wealth, that will define Ed Miliband's leadership (Daily Telegraph)

Labour's reluctance to stand up for those in greatest need leaves it in no man's land, says Mary Riddell.

2. Welfare cap: it's not about the money (Guardian)

Gavin Poole argues that opponents of the cap on benefits fail to see that it will raise self-esteem and break the cycle of poverty.

3. NHS reform should be dropped, before it's too late (Independent)

Steve Richards says that "sweeping upheaval" is a polite way of expressing the chaos that is being imposed.

4. Barack Obama has reasons to smile again (Daily Telegraph)

The president's future looks more hopeful, says Alex Spillius -- the US economy is recovering, Republicans are weak and he is untainted by scandal.

5. The real debate that America needs (Financial Times)

Romney and Obama are the men to set the agenda, says Gideon Rachman.

6.For Greece default is the only option (Guardian)

Costas Lapavitsas says that the dreadful debt saga will only come to a close when Greece takes charge of its predicament.

7. We want a deal with Iran, not a war (Independent)

The EU decision yesterday to ban imports of Iranian oil makes even more perilous a confrontation that could yet lead to war, warns this leading article.

8. Economic uncertainty is no excuse for inaction (Financial Times)

Increasing demand is the way back to economic health, writes Lawrence Summers.

9. Hockney's painted message for the politicos (Times) (£)

Britain's greatest living artist uses modern means to convey traditional themes. Rachel Sylvester says that MPs of all colours should take heed.

10. Courage: a product of practice rather than faith (Guardian)

Giles Fraser discusses the question of moral courage and whether you can get better at it.

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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.