Osborne's housing policy risks being sub-prime for Surrey

Our housing market is overheating as it is. The last thing we need is a massive lending spree.

Many of the measures announced by the Chancellor are relatively simple. Either the effects are basically known – think fuel duty, which is always a fight between climate change and revenue versus angry motorists – or the debate around them is pretty black and white – will cutting corporation tax lead to growth, or just a hand-out to businesses?

The big one which we're watching play out now is the chancellor's new housing policies. Two major measures were announced, under the branding "help to buy:

  1. £3.5bn was committed to shared equity loans. 20% of the value of a new home will be loaned by the government, interest free, repaid when the home is sold. A 5% deposit required. Available to everyone buying a new-build home worth moreless than £600k. Because it is an investment in the equity of the house, it won't be counted toward the deficit figures.
  2. Offering a mortgage guarantee to lenders to encourage them to loan to people who can't afford a deposit. The Government will back up the deposits of £130bn worth of mortgages, from 2014 to 2017. It will guarantee the equity of 15 per cent of the house's value, and apply to all homes, not just new builds.

The measures fit Dan Davies' classic summation of the eternal failure of UK policy in this area:

The whole of British housing policy can be seen as an effort to reduce the cost of housing without affecting house prices.

By extending greater credit to people who otherwise couldn't afford a house, the plan is that they will be able to buy it at the existing price. Where the increased demand might then increase prices further, the requirement that the house be a new build – which is clearly intended to stimulate housebuilding – ought to ensure that house prices hover around the same level.

The outcome of the policy depends greatly on the demand for it – and at first glance I don't expect demand to be very high.

A 5 per cent deposit is, obviously, a quarter of a 20 per cent deposit. But the problem for too many families is that the thought of saving for any deposit is beyond the realms of imagination at the moment.

The average UK house costs £238,293, meaning a 5 per cent deposit would cost a little under £12,000, which is more savings than 71 per cent of the UK have. It's certainly the case that some of that 29 per cent who do have enough savings to pay a £12,000 deposit might not have enough to pay a £48,000 deposit; but it remains the case that if you want to buy a house, you are likely to do it with money inherited from someone else in your family, because few people are in a situation where they can save nearly enough to afford a deposit up front.

Of course, despite what Ed Miliband repeats there isn't only one Britain. The housing market in London and the South-East is vastly different from the rest of the country. In the former, where the market is definitely overheating already, the policy will do little but raise prices even further. In the latter, the question is whether the difference between an 80% and 95% mortgage is big enough to turn the market around. In both, it will also be grossly distortionary around the £600,000 cut-off point, and may actually depress prices in the short term as people hold off til 2014 to buy.

But the real aim of it isn't to help people who can't afford deposits buy homes. Instead, it's to help people who can afford deposits buy more expensive homes for their money. That won't do a huge amount for those who aren't already in some way in the housing market, but it will help a great deal to keep that housing market buoyant for a while longer.

The deficit-free aspect of the scheme is also questionable. The loans will indeed be backed up by the equity the government is taking in the new houses, and in the long run – assuming that house prices continue rising, which remains unspoken government policy – it will be deficit neutral.

But so would a lot of things the government could do. If it decided to build social housing, that would likely be deficit neutral in the long run; as would investment in green energy, or loans to small businesses.

Any measure to fix Britain's housing situation must be applauded for its aims, but this, I fear, continues the worst policies we already have, and at best will only treat the symptom, not the cause.

Houses. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Rarely has it mattered so little if Manchester United won; rarely has it been so special they did

Team's Europa League victory offers chance for sorely needed celebration of a city's spirit.

Carlo Ancelotti, the Bayern Munich manager, memorably once said that football is “the most important of the least important things”, but he was only partly right. While it is absolutely the case that a bunch of people chasing around a field is insignificant, a bunch of people chasing around a field is not really what football is about.

At a football match can you set aside the strictures that govern real life and freely scream, shout and cuddle strangers. Football tracks life with such unfailing omnipresence, garnishing the mundane with regular doses of drama and suspense; football is amazing, and even when it isn’t there’s always the possibility that it’s about to be.

Football bestows primal paroxysms of intense, transcendent ecstasy, shared both with people who mean everything and people who mean nothing. Football carves out time for people it's important to see and delivers people it becomes important to see. Football is a structure with folklore, mythology, language and symbols; being part of football is being part of something big, special, and eternal. Football is the best thing in the world when things go well, and still the best thing in the world when they don’t. There is nothing remotely like it. Nothing.

Football is about community and identity, friends and family; football is about expression and abandon, laughter and song; football is about love and pride. Football is about all the beauty in the world.

And the world is a beautiful place, even though it doesn’t always seem that way – now especially. But in the horror of terror we’ve seen amazing kindness, uplifting unity and awesome dignity which is the absolute point of everything.

In Stockholm last night, 50,000 or so people gathered for a football match, trying to find a way of celebrating all of these things. Around town before the game the atmosphere was not as boisterous as usual, but in the ground the old conviction gradually returned. The PA played Bob Marley’s Three Little Birds, an Ajax staple with lyrics not entirely appropriate: there is plenty about which to worry, and for some every little thing is never going to be alright.

But somehow the sentiment felt right and the Mancunian contingent joined in with gusto, following it up with “We’ll never die,” – a song of defiance born from the ashes of the Munich air disaster and generally aired at the end of games, often when defeat is imminent. Last night it was needed from the outset, though this time its final line – “we’ll keep the red flag flying high, coz Man United will never die" – was not about a football team but a city, a spirit, and a way of life. 

Over the course of the night, every burst of song and even the minute's silence chorused with that theme: “Manchester, Manchester, Manchester”; “Manchester la la la”; “Oh Manchester is wonderful”. Sparse and simple words, layered and complex meanings.

The match itself was a curious affair. Rarely has it mattered so little whether or not United won; rarely has it been so special that they did. Manchester United do not represent or appeal to everyone in Manchester but they epitomise a similar brilliance to Manchester, brilliance which they take to the world. Brilliance like youthfulness, toughness, swagger and zest; brilliance which has been to the fore these last three days, despite it all.

Last night they drew upon their most prosaic aspects, outfighting and outrunning a willing but callow opponent to win the only trophy to have eluded them. They did not make things better, but they did bring happiness and positivity at a time when happiness and positivity needed to be brought; football is not “the most important of the least important things,” it is the least important of the most important things.

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