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New housing scheme passes go

The 95 per cent mortgage is back.

The Prime Minister David Cameron this morning promised to lower the rungs on the housing ladder with a mortgage indemnity scheme.

Under the new scheme the construction industry and taxpayers will guarantee part of a homebuyer’s mortgage, allowing them to take out much larger loans than they would otherwise be eligible for. The NewBuy scheme will allow people to borrow up to 95 per cent of the sale price.

Mortgages worth 100 per cent or 120 per cent of house prices were common before the credit crunch but have now disappeared as banks try to avoid risk. Since 2007, most people seeking to buy newly-built houses have only been able to borrow up to 80 per cent of the property value.

The Government  claimed the scheme will jump-start the housing market, which is currently stalling, and also support up to 50,000 jobs in construction and related industries by upping demand for new builds.

"The problem today is we have lenders who are not lending so builders cannot build so the buyers cannot buy and it needs the government to step in and help unblock the market," Mr Cameron said.

But critics worry the scheme is a gimmick to help the construction industry.

Dominik Lipnicki, of Your Mortgage Decisions, told the Telegraph: "You can already obtain 95% mortgages with comparable interest rates of 5% plus."

"It's more of a gimmick. It's a great headline and it will help some but mainly the construction industry. All this will do is encourage people to buy new properties but old property won't be sold and the chain will stop."


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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.