Lib Dems predict victory in Eastleigh, with UKIP in second

Counting in the by-election continues as the Lib Dems say they have held the seat and predict that UKIP has beaten the Tories.

The counting is ongoing in Eastleigh, with the Lib Dems increasingly confident that they've held the seat. The party, which first won the constituency in 1994 (another by-election), expects its majority to be in the thousands, not the hundreds (it is currently 3,864).

Both the Lib Dems and Labour are predicting that UKIP has finished second, pushing the Tories ino third place. If true, this would be a disastrous result for David Cameron. His old rival David Davis was likely right when he suggested earlier this week that it would provoke a "crisis". But Cameron's right-wing critics will have trouble explaining why the Tories performed so poorly after a hard-edged campaign that focused on immigration and welfare and after the promise of an in/out EU referendum.

Labour is resigned to finishing fourth, although the party believes it has increased its share of the vote from the 9.6 per cent recorded in 2010. The result will undermine Ed Miliband's "one nation" narrative but shadow ministers point out that while the seat is 16th on the Tories' target list, it is 258th on Labour's. The swing required to win Eastleigh would put Labour on course for a majority of 362.

Turnout was a relatively impressive 52.8 per cent, down from 69.3 per cent at the general election. We'll bring you the result as soon as it's announced around 4am.

Party representatives watch as votes for the Eastleigh by-election begin to be counted. Photograph: Getty Images.

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.