The Treasury select committee is deeply unimpressed by Osborne's Help To Buy scheme

The plan to help first-time buyers is "very much a work in progress", say Andrew Tyrie and colleagues.

For connoisseurs of polite eviscerations, parliamentary select committees are a joy. From Tom Watson grilling the Murdochs to Michael Gove being asked if his special advisers had really described his junior minister as a "lazy incompetent narcissist", they can feature some very unpolitical plain speaking.

Under Conservative MP Andrew Tyrie, the Treasury select committee has often been a little more independent-minded than the government would like. Its new report into the effects of the Budget looks at the flagship "Help to Buy" scheme, and is a masterpiece of quiet denunciation.

Here's how the Treasury describes the initiative on its website:

Help to Buy is made up of two schemes – “equity loan” where the Government will loan you up to 20% of the value of your new build home and “mortgage guarantee” where lenders will be incentivised to make more mortgages available for people with small deposits.

The Treasury Committee has spotted a number of problems with this idea, and helpfully summarised them alongside Tyrie's thoughts, next to its full report. It describes the scheme as "very much work in progress. It may have a number of unintended consequences."

The first problem is with the structure of the scheme itself. The report notes:

It is by no means clear that a scheme, whose primary outcome may be to support house prices, will ultimately be in the interests of first time buyers. This is the group the Government says it wants to help.

. . .

The lack of clarity over whether the mortgage guarantee scheme will be open to those wishing to purchase a second home is concerning on two grounds. First, it is a reflection of the need to think schemes through carefully before announcing them. Second, whilst the Committee is aware of the complexity which may come with an exclusion, we struggle to see the rationale for the taxpayer to stand behind loans for people wishing to own a second property, especially given that the Chancellor has repeatedly stated that the scheme is primarily designed to help people onto the property ladder as well as those who wish to move property.

The issue of second homes has dogged the policy since the start, with government ministers offering differing opinions on whether it would cover them. The sentence I've bolded is one of several waspish reflections on the fundamental soundness of the plan.

Here's the second stand-out section:

The mortgage guarantee scheme also makes the Government an active player in the mortgage market. The Committee is concerned that the Treasury now has a financial interest in maintaining house prices to limit losses to the taxpayer.

Of course, there are already many reasons why a government would want to maintain house prices - it is not popular politics to plunge voters into negative equity, or make home-owners feel that an asset on which they felt they could rely has fallen in value. But given that high prices (driven by lack of supply in popular areas) are one of the factors locking first-time buyers out of the market, such a scheme places the Treasury in a very peculiar position.

At the Guardian, Nils Pratley analyses the report and notes:

The real problem in the housing market is the lack of new homes. To attempt to stimulate more building by subsidising mortgages and forcing up house prices is a bizarrely roundabout approach. It is long-term, at best. "If the government's priority was housing supply, its housing measures ought to have concentrated there," says the committee. Quite.

A pigeon on a rooftop. Photo: Getty

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

GETTY
Show Hide image

Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.