Help To Buy is in a mess - here's how Osborne can rescue it

To avoid a "second home subsidy", the government must limit the scheme to first-time buyers.

The government’s Help to Buy scheme - a handout to the big beasts of the construction industry wrapped up as a fluffy social policy giving the hard pressed a leg up - has had an inauspicious start to life.

The scheme will share out £3.5bn in interest-free loans to buyers who can rustle up a mortgage deposit of just 5 per cent, each loan offering up to 20 per cent of the value of a new-build property worth £600,000 or less, and taxpayer backing for up to £130bn of mortgage lending.

From the off, the policy faced criticism for artificially stimulating the housing market, threatening another disastrous cycle of boom, bubble and bust.

Even the Treasury select committee felt moved to share its concerns about the risks of channelling public money into an investment whose value - like all good property speculators know - could go up as well as down.

But the biggest problem with Help to Buy is the loophole in the mortgage guarantee scheme that will allow existing home owners access to a loan. Parodying the government’s own 'spare room subsidy' (or 'bedroom tax'), shadow chancellor Ed Balls found a new moniker for the policy: "the second home subsidy".

On BBC1’s Sunday Politics show this week, Conservative MP Nadhim Zahawi was challenged on this issue yet again. He gave a halting and stumbling response, which cleared absolutely nothing up and raised new fears about the perverse impact these loans might have.

Asked what the government could do to stop the policy being used to buy second properties, Zahawi said:

One of the things we have to look at is the detail. How do you decide? If parents want to help get [children] to get a 5 per cent deposit in place or if someone is selling a smaller property to help their family into a bigger place?

Clear as mud. But look again at what he asking us to consider: how do you decide if a parent purchasing a second home to help their child onto the property ladder - buying it for them, or with them, or using their existing owner occupied property as leverage - is using or abusing equity loan scheme?

It’s worth remembering that, when he unveiled Help to Buy in the Budget, chancellor George Osborne said that home ownership was now "beyond the great majority who can’t turn to their parents for a contribution. That’s not just a blow to the most human of aspirations, it’s a setback to social mobility."

What is this fudged idea over public funding for second homes if not a double-bolted cap on social mobility?

Allowing parents to purchase a second home through to the scheme to support their younger family members removes the opportunity of government support from the children of those who could never offer them an independent leg up, and uses public funds to consolidate wealth in the hands of those who already have it. And if that’s the case, it must be stopped. Immediately.

Writ large, a policy like this only exacerbates social inequality, with its disastrous consequences for us all (no need to rehash the excellent work of Richard Wilkinson and Kate Pickett here). It’s not clear that this is exactly what Zahawi meant in his fumbled answer to Andrew Neil’s forensic questioning; perhaps he was just having a bad morning, or feared falling foul of the party machine. Either way, a vacuum will be filled with speculation, so government must clarify exactly how, and by whom, Help to Buy will be accessed.

Another dangling question for the coalition is whether Help to Buy has actually pushed the construction industry to develop more homes? We know there is demand for decent housing; the problem is with the lack of supply. Builders aren’t building, and where they are they’re not building the right sort of homes.

As David Orr, chief executive of the National Housing Federation, explained in his response to Help to Buy: "Our housing market has long been weakened by the lack of new houses being built... the government should be focusing on unlocking investment to build more new homes as a way of managing down the housing benefit bill and boosting the economy."

If the policy has only managed to put down the foundations for £600,000 Barrett ‘dream homes’, what is its value to first time buyers?

But listen up, Osborne, because you can rescue Help to Buy with three simple measures:

1. Reduce the limit to 20 per cent of any property valued at the national average of £238,293, rising to £350,000 for London and the South East.

2. Only allow first-time buyers to access the mortgage guarantee scheme.

3. Only open the scheme up to properties with three bedrooms or less, forcing developers to build the type of affordable housing that is so desperately in demand for first-time buyers.

The Chancellor may feel reports that house prices are on the rise for the first time since 2010 confirm that his policy is working. I believe it demonstrates quite the opposite.

George Osborne meets with a couple at the Berkeley Homes Royal Arsenal Riverside development in Woolwich. Photograph: Getty Images.

Hannah Fearn is contributing editor of the Guardian local government, housing and public leaders networks

Gage Skidmore via Creative Commons
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Donald Trump brings home his dark vision of America at the Republican convention

The Presidential nominee pledged: "Safety must be restored."

Donald Trump brought home the Republican convention Thursday night with a dark vision of contemporary America – a darkness he claimed only his leadership could lift. It was a lengthy, tightly-scripted speech framed around polarities – insiders and outsiders, criminals and victims, the United States and the rest of the world – and infused with righteous anger. And yet against the darkness, he offered not lightness but “greatness” – a bombastic, personalistic vision of how through sheer force of will he could right the American ship before it plunged irretrievably into the depths. “I alone can solve,” he famously tweeted earlier in the campaign. This was the 80-minute version.

Any presidential challenger, of course, has to lay out a set of problems they believe need fixing and a case for why their leadership might make a difference. It was the breathtaking scale and intensity of Trump’s diagnosis, and the lack of optimistic alternative to counterbalance it, that was notable compared to other acceptance speeches. He portrayed the United States as a country riddled with crime and corruption, a “rigged system” in which politicians like Hillary Clinton can evade justice, while police officers trying to protect its citizens become targets; a fearful country, its economy sluggish, its infrastructure crumbling, its security an illusion, and its international stature in freefall

For a candidate who has mocked the soaring rhetoric of President Obama (the “hopey-changey stuff,” as Sarah Palin once called it), it was perhaps not surprising that Trump’s speech would be short on uplift. It was at least more disciplined than his other campaign speeches, if in keeping with their tone and content – the much-maligned teleprompter rolling a script to which he largely stuck. (“He sounds presidential,” a lady behind me remarked, though his press conference Friday morning marked a reversion to free-wheeling form).

It was short on substance too, though acceptance speeches aren’t designed to be policy laundry lists like a State of the Union. Still, there were few specifics, beyond a pledge to revise tax laws which inhibit religious groups from political advocacy, and a newfound concern with student loans. It was daughter Ivanka’s speech that had the greater substantive heft, promising her father would push for new labour laws to help working mothers, and for affordable childcare in the US. Neither are traditional Republican positions, but the crowd seemed on board for anything Trump might offer.

He even had them cheering for LGBTQ rights, after recalling the tragedy in Florida last month, and the need to protect gay Americans from a “hateful foreign ideology” in radical Islam. “It is so nice as a Republican to hear you cheering for what I just said,” he commended the delegates in an unscripted moment. But whether they had really embraced this unexpected message – or if it was the anti-terror chaser that really got them on their feet – remains to be seen. In either case, it was a rare grace note in an otherwise bruising speech.

Presenting himself repeatedly as the candidate of “law and order,” Trump evoked Richard Nixon’s 1968 presidential campaign. At a time when American cities were erupting in race riots and protests over the Vietnam War, Nixon had pitched himself as the face of stability and security. Likewise Trump has reacted to the simmering racial tensions and terrorist attacks this summer with a hard-line stance on “lawlessness.” “Safety must be restored,” Trump said, in one of the eerier lines he delivered. Yet in his convention speech, Nixon had balanced his tough talk with a positive message – speaking of love, courage, and lighting a “lamp of hope” in partnership with the American people. 

Trump channeled another president in his speech, too, when he promised to give voice to “the forgotten men and women of our country” – drawing on the language of Franklin Roosevelt. Roosevelt had promised to aid “the forgotten man at the bottom of the economic pyramid” during the 1932 campaign. But Roosevelt’s solution to the forgotten man’s distress was economic internationalism – tearing down tariff walls and trading freely with the world – which the Republican Party then opposed. Trump’s solution is the protectionist policies Roosevelt had railed against.

Trump’s economic and security philosophy is encapsulated in another, more notorious phrase associated with that era: “America First.” A rallying cry for isolationists seeking to avoid US entanglement in World War II, it acquired an anti-Semitic taint. But Trump has employed it nonetheless, capturing as it does his core argument that America must do more to protect its own citizens against threats from within and without – from illegal immigrants, from radicalized Islamic terrorists, from the downsides of free international trade. Little wonder that former George W.

Bush staffer Nicolle Wallace announced that the Republican party she knew “died in this room tonight.” In embracing elements of isolationism, protectionism, and nativism, however, it is perhaps truer to say that Trump’s Republican party reverted to an earlier form.

Often disconcerting, at times mesmerizing, the question remains how effective this speech will be. The delegates responded enthusiastically to Trump’s fierce rhetoric, but many prominent Republicans had stayed away from the convention altogether. Combined with Senator Ted Cruz’s non-endorsement, Trump goes into the general election campaign without a fully united party behind him. For both partisans and the public, Trump’s speech offered a cast of villains to rally against, but no positive, unifying vision to rally behind – beyond the much-touted yet elusive “greatness,” of course. In a typical election year, that would seem a critical flaw in a campaign – but Trump loves to confound the naysayers. As his convention speech showed, he thinks the formula that got him this far - showcasing his fame and fanning Americans’ fears – can land him in the White House.