Woolwich terror attack: Cameron and Miliband respond

"The terrorists never win because they cannot defeat the values we hold dear," says Cameron after the beheading of a British soldier in Woolwich.

David Cameron and Ed Miliband have now both responded to the suspected terrorist attack in Woolwich, which saw a British soldier beheaded by two men at 2:20pm this afternoon. The two suspects, one of whom declared in a grim video, "The only reasons we have done this is because Muslims are dying every day", were shot by police and are receiving emergency treatment in hospital. The full statement from the suspect with the bloodied machete was:

We swear by Almighty Allah we will never stop fighting you. The only reasons we have done this is because Muslims are dying every day. This British soldier is an eye for an eye a tooth for tooth. We apologise that women had to see this today but in our lands our women have to see the same. You people will never be safe. Remove your government. They don't care about you.

Cameron, who is in Paris for meetings with François Hollande, said at a press conference at the Elysée Palace:

I've been briefed by the Home Secretary about this sickening attack in Woolwich in London. It is the most appalling crime. We obviously are urgently seeking, the police are urgently seeking, the full facts about this case but there are strong indications that it is a terrorist incident.

Two people at the scene of the murder were wounded by the police and they are being treated as suspects. The Home Secretary is chairing COBRA tonight to bring together the police, the security services, all of the agencies, so that we can gather every piece of information that we can. The police and the security services in the UK will get all of the support that they need to deal with this or indeed any other incident.

I'll be returning to London later tonight, so that I can chair a COBRA meeting again in the morning to make sure that we have all of the facts of this case. Tonight, our thoughts should be with the victim, with their family, with their friends. People across Britain, people in every community, I believe, will utterly condemn this attack. We've had these sorts of attacks before in our country and we never buckle in the face of them. We show indomitable British spirit. The terrorists never win because they cannot defeat the values we hold dear.

He will travel back to London tonight and attend a COBRA meeting tomorrow morning.

Miliband, who cut short a visit to Germany to return to the UK, said:

This is a truly appalling murder which will shock the entire country. All of my thoughts are with the family and friends of the victim. The British people will be horrified by what has happened in Woolwich. They will be united in believing that this terror on our streets cannot be allowed to stand. The Labour Party will offer the Government our complete support in establishing the facts of what happened and ensuring that those responsible face the full force of British justice.

Although some MPs have suggested that parliament, which went into recess yesterday, should be recalled, a spokesman for John Bercow said that there had been no request from Downing Street for him to do so.

One of the Woolwich murder suspects is shown holding a bloodied machete. Photograph: ITV News.

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.