Duncan Smith rejects evidence-based policy: "I believe this to be true"

There's no evidence for his claim that 8,000 people moved into work as a result of the benefit cap but he "believes" it regardless.

I've already told you five things Iain Duncan Smith doesn't want you to know about the benefit cap (which is introduced nationally today), but I couldn't allow his egregious interview on the Today progamme this morning to pass without comment. 

Early on in his duel with John Humphrys, the Work and Pensions Secretary declared that the homelessness figures had "hardly moved". The reality? Homelessness in England is up by 27 per cent since the government came to power in 2010. 

Later challenged over his claim that 8,000 people moved into work as a result of the benefit cap (a statement that the UK Statistics Authority said was "unsupported by the official statistics"), Duncan Smith decided to dispense with any pretence of evidence-based policy. "I believe this to be true!" he cried, demonstrating the same faith-based approach that led George Osborne to believe that cutting public spending in the middle of a slump would lead to higher growth.

He told Humphrys:

The reality is, I believe that to be right. I believe that we are already seeing people go back to work, who were not going to go back to work until they were assured of the cap.

Any remaining ambition that David Cameron had to lead the "the most open and transparent government in the world" finally died with those words. 

P.S. In an apparent fulfilment of his prophecy that "too many tweets might make a twat", David Cameron tweeted this morning.

We're rolling out a cap on Benefits today - @IDS_MP and I are determined to make work pay, and help the UK compete on the #GlobalRace.

— David Cameron (@David_Cameron) July 15, 2013

Unfortunately for Cameron, @IDS_MP is not, as he thought, the Work and Pensions Secretary but a spoof account whose recent tweets include "I've always supported a Mansion Tax. Your Tax buys my Mansion. Chin chin!" and "A thrifty way to keep cool in this heat wave is to dab the ice from your Champagne bucket onto your forehead."

Iain Duncan Smith arrives for a cabinet meeting at 10 Downing Street. 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.