Osborne reveals the true aim of Help to Buy: to inflate house prices

"Hopefully we will get a little housing boom and everyone will be happy as property values go up," the Chancellor reportedly told the cabinet.

Mervyn King once memorably complained of David Cameron and George Osborne's "tendency to think about issues only in terms of politics, and how they might affect Tory electorability". Rarely has there been a better example of this than the Help to Buy scheme. 

While Cameron and Osborne publicly state that the aim of the policy is to help first-time buyers, their real aim is to create a pre-election feel-good factor among Tory-leaning homeowners by inflating prices. With the cap for support set at a £600,000 (the average house price is just £172,000), Help to Buy will act as a giant state subsidy for homeowners seeking to trade up or borrow against the value of their property. 

Today we learn that Osborne has told the cabinet as much. The Independent's Andrew Grice quotes the Chancellor as saying: "Hopefully we will get a little housing boom and everyone will be happy as property values go up." 

This is undoubtedly smart politics; 45% of homeowners voted Conservative in 2010 and are more likely to remain loyal to the party if they're feeling flush by 2015. But it is terrible economics and a policy that no one genuinely committed to expanding home ownership should support.

Even while allowing some to make it onto the ladder, the scheme risks blocking the route for others by further widening the gulf between prices and earnings. There is much that the government could do to ease the housing crisis, including increasing supply by allowing councils to borrow to build (as Vince Cable has proposed), penalising developers who sit on unused land, and improving conditions for private tenants. But none of these objectives are aided by an electoral bung less aimed at delivering more homes than more votes.

George Osborne leaves 10 Downing Street on October 7, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Matt Cardy/Getty Images
Show Hide image

What did Jeremy Corbyn really say about Bin Laden?

He's been critiqued for calling Bin Laden's death a "tragedy". But what did Jeremy Corbyn really say?

Jeremy Corbyn is under fire for describing Bin Laden’s death as a “tragedy” in the Sun, but what did the Labour leadership frontrunner really say?

In remarks made to Press TV, the state-backed Iranian broadcaster, the Islington North MP said:

“This was an assassination attempt, and is yet another tragedy, upon a tragedy, upon a tragedy. The World Trade Center was a tragedy, the attack on Afghanistan was a tragedy, the war in Iraq was a tragedy. Tens of thousands of people have died.”

He also added that it was his preference that Osama Bin Laden be put on trial, a view shared by, among other people, Barack Obama and Boris Johnson.

Although Andy Burnham, one of Corbyn’s rivals for the leadership, will later today claim that “there is everything to play for” in the contest, with “tens of thousands still to vote”, the row is unlikely to harm Corbyn’s chances of becoming Labour leader. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.