Nick Clegg speaks at the Liberal Democrat spring conference in York last month. Photograph: Getty Images.
Show Hide image

The progressive Lib Dem policies that no one knows about

How many know that the party still aspires to abolish tuition fees and plans to review the bedroom tax? 

When I wrote last week that Lib Dem MPs who had supported party policy by voting against an increase in university tuition fees were likely to receive some sort of credit for this from the electorate in 2015, a senior political journalist asked me if I hadn’t got that the wrong way round – that surely the rebels had voted against party policy?

But in fact this wasn’t the case. Lib Dems who trooped through the lobby supporting the government were in fact the actual rebels, whereas those who voted against the government were - in party terms – bowing to the will of conference and towing the line. Indeed, party policy is to review the system after next year's election with a view to abolishing tuition fees altogether. A fact that I suspect eludes most people.

And there lies the biggest issue for the Lib Dems at present. If senior political correspondents get confused about the minutiae of party policy, what chance for an electorate where nine in 10 voters fail to recognise a photograph of the Secretary of State for Defence, and the Foreign Secretary frequently gets confused with Ross Kemp?

We saw another example of this type of contradiction the other day on the bedroom tax. You might imagine that the bedroom tax enjoys the support of the Lib Dems, but in fact party policy is to review it, Nick Clegg has ordered said review and when you know that, suddenly Tim Farron's intervention against the tax last week all makes sense. Or at least, it makes sense until 24 hours later the majority of Lib Dem peers end up supporting it.

It’s almost like we want to confuse people.

It is into this vacuum that well-written and provocative contributions like Jeremy Browne's new book get confused with party policy and a set of proposals, approved by conference, ready to present to the electorate as a programme for government. And before you know it, you’re being asked whether it's true that the Lib Dems will cut the top rate of tax for the rich on the day that we take thousands more at that the other end of the scale out of income tax altogether. Which doesn’t help. And that’s not Jeremy’s fault – it’s his job to say what he thinks.

The next month will see Lib Dems campaigning hard on one policy that we are both clear about and well known for – our support for the UK’s membership of the European Union. But after that, we need to start filling in the void on every other policy area – because we’ll have just 12 months to tell people what it is we actually believe. 

At the moment – EU and the Mansion Tax aside – I’m not sure many people actually know. 

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

Getty
Show Hide image

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.