It may buy votes, but it won't get many houses. (Image: Getty)
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Help to Buy ISAs are a great election gimmick. That's a relief, because they're no good for first-time buyers

Help to Buy ISAs are eye-catching - but useless.

Let’s start by giving George Osborne some credit: seven weeks out from a general election this is no time for sensible, long-term policymaking. He knows what he’s doing with his Help to Buy Isa, which is trying to win an election, not address the country’s long-term housing challenge. Which is just as well, because it will not help with that at all.

The UK has a housing shortage, or at least parts of it do, notably the South-East where many (too many) of the jobs are. Demand has been growing faster than supply for many years, and so prices have been increasing rapidly with the average home now costing many multiples of the average salary. It is quite plain that the scales need rebalancing away from demand and towards supply.

And yet. The Chancellor, in one of the major announcements of his pre-election Budget, has decided to go instead for boosting demand. A new Help to Buy Isa will be available from this autumn for first-time buyers, who will effectively have their savings topped up by 25%, up to a maximum of £3,000 (although this seems to be per person so could amount to £6,000 for a couple purchasing their first home together). This is an extension of earlier Help to Buy initiatives but it marks quite a fundamental shift in that previous measures have amounted to loans and guarantees: now, the state will be directly topping up buyers’ savings at the point of purchase. It will be giving people money to buy homes with. There is no direct precedent for this that I can think of.

On the face of it, this is a great idea. Owner-occupation has been declining since the early 2000s. The latest English Housing Survey puts it at 63%, its lowest level since the mid-1980s. In London it is only 48% - a minority, which owner-occupiers in the rest of the country are expected to be in by the 2030s. And a major obstacle for those being shut out of the market is indeed the difficulty of saving up a big enough deposit, especially since mortgage lending tightened after the 2008 crash. These people certainly need greater government support, but not via a subsidy like this which will simply increase aggregate purchasing power in the housing market and so hold up house prices for everybody, including first-time buyers and future generations who will have even less chance of purchasing their own home. The Treasury’s spending forecast for this scheme is something like £1 billion a year by the end of the next parliament, depending on take-up.

If the Chancellor really wanted to help first-time buyers – and not just those that might be voting in  May, but the young people of the next couple of decades – then he would be doing something to bring prices down rather than helping to keep them up. There are two principal ways in which he could be doing this.

Firstly, he could build more homes. Not just encouraging the private sector to build enough (which it never has and never will) but actually committing significant public investment to building the homes we need. This was how the post-war governments managed to build the homes the country needed until such spending was wound down from the 1970s. The period since has amounted to a prolonged experiment in getting the market to pick up the slack – and failing. He could start by diverting this Help to Buy cash into housebuilding. Those sceptical about the cost should remember that we already spend £25 billion a year in housing benefit (which goes to landlords in rent subsidies), largely as a result of our failure to build enough homes.

Secondly, he could severely restrict further house purchases by private landlords. Young people are being priced out of the market not by each other, in the main, but by a private rented sector which has been booming since the 1990s. The decline in owner-occupation has been in inverse proportion to the growth in the landlord class, which has more than doubled the number of homes it owns in just over a decade and now accounts for 19% of the housing stock in England. It is continuing to grow, fuelled by a housing benefit system which effectively under-writes the demands of landlords already charging more than a quarter of their tenants can afford/

Of course if this government had intended anything meaningful on housing it would have initiated it five years ago, not at the tail end of its time in office. There are too many vested interests standing in the way of what is really needed, which is real action to tackle the causes of house price growth. But these interests are not confined to developers, housebuilders, estate agents or private landlords – it also includes the millions of people who already own their homes, who enjoy seeing their assets rise in value. This amounts to a formidable lobby, and one that Osborne has not taken on. But this close to an election, who would?

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Former Irish premier John Bruton on Brexit: "Britain should pay for our border checks"

The former Taoiseach says Brexit has been interpreted as "a profoundly unfriendly act"

At Kapıkule, on the Turkish border with Bulgaria, the queue of lorries awaiting clearance to enter European Union territory can extend as long as 17km. Despite Turkey’s customs union for goods with the bloc, hauliers can spend up to 30 hours clearing a series of demanding administrative hoops. This is the nightmare keeping former Irish premier John Bruton up at night. Only this time, it's the post-Brexit border between Northern Ireland and the Republic, and it's much, much worse.   

Bruton (pictured below), Taoiseach between 1994 and 1997, is an ardent pro-European and was historically so sympathetic to Britain that, while in office, he was pilloried as "John Unionist" by his rivals. But he believes, should she continue her push for a hard Brexit, that Theresa May's promise for a “seamless, frictionless border” is unattainable. 

"A good example of the sort of thing that might arise is what’s happening on the Turkish-Bulgarian border," the former leader of Ireland's centre-right Fine Gael party told me. “The situation would be more severe in Ireland, because the UK proposes to leave the customs union as well."

The outlook for Ireland looks grim – and a world away from the dynamism of the Celtic Tiger days Bruton’s coalition government helped usher in. “There will be all sorts of problems," he said. "Separate permits for truck drivers operating across two jurisdictions, people having to pay for the right to use foreign roads, and a whole range of other issues.” 

Last week, an anti-Brexit protest on the border in Killeen, County Louth, saw mock customs checks bring traffic to a near standstill. But, so far, the discussion around what the future looks like for the 260 border crossings has focused predominantly on its potential effects on Ulster’s fragile peace. Last week Bruton’s successor as Taoiseach, Bertie Ahern, warned “any sort of physical border” would be “bad for the peace process”. 

Bruton does not disagree, and is concerned by what the UK’s withdrawal from the European Convention on Human Rights might mean for the Good Friday Agreement. But he believes the preoccupation with the legacy of violence has distracted British policymakers from the potentially devastating economic impact of Brexit. “I don’t believe that any serious thought was given to the wider impact on the economy of the two islands as a whole," he said. 

The collapse in the pound has already hit Irish exporters, for whom British sales are worth £15bn. Businesses that work across the border could yet face the crippling expense of duplicating their operations after the UK leaves the customs union and single market. This, he says, will “radically disturb” Ireland’s agriculture and food-processing industries – 55 per cent of whose products are sold to the UK. A transitional deal will "anaesthetise" people to the real impact, he says, but when it comes, it will be a more seismic change than many in London are expecting. He even believes it would be “logical” for the UK to cover the Irish government’s costs as it builds new infrastructure and employs new customs officials to deal with the new reality.

Despite his past support for Britain, the government's push for a hard Brexit has clearly tested Bruton's patience. “We’re attempting to unravel more than 40 years of joint work, joint rule-making, to create the largest multinational market in the world," he said. It is not just Bruton who is frustrated. The British decision to "tear that up", he said, "is regarded, particularly by people in Ireland, as a profoundly unfriendly act towards neighbours".

Nor does he think Leave campaigners, among them the former Northern Ireland secretary Theresa Villiers, gave due attention to the issue during the campaign. “The assurances that were given were of the nature of: ‘Well, it’ll be alright on the night!’," he said. "As if the Brexit advocates were in a position to give any assurances on that point.” 

Indeed, some of the more blimpish elements of the British right believe Ireland, wedded to its low corporate tax rates and east-west trade, would sooner follow its neighbour out of the EU than endure the disruption. Recent polling shows they are likely mistaken: some 80 per cent of Irish voters say they would vote to remain in an EU referendum.

Irexit remains a fringe cause and Bruton believes, post-Brexit, Dublin will have no choice but to align itself more closely with the EU27. “The UK is walking away,” he said. “This shift has been imposed upon us by our neighbour. Ireland will have to do the best it can: any EU without Britain is a more difficult EU for Ireland.” 

May, he says, has exacerbated those difficulties. Her appointment of her ally James Brokenshire as secretary of state for Northern Ireland was interpreted as a sign she understood the role’s strategic importance. But Bruton doubts Ireland has figured much in her biggest decisions on Brexit: “I don’t think serious thought was given to this before her conference speech, which insisted on immigration controls and on no jurisdiction for the European Court of Justice. Those two decisions essentially removed the possibility for Ireland and Britain to work together as part of the EEA or customs union – and were not even necessitated by the referendum decision.”

There are several avenues for Britain if it wants to avert the “voluntary injury” it looks set to inflict to Ireland’s economy and its own. One, which Bruton concedes is unlikely, is staying in the single market. He dismisses as “fanciful” the suggestions that Northern Ireland alone could negotiate European Economic Area membership, while a poll on Irish reunification is "only marginally" more likely. 

The other is a variation on the Remoaners’ favourite - a second referendum should Britain look set to crash out on World Trade Organisation terms without a satisfactory deal. “I don’t think a second referendum is going to be accepted by anybody at this stage. It is going to take a number of years,” he said. “I would like to see the negotiation proceed and for the European Union to keep the option of UK membership on 2015 terms on the table. It would be the best available alternative to an agreed outcome.” 

As things stand, however, Bruton is unambiguous. Brexit means the Northern Irish border will change for the worse. “That’s just inherent in the decision the UK electorate was invited to take, and took – or rather, the UK government took in interpreting the referendum.”