Give it up, it's never going to happen. Image: Getty.
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If you're a first time buyer, don't let Osborne fool you: he hates your guts

The first time buyer ISA won't even get you close.

Rejoice, first time buyers! Rejoice! Chancellor George Osborne, your friend and mine, has come up with a nifty new scheme to help you save your deposit.

For every £1 you save in a new first-time-buyer ISA, the government will top it up by an extra 25 pence – up to a maximum of £250 a month. In all, the government is willing to give you an extra £3,000, effectively for free. Can't say fairer than that.

Except, actually you can – because today's Budget was a bit light on measures to increase housing supply. Without such measures, house prices will continue to climb inexorably. And, unless that changes, this scheme isn’t going to be that helpful for anyone who doesn't already have a pile of money.

Demonstrating this gets a bit maths-y, but bear with us. The Office for National Statistics produces a house price index, which stood at 100 in February 2002. By December 2014, 154 months later, it had more than doubled, and stood at 206.9. Do some sums, and you’ll find that, over that 13 year period, house prices on average increased by about 0.4732 per cent each month.

(Obviously, they didn’t do anything of the sort. Reality isn’t that straightforward: there are booms and busts, different regions see different trends, and so forth. Nonetheless, we’re only looking for a sense of the way prices increase over the long term, so this’ll do for our purposes.)

Let's assume this growth rate continues: each month, house prices continue to increase by 0.47 per cent. Last August, the average first-time-buyer deposit stood at £27,719, but that was seven months ago so, assuming that the proportion of your house price you need to save for a deposit has stayed the same, the average deposit will now stand at £28,650.

Now imagine that a 25 year old hears of Osborne’s generous new scheme, gets all excited about it, and starts saving £200 a month this very day, just to get hold of that £50 government top up. Assuming the ISA pays an annual interest rate of approximately 3 per cent, which isn’t bad going right now, it should take them just over eight years.

By August 2023, then, when our 25 year old is 33, they'll have their deposit. Brilliant.

Except that they won't.

One reason is that we’ve forgotten about that £3,000. Our putative homeowner, who is stretched enough that they can only save £200 a month, runs slap bang into that target in March 2020, several years before they've reached their goal. After that, they're on their own, so the graph of their savings actually looks like this:

The point at which the government bribe comes to an end, and the rate of growth reduces, is barely visible (hence our broken red line to highlight it). But it is there, nonetheless: now our plucky saver doesn’t reach their target until April 2024, a good eight months after they’d first expected to.

But even if that weren't true, they still wouldn't be able to climb onto the housing ladder, because house prices are growing, too. By April 2024, on long run rates of growth, the average deposit should stand at £47,929. If our poor hard-working renter keeps saving their £200 a month, they’ll get to that target by August 2029, by which time the average deposit is £64,836. They’re still £17,000 short.

What’s really insidious is that, unless they save more, they always will be. Around August 2030 (by which time our 25 year old is 40 and still doesn’t own a house), the increase in house prices each month becomes larger than the increase in our renter's savings. Each month, rather than the target getting closer, it begins to recede into the distance.

If the government were to extend its free money scheme, that point would come a few years later – but it would still come.

There are a lot of assumptions here – about interest rates, the rate of house price increase, and so on. You’d hope that someone who can save £200 now should be able to save a bit more than that in future.

In practice, many first-time buyers aren’t individuals, but couples; and it’s in the nature of averages that a fair few people be buying with smaller deposits. It would be untrue to say that Osborne’s scheme won’t be useful to anyone, because it clearly will. 

But the people it'll be useful to are mostly those who are already sat on a big pile of money with which to buy a house, and just need a little bit of help to get them over the top. If an individual first-time-buyer relies purely on the government backed ISA, then they will never, ever reach their savings target. Despite what the government has implied, saving £250 a month simply isn’t enough. Either house prices have to come down, or ISA interest rates have to go up, or they need to find a hell of a lot more than £200 a month.

Oh, and this is assuming that pumping more money into the housing market without significantly increasingly supply – as this government has repeatedly done – won't push up house prices yet further. Which it almost certainly will.

If you're a first time buyer, don't let Osborne fool you: he hates your guts.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.

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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.