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US Congress passes fiscal cliff deal

Obama praises the decision.

US Congress has passed a deal to stave off the fiscal cliff, which will raise taxes for the wealthiest Americans, and delay spending cuts.

Barack Obama said the deal was "just one step in the broader effort to strengthen the economy".

Here's the Telegraph:

The bill's passage on a 257-167 vote in the House of Representatives sealed a hard-won political triumph for the president less than two months after he secured re-election while calling for higher taxes on the wealthy.

Moments later, Mr Obama strode into the White House briefing room and said: "Thanks to the votes of Republicans and Democrats in Congress I will sign a law that raises taxes on the wealthiest 2pc of Americans while preventing tax hikes that could have sent the economy back into recession."

There had been huge pressure on US Congress to pass the vote before markets re-opened on Wednesday. Economists warned that the automatic tax rises and spending cuts that would occur in the absence of a deal could send the US back into recession.

Asian markets rose in relief at the news. Hong Kong's Hang Seng index was up 2.1 per cent on Wednesday morning.

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Who benefits, and who loses out, from David Cameron’s housing plan?

The prime minister’s plan to scrap the affordable rental homes requirement, explained.

What has Cameron actually announced about housing today?

In David Cameron’s closing speech to the Conservative Party conference in Manchester today, he announced plans to change the requirements to build affordable rented homes in new developments so developers can build "starter homes" instead of homes to be leased at affordable or social rents. 

The policy is geared toward ensuring that his party meets its campaign pledge of building 200,000 new homes by the close of this parliament, by taking the emphasis off renting (affordable housing requirements usually refer to rented, not owned houses) and onto owning. It should, claims Cameron, take us from “Generation Rent” to “Generation Buy".

What sort of houses will they build instead?

"Starter homes" are homes sold at 80 per cent of market rates to those under 40. These an be sold for a maximum of £450,000 in London, and £250,000 everywhere else. 

That sounds quite good!  

There is a chance that Cameron is right – that removing these obstacles will make developers move through the planning process more quickly, and will help boost the number or houses built. 

But (and this is a big but): most predictions so far are that this won’t happen, and if it does, it’ll only help a very specific demographic. As my colleague Stephen Bush has already pointed out, the announcement is good politics, but bad policy. It makes it look like Cameron is doing something about the housing crisis, while scoring points with big property developers along the way.

My colleague Jonn Elledge, meanwhile, notes that this system could actually slow down housebuilding, as the houses will take longer to sell than they would to let. Moreover, if housebuilding is more profitable in the long run, this will push up land – and therefore house – prices. 

Who'll benefit?

Tory voters and their children, in a nutshell. The starter homes will mostly be one or two bedrooms, and will be aimed at working couples.

Shelter calculated earlier this year that a couple would need a combined income of £76,957 in London and £50,266 in the rest of the UK to afford one of these homes, which makes it clear that they're aimed at well-off professionals. If you're in a stable relationship, earn £40,000 or £26,000 a year each and are looking to get on the housing ladder, you're in luck. 

Who won't it help? 

Everyone else. Under this policy, the Conservatives are effectively redefining “affordable”, just as they co-opted the phrase “living wage” earlier this year. By most peoples' definitions, a housing option only available to those with access to £80,000 in earnings a year is not affordable. The situation outside London is a little better. 

That’s not to say the affordable housing requirements were perfect before – these, too, were defined by some councils as 80 per cent of market rents, which in many places equates to anything but affordable. Yet removing the requirement for affordable rentals leaves nothing for those unable to afford to buy, leaving the squeezed lower-middle (and most young people) increasingly in the lurch.

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.