Coffee House

Help to Buy mortgage subsidies show how little politicians learnt from the bubble years

11 November 2013

9:46 AM

11 November 2013

9:46 AM

Gordon Brown used to joke that there are only two types of Chancellors: ‘those who fail and those who get out in time.’ Inside this joke lay his strategy: he was stoking a debt-fuelled bubble that was going to burst, but he hoped it would do so after the election or on someone else’s watch. It’s the textbook definition of putting party over country. I’m afraid that we can see its reflection in Help to Buy.

David Cameron’s article in the Sun today shows this politicking is back. Look, he said, this policy shows I’m on the side of aspirational voters. If you want to get on in life, the Tories are on your side – they’ll kit you out with a sub-prime housing loan. After all, what could possibly go wrong?

As James says, this strategy may pay political dividends for the Conservatives. But it is a piece of economic madness. In his piece today, Cameron says:-

Unbelievably, there are people who actually oppose Help to Buy and don’t want people like Kayleigh and Chris [two customers of his sub-prime debt] to get on. I’ll let you guess who they are. Yes, the same old Labour Party. The party that oversaw the biggest boom and the biggest bust.

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It is all too believable that people oppose Help to Buy – and it’s not just Labour. Concern has been expressed by any sane economic forecaster old enough to remember George W Bush’s sub-prime disaster or Brown’s debt bubble. They are worried because Cameron is borrowing from the Brown play book: place your faith in debt, debt and debt again. Here are a few of the ‘unbelievable’ opponents of Help to Buy:-

·  The IMF has warned that it will just jack up house prices even further, providing a subsidy to housing when “”housing market is already recovering quite well”.

·  The Institute of Directors’ chief economist has this to say: ““The world must have gone mad for us to now be discussing endless taxpayer guarantees for mortgages. Instead of trying to pump-up prices, the Government should focus on relaxing planning laws and reducing Local Authority charges on developers to make it easier to build more homes.“

·  Société Générale’s head global strategist, Albert Edwards, puts it even more strongly:

‘Why are houses too expensive in the UK? Too much debt. So what is George Osborne’s solution for first-time buyers unable to afford housing? Why, arrange for a government-guaranteed scheme to burden our young people with even more debt! Why don’t we call this policy by the name it really is, namely the indentured servitude of our young people. I believe it truly is a moronic policy that stands head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business.’

·  And Fathom Consulting’s Andrew Bridgen is the most scathing of all:

‘Had we been asked to design a policy that would guarantee maximum damage to the UK’s long-term growth prospects and its fragile credit rating, this would be it.’

Ed Balls will never criticise any tactic that relies on debt, whether making it cheaper (QE) or increasing the national debt by £3,200 per second as Osborne is doing now. The Chancellor will be calculating – as Brown calculated – that the danger of a bubble bursting will lie on the safer side of the election. He may well be right, and if all you care about is the narrow self-interest of the Conservative Party then this may be a good idea. But as the Chancellor pumps the economy full of debt again, he should not expect the applause from those of us who lambasted Gordon Brown for precisely the same tactic.


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Show comments
  • CaptainDallas

    One of the better articles about all this I have read.

    The whole thing is complete insanity – and the MSM are allowing Osborne to get away with it. A bubble, mostly in London/SE being presented as some kind of economic recovery, when it’s just more debt.

    What’s preventing young people getting on the property ladder is not the acquisition of larger and larger mortgages, but unaffordable house prices. We need a proper correction in house values, more in line with wages. Starting with an interest rate increase – the current rate is there just to inflate the bubble further.

    As a declaration of my own interest here – I have a reasonably sized house in the SE with a mortgage, so I would be one of those that, in the world of the Daily Mail, should be delighted by this lunacy. But I’m not, and I fear for the future of this country and the next generation.

  • http://www.ipinglobal.com/ IPIN Global

    Help to Buy not only makes little sense in the first place, it also has significant potential to make matters worse for those that it was “designed” to help.

    In what world does making it easier to borrow, coupled with additional lending to those that cannot afford to repay make any sense? Interest rates cannot be held down forever – something has to give at some point.

    The fact the government has handed the monitoring of the scheme to a department of the Bank of England is also a joke – it took the BoE until 2012 to realise 100% mortgages were not a good idea – more on that here: http://www.ipinglobal.com/ipin-live/407095/help-to-buy-the-bank-of-england-and-the-madness-of-chancellor-george

  • Denis_Cooper

    Well, there are some details here:

    http://www.conservativehome.com/thetorydiary/2013/11/boon-or-bubble-what-do-the-numbers-tell-us-about-help-to-buy.html

    and the author’s fairly mild criticisms are summarised thus:

    “A quarter of the applicants aren’t first time buyers. More than a quarter are in the parts of the country most at risk of a housing bubble. Both statistics represent a large amount of money going to places and applicants it ought not to.”

  • the viceroy’s gin

    The Camerroons are illegitimately keeping interest rates low, so as to facilitate their massive deficit spending and massive new piles of fresh debt, and they’re shoving bales of fresh QE cash to their bankster friends, to pacify them and send them off to the casino to play, in addition to floating government’s fresh debt piles.

    This all helps the banksters, and helps the Cameroons float their massive levels of spending, by keeping low the borrowing rates, but it has no real political cachet, and is in fact damaging savers and pensioners and all investors save the bankster-casino types.

    So, the Camerluvvies have decided to buy some political cachet with a socialist house buying scheme. Voila. Help to Buy. It’s a political talking point, and the Camerluvvies are in deep electoral trouble, and are 18 months distant from a certain electoral beatdown, and are desperate for a political talking point.

    Classic socialism. Using socialism to cover up socialism. Classic.

    • 2trueblue

      So that is why interest rates are low worldwide????? Who would have thunk it.

      • the viceroy’s gin

        Pretty much across the West, yes. Central banks hold rates down and print cash.

        Try to keep up.

        • 2trueblue

          All Camerons fault, change your pills.

          • the viceroy’s gin

            No, only the part of it that he controls is his fault.

            Try to keep up.

  • Liberty

    Agreed, terrible economics. But the Tories will lose the election if there is a housing crash before the election. But even so, it is wrong because it would have corrected itself if they limited housing debt steadily from the outset because the housing shortage is such that people would have bought steadily as prices fell. If they had also freed up the market more properties would be available a year or so before the GE.

    • itdoesntaddup

      Did John Major lose the election on the back of the housing crash and widespread repossessions that preceded the 1992 election?

      It doesn’t follow at all.

      On the other hand, governments that promoted property bubbles are thrown out at the next election more often than not.

  • AamirK

    The Bank of England has been mandated to look at this each year and, if it concludes that it is inflating house prices the scheme will stop. The only bubble that I can see here is the bubble of rhetoric inflated by all the hot air being spouted about the scheme in the media.

    • HookesLaw

      People have to have something to mouth off over. Its sad to see Mr Nelson playing Labour’s game – but for the press at the moment its any excuse to attack the govt. It is desperate to avoid the sort of regulation it insists every other body should be subject to.

    • itdoesntaddup

      Leaving it a year is far too long. It should be subject to continuous review as part of the MPC’s monthly deliberations.

  • Terence Hale

    Hi,
    Help to Buy mortgage subsidies show how little politicians learnt from the bubble years. As a saver or investor when interest rates are approaching zero, what do you do? Buy property. When many people do this all at the same time you get a bubble and when politicians recognize this and do something you get a pin which burst the bubble.

    • HookesLaw

      The scheme is not available to second homes.

      • the viceroy’s gin

        …yet.

        Give you Camerluvvies time. That’s where you’re going, same as last time. You’re socialists. It’s what you do.

      • itdoesntaddup

        Many years ago my grandfather wanted a loan to help him buy a car, but at the time there were restrictions that meant such loans were not available. However, the bank advised they could grant him a loan to pay for the redecoration of his house that he had been saving up for, allowing him to pay cash for the car.

        Remortgaging to 95% will free up funds that can provide a deposit on a BTL or second home purchase. Of course, such a purchase would have to be after the HtB one – but I bet they don’t check for that. Besides, how about simply moving to a better house rather than buying a spare one? It’s an increase in property exposure, and could even take you into the London tiger market.

  • HookesLaw

    One thing we won’t get in The Spectator is sane and balanced reporting.

    People buying houses by the time honoured process of a mortgage (rates 5% and including a fee which the banks pay for being part of the scheme) is ‘pumping the economy full of debt’ to Mr Nelson.
    Is he proposing free housing for these people? How else does he propose people live? By renting property? And what exactly is the difference beween rental payments and mortgage payments which will wreck the economy?
    Are we getting 100% mortgages? Are we getting 120% morgtages? RBS) and Halifax said they had received a total of 2,384 applications – is this going to wreck the economy? Nationwide have not even decided if they will be part of the scheme.

    Are banks lending to ‘sub prime’ borrowers? Are banks themselves lending long and borrowing short on the wholesale market? Where are the non standard lending practices that blew up in Browns face?
    Figures from Halifax suggest house prices are well below (thats WELL BELOW) what they were in 2007. Outside London and the Souih East reports show only modest roses in house prices and still falls in some areas

    http://www.theguardian.com/money/blog/2013/oct/14/help-buy-no-housing-bubble-bank-deputy

    http://www.thesurveycentre.co.uk/There-wont-be-help-to-buy-bubble#.UoDTaic3D_o

    Well Mr Nelson?
    But we know that Mr Nelson is on his hobby horse and only too pleased to encourage the anti everything and everybody ranters he needs to keep the hits going. With Mr Nelson in this hysteric mood its no wonder his favoured commentators react likewise.

  • FrankS

    Cameron seems unaware – as did Brown and indeed every economic expert of the past couple of decades – of The First Law of Housing economics: In a shortage, house prices rise to absorb the money available to pay for them.
    This has been born out time again since the erstwhile building societies abandoned their traditional pessimism about over-valuations and the debt worthiness of would-be borrowers.

  • AdH2011

    It’s not necessarily a bad policy if applied to the right areas, house prices in the majority of the midlands and further north have been stagnant or falling for several years now (which is exactly what needed to happen). It’s only London and to a less extent, the South East (where property is bought and traded like commodities) that there is a bubble.

    • HookesLaw

      Reports say the initial take up is from outside London.

      • itdoesntaddup

        True: in London most purchases are by foreigners for cash. That’s a separate problem producing its own bubble.

    • itdoesntaddup

      Perhaps it should be restricted to Northern Ireland, where prices have halved since the peak. The whole point is that prices have to fall in real terms measured by disposable income to be affordable. The state should have no business guaranteeing mortgages that prudent banks would not otherwise undertake – it simply puts the taxpayer on the hook for the bailout when prices fall.

  • StateWeShouldBeIn

    “Concern has been expressed by any sane economic forecaster old enough to
    remember George W Bush’s sub-prime disaster or Brown’s debt bubble”

    Leaving aside the fact that you mean Bill Clinton (changes to the Community Reinvestment Act of 1977 he made in 1994), let us consider the magnitude of the concern expressed. Yes, commentators like the fantastic, pathologically perma-bearish Albert Edwards, think it is a complete disaster, but that ignores:

    1. The overall size of the guarantee- the subprime market in the US was a far, far higher proportion of the total market and completely undermined by the creation of synthetic MBS and CDO bonds, which ain’t happening here or anywhere else.

    2. The eligibility criteria- 5% deposits are a far cry from the Ninja loans in the US

    3. The state of the housing market outside the the South East- property transactions in the North East, North West, Yorkshire, East Midlands and West Midlands are are still down on 2008

    I completely agree that *totally unrestricted* Help to Buy would be a massive mistake, but that is not what is happening; there is an argument that it could be regionalised to limit further the risk of unintended consequences (http://www.theblogofreason.com/2013/10/21/buy-scheme-good-idea-regional-2/). But I also agree that Help To Buy should not be considered the only remedy- planning reform, time-limited permission and another look at Section 106 must also be considered, as indeed they are.

    • Denis_Cooper

      I think there is enough detailed information to make it possible for the policy to be localised, not just regionalised.

    • HookesLaw

      Correct.
      It speaks volumes that Mr Nelson talks of Bush and not Clinton’s campaign to give loans to sub prime minorities.
      He quotes the CBI but the chief of the CBI can be found supporting the scheme.

  • black11hawk

    I don’t see that it will get them so many more votes. The number of people using the scheme is large enough to cause a massive economic headache when it all collapses but small enough that it will not matter come election day. Also it is not guaranteed that all those who use it will vote Tory in 2015. Plus these kind of detailed messages about government policies tend to get lost in the ether. When recent data from the electoral commission shows that large numbers of people do not know we are members of the EU, how is it that they will remember ‘Help to Buy’? What they are more likely to remember are the difficult economic times which they will experience due to the bubble bursting and the rise in interest rates a few years down the line.

  • Magnolia

    It’s not a new thing for governments to help people to buy homes.
    I benefited from MIRAS for years.
    Labour abolished it.
    People must have a roof over their heads and in an ideal world the free market would provide them with enough pay and affordability to achieve that.
    Housing booms and busts are perhaps a reflexion of the failure of the broader economy rather than just specific government actions.

    • Holly

      I thought it was the Tories who scrapped MIRAS.
      And handing out taxpayers money for this, knocks the spots off handing out taxpayers money for people to stay at the bottom, unless you have children, then you are better off not contributing.
      Like Labour keep banging on…It is a choice of how you spend the money available…

      • itdoesntaddup

        The Tories started by telegraphing that they were going to abolish double MIRAS – where each party to a mortgage could have relief on the first £30,000 of their share of the debt. That caused a crazy boom in the south east, where prices were already over £30,000 on average – but had little impact in other parts of the country where prices were below £30,000 on average. The actual withdrawal of double relief to new borrowers caused a price crash of 30-40% in nominal prices in the hothouse south east areas, exacerbated by high real and nominal interest rates. The next stage was restriction of relief to an assumed average rate of tax that was below basic rate (because it factored in personal allowance in calculating the average). This, together with continuing high real interest rates, kept price in check through the mid 1990s.

    • Denis_Cooper

      We did benefit from MIRAS, but it was actually the Tory government which started the process of phasing it out.

      • 2trueblue

        It was closed by Brown in 1999/2000.

        • Denis_Cooper

          That was the final step, the Tories had already been phasing it out.

          From February 2000:

          http://www.hmrc.gov.uk/ria/miraswithdrawal.pdf

          “7. Mortgage interest relief has been progressively reduced over recent years. This started in 1988 when restrictions on loans that qualified for relief were introduced and continued through the 1990s when the rate of relief was reduced from the borrower’s marginal rate of tax down to 10 per cent. The Government has decided that now is the right time to complete the phasing out of the relief.”

          • 2trueblue

            Closing it down was closing the door.

          • 2trueblue

            As stated, completely closed down by Brown.

            • Denis_Cooper

              Abolished by Labour as the final step in the process of phasing it out started by the Tories, and no doubt if the Tories had won the 1997 election they would have taken that final step to complete what they had started.

  • Frank Heaven

    It’s refreshing to read such criticism of this policy from a Tory-supporting title.

    The thinking behind Help-to-buy is either plain stupid or brazenly political – it certainly isn’t in line with the wider Tory doctrine of governments staying out of the way and letting the free market do its thing.

  • Tom Tom

    Would have been better to have cut SDLT from 3% and issue a £125,000 credit. That would have most impact on houses outside London

    • Holly

      Would have been better, and probably a heck of a lot cheaper to use taxpayers money to pay off everyone’s mortgage back in 2008/9.
      Then start again from scratch.

      • Denis_Cooper

        Give me some advance warning of when you intend to introduce this new policy to punish the prudent for the benefit of the feckless, and I’ll remortgage my house up to the hilt.

        Total household mortgage debt was something like £850 billion:

        http://www.theguardian.com/news/datablog/2013/may/13/mortgages-property-debt-uk-trends

        so how much of that would you have contributed as a taxpayer?

        • the viceroy’s gin

          Hey, just borrow it off the Chicoms, same as always.

        • itdoesntaddup

          Total mortgage debt grew from £417bn when Blair won in 1997 to £1,237bn when Brown was deposed in 2010, and has since grown to a record £1,270bn at end September this year according to Bank of England data.

          • Denis_Cooper

            From the tenor of the Guardian article it’s possible that the author is referring just to owner-occupiers.

            It says:

            “The UK might have a reputation as a nation of mortgage slaves – interest rates are often reported as if that’s the case – but that’s not the reality. The ONS figures reveal 9.2 million UK households had property debt in 2008/10 – that’s 37.3% of the total.

            This figure was actually a slight decrease from the 9.4 million households who had property debt two years earlier. Those households might be making those repayments for a while yet, though: between them, they have a total of £847,911,798,000 to pay off on their properties (median debt £75,000).”

      • the viceroy’s gin

        That’s sort of what occurred, when you consider how the banks were bailed out, and continue to be bailed out.

    • itdoesntaddup

      Cuts to SDLT favour buyers, not sellers. So yes, it would have had an impact – increase the prices paid and received at the expense of the lower tax.

  • 2trueblue

    The real problem at the first entry stage prices is the ‘Buy to Let’ market, and the lack of house building. It is not rocket science. We need more houses.

    • Tom Tom

      Houses are easy to build but you want more LAND. Where that land is it might be very expensive so if the price of the house is comprised 100% land cost the builder makes zero profit and builds nothing. Maybe you should manufacture land in areas where the property market is overheating……..Lebensraum

      • Denis_Cooper

        In this town we had a massive pit where all sorts of things had been dumped over many decades, including various chemical wastes but also allegedly a dead circus elephant. The builder has spent years on the reclamation of the site and has now got on to actually building houses on it. Driving past recently it occurred to me that the profits he expects to make on selling the houses must be pretty large to cover the costs of cleaning up the site, and maybe it would be economic to “manufacture land” in the way the Dutch have done.

      • 2trueblue

        They don’t make land anymore! There are land banks that developers are holding on to and there are brown field sites that should be developed. There are also unoccupied derelict houses that should be brought back into use.

      • 2trueblue

        Developers have land banks and also brown field sites on their books that they are less keen to use as the profit may not be as much as they would like.

  • alabenn

    This new initiative is a minor dent in the housing market, Cameron is carrying on the destruction of the UK started by Labour, mass immigration is causing house prices to rise, buy to let is driving up the price, it is a simple case of supply and demand, stop all immigration and you will see a big correction.
    This little measure which Fraser uses almost every week is his deflection from addressing the real causes, after all you are a racist if you prefer the old true adage, birds of a feather flock together.

  • Mr Creosote

    This is small beer and time-limited, so no problem.
    The Institute of Directors have hit the nail on the head – less planning and less land taxes through S106 and Community Infrastructure Levy, then house building will increase and prices will stabilise and eventually fall.

    • vi_sa

      The problem is that people (media, local policitians, residents) say they want more house building but will fight tooth and nail against any development in their own area. Don’t blame the government for not trying to make itself more unpopular.

    • HookesLaw

      The headline says ‘subsidy’. Where is the subsidy in this arrangement? There is a mortgage guarantee – the lender pays a fee.
      There is an equity loan – thats ‘loan’ not subsidy. A subsidy is a non returnable gift.

      • itdoesntaddup

        The subsidy is that the guarantee is hopelessly underpriced. That’s why banks aren’t offering the deal without the subsidy of an underpriced third party (government) guarantee.

    • itdoesntaddup

      House building is not really that important in creating lower house prices – unless done to wasteful excess, as in Ireland or Spain, where tumbleweed estates finally blew the top off their bubbles long after they created a surplus.

      • Mr Creosote

        Clearly we don’t want to repeat the Irish and Spanish model – but in both cases there’s no denying that prices have dropped!!
        It’s all a question of balance and knowing when to pull the plug on schemes like Help to Buy and for that we need astute politicians in charge.
        The basic problem is that the population of the country is projected to grow by 10 million in the next 10-15 years, the lifetime of most emerging local plans, but we’re currently building a little over 100,000 units per annum and the emerging plans contain nowhere near enough housing supply.
        You don’t have to be a mathematical genius to work out that this is a severe imbalance.

  • In2minds

    David Cameron and “aspirational voters”, what if these people want fewer immigrants and no windfarms? Cameron tends to ignore rather than pay attention.

    • dalai guevara

      What if higher house prices lead to fewer immigrants as only those with the dosh will be attracted to come here in the first place? A vision of lifelong debt servitude would attract workers from Bangladesh and Nigeria? Think again. Now prepare for more Russian salad and Dim Sum on the menus of indigenous restaurants aspiring to a Michelin star based on the philosophy of “terroir”.

      • the viceroy’s gin

        …your posts are a whirlwind of stupid. A stupid cyclone.

        Surely they must show up on stupid weather radar.

        • dalai guevara

          You again display your ignorance with regards to how good food works. Tim Raue, the two Michelin starred artist who fed Obama when on visit blends Asian and German cookery. Right next to Checkpoint Charlie, tovarishch. Get your name down early, you might learn a thing or two.

          • the viceroy’s gin

            …and the stupid weather services better issue an advisory, after that post.

  • RavenRandom

    Fraser,
    You are fighting the last war. So are the same economists you quote who so spectacularly lost the last war. I always find it odd that people give them such credence when they failed completely to predict the worst economic event in 80 years. Ironically the Chancellor is not fighting the last war, he might not be right, but the amount of money involved is relatively small. When it all goes wrong again (as it will), it will be for a different unforeseen reason. It is also unlikely to happen any time soon, and to the same devastating extent.
    The Chancellor at this stage is taking a reasonable and small risk.

    • Alex

      It isn’t just about the amount of money; it’s about the market signals. The state-subsidised Ninja loans in the U.S. before 2008 were not the bulk of the housing market, but they did help inflate the bubble that caused the 2008 crash. In both cases the government has effectively said to the housing market “We will guarantee that house prices are going to rise”. That a textbook example of how you create bubbles.

      • RavenRandom

        Blimey a text book example you say. Odd then that everybody missed the worst economic event of the last 80 years when it was plain to see in a text book. Complex adaptive systems, particularly when starved of demand for the five years since 2008 are not predictable. Economics text books are the equivalent of early 16th century maps of North America, crude and mostly inaccurate.

      • monty61

        Too true. This is precisely the point – all about market signals.

        Also, sub-prime buyers are in general not financially literate. Suckering people into taking these loans when rates are about to climb is the worst form of cynicism.

      • vi_sa

        Do you know the details of the scheme? It is repayment mortgages only and the guarantee stops after 7 years. And banks are required to put ALL mortgages in a particular segment (5% deposit, 10% deposit, etc.) through the scheme so they can’t pick and choose the better borrowers. This is in no way comparable to Ninja loans in the US.

        • HookesLaw

          The answer to your question is assuredly ‘No’. And of course the lending is not ‘sub prime’

    • Gareth

      The risk of a housing bubble is neither small, nor would its effects be insignificant. The gains, on the other hand, are predominantly political. It’s a policy which serve no one but the Chancellor.

      • RavenRandom

        Perhaps you are right. However, I don’t see a bubble in Leeds, Nottingham, Glasgow, Manchester… and so on. We are a long long way from bubble conditions. If the policy helps prevent the economy wrecking Labour party getting in it’ll be cheap at twice the price.

        • Denis_Cooper

          But this policy is not restricted to Leeds, Nottingham etc; if it was then there would be less concern. In parts of the Thames Valley we now have estate agents sufficiently confident about the strength of the market that they are setting the would-be buyers of a house to compete with each other, in some cases through sealed bids.

          • RavenRandom

            So what? An economy as large as the UK’s cannot be micromanaged. Some parts will always be doing better than others.

            • Denis_Cooper

              In this case it could very easily be “micromanaged”, by restricting the help with mortgages to houses in areas of the country where the policy might do more good than harm.

              • RavenRandom

                Ah you mean depriving one part of the country to advantage another. Not generally seen as particularly democratic.

                • HookesLaw

                  Correct – these are the people who are always moaning about the ‘Westminster bubble’ as well.

                • Denis_Cooper

                  No, I mean concentrating the government assistance where it would do most good and least harm, and there is nothing about that principle which is not democratic.

                • RavenRandom

                  So fiddling with the housing market is ok sometimes? And it is a little undemocratic, granting rights to some and not to others… how would you describe it?

                • the viceroy’s gin

                  Apparently, it’s ok all the time for you, and for everybody.

                • RavenRandom

                  How do you arrive at that conclusion?

                • the viceroy’s gin

                  You’re scorning what you call “micromanagment”, and celebrating this macromanagement for being “democratic” or something. It’s hard to fish out what you’re on about, other than it’s some brand of socialism or another.

                • RavenRandom

                  I’m saying the Chancellor’s policy is a small scale acceptable calculated risk. I’m saying there can be no certainty in economics. I’m saying that to apply it (the Chancellor’s policy) in say Yorkshire and not Berkshire would be mildly anti-democratic. I struggle to see the socialism you imply. Hope that helps.

                • the viceroy’s gin

                  Struggle away, lad. You do appear to be the struggling sort.

                  So you favor this socialist policy, even as directionally it’s the root cause of what just popped a few years ago?

                  And you want your socialist policy applied “democratically”?

                  Just to get that all settled, then.

                • RavenRandom

                  I’m glad you’re clear.

                • the viceroy’s gin

                  No struggle here, lad. Direct observation isn’t a struggle. You just observe, and identify.

                • RavenRandom

                  I’m glad you’ve taken the courses in condescension and patronisation. When you grow up we can put you in the class where we teach reasoned argument. Have a nice day little troll.

                • the viceroy’s gin

                  No “growing up” required, lad, other than for you charlatans.

                  Again, direct observation is a simple (if harsh) method. Some have great difficulty with its output. In particular would be those who are uncomfortable with that output and wish to spin it.

                  But in this case, socialism is a quite clear part of your preferred policy prescription. You’re also quite clear that your policy prescription is to be executed “democratically”.

                  We know all this, by direct observation. No need to guess.

                • RavenRandom

                  What’s that little troll, a willing misinterpretation of ill read posts? No wonder you’re in the class with the hard of thinking.
                  Nurse will bring you some milk later.

                • the viceroy’s gin

                  I like lighting up whiny charlatans, I must admit. 😉

                • RavenRandom

                  You do it so badly. And with such ill grace. Pathetic little troll.

                • the viceroy’s gin

                  No, and again, applying direct observation methods, it’s working quite well. The charlatan in question is lit up quite colorfully. 😉

                • RavenRandom

                  Your post barely makes sense, but then that’s not your purpose is it? In fact I suspect that purpose lies beyond you. And all you are made of is spit and bile.

                • the viceroy’s gin

                  Well, as long as you whiny charlatans are lit up, let’s call it a job done. 😉

                • RavenRandom

                  Clearly it’s not done, clearly you’re getting exasperated. All you are capable of it seems from your posts is the intellectual equivalent of flinging poo. A job done indeed. Makes you kind of worthless.

                • the viceroy’s gin

                  Well, and again by direct observation of your posts and myself, it appears it is a job well done. The whiny charlatan is lit a bit brighter now. 😉

                • RavenRandom

                  What’s the matter, mind in a block is it, stuck on the same words of insult like a child in a playground. Yes you appear to be a chattering monkey made of nothing but spite and hate, incapable of original thought and sad and bitter enough to insult all with whom you disagree.

                • the viceroy’s gin

                  No, just you whiny charlatans, lad. 😉

                • RavenRandom

                  Brain stuck is it? Must happen to you a lot.

                • the viceroy’s gin

                  Well, we must keep the whiny charlatan lamp lit, afterall. 😉

                • RavenRandom

                  Yes we must and I’m pleased that your simian brain is happy with flinging poo. One day you really must try a little higher thought. But then, how could you continue to be so pitiful and pathetic.

                • the viceroy’s gin

                  …and this particular lamp requires little fuel, obviously. 😉

                • RavenRandom

                  You really are rather sad and odd. I suspect at some level you know that. I suspect people have told you that before. You appear to have no positive worth or contribution whatsoever. A sad little automaton flinging out the same phrases of unthinking insult.
                  You’re a worthless little man aren’t you?

                • the viceroy’s gin

                  …it’s sort of an oily little lamp though, isn’t it? 😉

                • RavenRandom

                  Sorry worthless little man what was that?

                • the viceroy’s gin

                  …well, in 18 months time, the oily little lamp is likely going to be snuffed out. 😉

                • RavenRandom

                  What’s that worthless? I can’t quite hear you, you’re gumming your words too much. Enunciate.

                • the viceroy’s gin

                  …and that snuffing will put the lie to the charlatan’s charlatanism. 😉

                • RavenRandom

                  What’s that worthless little man? Something useful ah no. Another weak effort. Keep it up. Would you like a thesaurus? (And no, it’s not a dinosaur.)

                • the viceroy’s gin

                  …just 18 more months. 😉

                • RavenRandom

                  Sorry worthless little man what happens in 18 months?

                • the viceroy’s gin

                  …oh you know, little lamp. 😉

                • RavenRandom

                  Oh dear you don’t even know what you’re talking about now, do you worthless little man? Would you like me to use my brain for you as yours clearly hurts.
                  But give me a mo… I must find some charlatan oil, for my charlatan lamp. I wonder if they have a charlatan lamp polishing cloth at B&Q. Hmm.

                • the viceroy’s gin

                  …good, I was worried your light was fading. 😉

                • RavenRandom

                  What’s that worthless little man, what have you got? Oh I see, nothing; well that figures. Blimey my charlatan light is so simple, befitting as it does its point of origin.

                • the viceroy’s gin

                  …we need it lit up bright, so it can be harshly snuffed 18 months from now. 😉

                • RavenRandom

                  Goodness well done worthless little man, you’ve rearranged the words an ickle bit from earlier posts. I’ll get the other children to come and have a look by the light of the charlatan lamp.

                • the viceroy’s gin

                  …well yes, you do know a thing or 2 about charlatan lamps. 😉

                • RavenRandom

                  Worthless little man every thing I know about the absurd contrivance of charlatan lamps I know from you.

                • the viceroy’s gin

                  …no, lad, you arrived at your whiny charlatanism all by yourself.

                  See above.

                • RavenRandom

                  You are funny, even if you’re such an intellectually limited worthless little man. Playing with your limited vocabulary, it’s so cute.
                  Now I have grown up things to attend to. I apologise to other folk, and hope that at the very least they’ve found our contretemps mildly entertaining.
                  Worthless little man, rather like a moronic little computer program, I imagine you’re about to repeat yourself. Here I’ll give you the component words lamp, charlatan, lad, whiny. (Yawn).
                  Now you sit back in your high chair, continue your trolling elsewhere and if you’re lucky I’ll be back tomorrow to continue to educate you in the fine art of internet insult.

                • the viceroy’s gin

                  Darn. The charlatan light’s going out. 😉

                • Kennybhoy

                  “Sorry worthless little man what happens in 18 months?”

                  If he has his way Labour will be back in power…

                • RavenRandom

                  Yes apparently. Odd isn’t it?

                • Kennybhoy

                  Anyone who disagrees with him is a socialist in his book! :-)

                • RavenRandom

                  Ah thanks. I wasn’t aware of that.

                • Denis_Cooper

                  I would describe it as sensibly targeting state assistance rather than using a scattergun approach. Nothing particularly unusual about that, and not even a little undemocratic.

                • RavenRandom

                  Fair enough. I just feel that if rights are granted at one end of the country and not the other, it’s not quite fair.

        • Gareth

          I find it ironic that, having striven so hard to establish this “economy wrecking Labour” narrative, this government is prepared to risk that so-called ‘credibility’ by such an irresponsible policy. I don’t think it will yield the political dividend that Osborne believes it will. It certainly won’t help economically.

          • RavenRandom

            Fair enough. I doubt that it will do any short term damage. “It certainly won’t help economically,” you can’t know that, to know that you would have to “know” the effect of every single moving part of the UK and possibly the world economy. For nothing acts in isolation.

            • Gareth

              “For nothing acts in isolation.”

              That’s exactly the reason why Osborne’s austerity has so damaging. And exactly why a housing bubble now has the potential to cause such damage, not just in the long-term.

              And, no, you don’t have to “know” every single part of the UK economy; the forcesof supply and demand operate at an aggregate level. It’s not just basic economics, it’s VERY basic economics.

              • RavenRandom

                No it’s not basic economics. It displays a lack of knowledge on your part. I say again you are “certain” you are 100% sure you are correct? Aggregate demand, trade balances, interest rates, money supply, labour markets, capital flows, currencies, have no effect. Of this you are certain?

                • Gareth

                  Do enlighten me as to why trade balances would be the dominant factor in controlling house prices.

                • RavenRandom

                  Dominant is your word, I mentioned no such thing. I merely said it could be a factor among many others. You are the one expressing certainty. So going back to the question you’ve failed to answer, are you still certain?

                • Gareth

                  Yes, I chose the word very carefully. You listed a number of factors, each of which may exert some effect on house prices. But the factor which exerts the largest effect will generally be the one which determines which direction prices move. Therefore trade balance is much more relevant in an analysis of something like exchange rates than it is to house prices, as houses are seldom exported.

                  So unless you can point me to a well-founded model demonstrating that trade balance is likely to be especially relevant, I’ll stick with the supply and demand model which has served economics since the 18th century. And with which I am very well acquainted, thank you very much.

                • RavenRandom

                  Yes because economists were very successful in predicting the worst economic crisis in the last 80 years. Are you still “certain” you are correct? Or does your scrupulous avoidance of giving an answer betray a scintilla of self-doubt? It should economics is not settled science.

                • Gareth

                  And what level of certainty would you require before you opposed the policy?

          • Holly

            This ‘irresponsible’ policy is not available to those who will not be able to pay their mortgage when interest rates rise.
            And unlike the absolutely irresponsible, scorched earth policies of the Labour government.

            There is a world of difference between Osborne and Balls…
            Osborne has people ‘looking out’ for any trouble, whereas Balls was far too busy looking inward at getting rid of Blair….
            for Bozo…Who just so happened to be Chancellor, who was also far too busy looking inwards at getting rid of Blair…or anyone else who he thought would stand in his way for the top job, that was way beyond his ability.

            • HookesLaw

              Correct

            • Gareth

              The irresponsibility is nothing to do with people not being able to cover their mortgages, it’s in letting house prices rise still further.

              As for your second point, I find it quite revealing how often supporters of the Tories make the point “at least he isn’t Brown/Blair/Balls/Twigg/Burnham…” They seem to find this easier than arguing in support of Coalition policies.

            • Kennybhoy

              “If the policy helps prevent the economy wrecking Labour party getting in it’ll be cheap at twice the price.”

              Spot on.

          • 2trueblue

            Oh what a good job that Balls and the BBC are there to help, each day there is a rent a mouth declaring on behalf of Liebore that it is all wrong. Balls, Brown, and Blair did such a good job destroying this country it can not be turned on a sixpence. If they get in again we are truely doomed.

            • Gareth

              Yes, it must be inconvenient for the BBC to keep on asking “what sound evidence is there for your policy?” Very inconvenient.

              • 2trueblue

                Ah but they put such effort into it.

                • Gareth

                  They’ve got to justify the licence fee!

    • Makroon

      Very well said. Fraser Nelson would be far better off trying to understand the basics than reading “puff pieces”.
      Here’s a suggestion – read David Smith’s article on the true state of private debt in yesterday’s Sunday Times, you might learn something.

    • itdoesntaddup

      I don’t call £130bn of HtB lending “relatively small”. It’s more than 10% of all outstanding mortgages, or 150% of what was lent in 2012 to buy houses.

  • Alex

    Spot on, Fraser.
    Because any scheme that gives x billion pounds of upside now but 100x billion of economic damage after the next election will always be approved of by our political class, of whatever party.
    A perfect example of why we should have the less meddlesome small-government approach that Cameron promised us before the last election, before cynically reneging on the manifesto commitment.

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