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Budget 2013: New ‘Help to Buy’ plan is a boost for Eric Pickles

20 March 2013

One of the big measures in today’s Budget was the Help to Buy scheme. It answers two demands: the first for the Tories to continue to support home ownership as what George Osborne called ‘the most human of aspirations’, and the second for the government to do everything it can to get construction moving again.

But there’s an interesting political point here. In the summer, George Osborne frightened the living daylights out of Eric Pickles and his team at the Communities and Local Government department by putting it about that he wanted further relaxations on planning regulations to encourage economic growth through construction. Pickles & Co fought back pretty hard, arguing that the problem was no longer the planning system as the Localism Act and National Planning Policy Framework had dealt with that, but the availability of credit. But then Nick Boles, who the Pickles camp widely regarded as one of ‘Osborne’s spies’, was installed in the department, and started talking about his plans to change the system still more.


The Treasury says Help to Buy will benefit around 190,000 households a year with an equity loan worth up to 20 per cent of the value of a newbuild property and a guarantee for lenders on mortgages of up to 95 per cent. George Osborne called it a ‘dramatic intervention to get our housing market moving’. And it’s also a boost for Pickles as it focuses on credit. But the Budget document itself reminds us that there is still more to come on planning rules too: on point 1.115, it says the Government will ‘publish significantly reduced planning guidance by this summer, in line with Lord Matthew Taylor’s recommendations, providing much-needed simplicity and clarity’.

P.S. I asked Nick Boles about the tension between credit and planning rules in an interview that I did for another publication recently. His answer was interesting, but perhaps not entirely reassuring for those who hope that everything will be running smoothly on the construction front by 2015:

‘We need to be clear about something: the planning system has not delivered for about 30 or 40 years. Our reform is crucial and I am confident that, with simplicity, clarity and incentives, it will work. The difficulty in the short term is that we can’t tell whether it’s working until market and credit conditions become more normal.’

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  • Mr Arthur Cook

    Might it be possible to ease the housing shortage by using pairs of Eric’s Y-fronts as giant tents each of which might accommodate several families and their pets?

  • Mr Creosote

    I wonder if the Help to Buy scheme will apply to Sir Simon “three homes” Jenkins (Chairman of National Trust and professional Nimby), if he decides to buy yet another one?

  • Alex

    I see the government is saying that this will not cause a bubble. IMHO that isn’t the biggest problem with it.
    If you want to help people buy houses, you can
    a) increase supply, thereby reducing prices, and/or
    b) subsidise buyers through borrowing.
    I hope that most Conservative MP’s and readers of the Spectator would agree that the first method is the best. However, the measure in the budget not only is method 2, but also prevents method 1.
    Because if the government is backing 95% mortgages then it CANNOT ALLOW PRICES TO FALL.
    So this budget has just told us that the government will not allow house prices to fall. Therefore only method 2 applies. And method 2 is economic insanity.

    • Dogsnob

      There are two ways of increasing supply: 1. Build more houses; 2. Reduce the number of people requiring a house.
      The latter is favourite. Early start tomorrow morning.

    • itdoesntaddup

      c) You can remove the house price props such as excessive Housing Landlord Benefit, subsidised mortgages with excessive forbearance, the CGT ratchet that prevents landlords from selling to would-be owner occupiers, the absurd greenergy building standards that add needlessly to newbuild prices, the Section 106 penalties that do likewise…

      Adding to housing supply is not going to bring down prices, unless you over-build on the same scale as the Spanish and Irish – which would be extraordinarily wasteful, as it would entail large numbers of vacant properties that would end up being demolished.

  • Daniel Maris

    Pickles is squatting on the baby of recovery like some giant prize pig – squeezing the life out of it. He has spread economic insecurity throughout the public sector (and the private sector elements that depend upon the public sector). As a result he, after Osborne, has been the main cause of the collapse in consumer confidence that has done so much to stifle the recovery.

  • morbidfascination

    Underwriting mortgages in this way is utter madness. If, as is likely, it creates a bubble, all it will mean is that those buyers he is supposedly trying to help will have to borrow more in the first place. And, if that bubble pops, the taxpayer is on the hook for stupid amounts of money.
    If we can really afford to underwrite borrowing, how about underwriting loans to small businesses instead of tinkering with National Insurance? I know from direct experience of a relative and from speaking to someone with banking connections that banks are very little interested in small businesses. Most of the funding-for-lending to date has simply gone into mortgage lending.
    The stupidity of Osborne and Cameron has reached heights to which Brown could only aspire.

  • Dogsnob

    Wait a minute. So, our young people can now ‘aspire’ to trying to qualify for a loan, which will then form a deposit, which will then allow them to have an even bigger loan.

    We are about to enter the era of meta-usury. And you must enjoy it.

  • monty61

    It’s not support for home ownership. It’s a reckless piece of market tinkering that puts the whole housing market at risk. What’s better, jog along much as now, or an almightly wealth-destroying asset crash? The naivete is breathtaking. Apparently Osborne consulted housebuilders and mortgage lenders over this. How about consulting some economists?

  • andagain

    “we can’t tell whether it’s working until market and credit conditions become more normal”

    Seems to me that they are normal. It is going to be like this for the remotely forseeable future. Unless it gets worse.

  • andagain

    If you pump more money into the housing market, don’t you send prices even further out of everyone’s reach?

    • 2trueblue

      Agree with you. The real problem is that at the bottom end of the market the ‘buy to let’ is totally skewing the market. Until this is solved the ‘first timers’ will not be able to get on the ladder. It seems to be a vicious circle but until it is broken the first timers are stuck.

  • Alex

    So let’s see. If the Government succeeds in what it needs to do, which is reduce house prices, it has effectively offered to insure the buyers against the loss in value.

    “Come on everybody, act irresponsibly and if it goes wrong you can bill the taxpayer. ”

    It’s only 2013 and they have already forgotten what caused the 2008 crash.

    • Dogsnob

      Precisely. The chimps who come up with this crap, should be taken out into the yard and publicly flogged. Tickets for that would fetch a great deal.

      Whatever happened to trying to manufacture our way back into the black, as so many other countries do?

  • telemachus

    there’s an immigration crisis not a housing crisis. i keep saying it. send some people home before we start building houses on green belt. follow the money. the political elite in all parties rake it in from housing especially when funded by taxpayers.

    • perdix

      An immigration crisis started by Labour.

      • telemachus

        irrelevenat really. and there has been higher immigration under the latest givernment. it is, after all, just more of the same progressive agenda. Cameron has just said that there will be no restrictions on Indians or Brazilians. that is why there is a housing crisis.

    • telemachus

      the goon has hijaked original tele again

      • Dogsnob

        Problem you’ve got is: how will anyone notice?

  • itdoesntaddup

    Sub prime comes to Britain again, underwritten by the taxpayer. This policy is a mad attempt to reflate the property market, and hope it doesn’t blow up by the election. Far from being a good idea, it is a disaster waiting to happen. Frankly, it’s insane.

    • HookesLaw

      How is it sub prime? Is the government or anyone planning to give loans to people with weakened credit histories?
      Are these mortgages going to be rolled up into special vehicle entities and resold?

      The value of U.S. subprime mortgages was about $1.3 trillion in 2007, About 25% of US subprime mortgages were facing foreclosure at the height of the mess.
      Thats sub prime.

    • Mr Creosote

      This is not in the same league as sub-prime and is totally different in almost every respect. It is also time-limited to coincide with the next election, providing a short-term, kick start boost, timed to allign with the NPPF coming into full force at the end of the month (releasing building land). In short, a good stimulus,appropriately timed and an unusually sensible move by the Chancellor.

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