Coffee House

Cameron’s class war: only snobs dislike my Help to Buy

1 October 2013

David Cameron has just been interviewed by Sarah Montague on Radio Four, who rather put him through his paces. She teased out an interesting position he is adopting to the growing concern about his Help to Buy mortgage subsidies. He defends himself by saying he will liberate those ‘trapped’ in rented accommodation and casts his critics as cold-hearted rich kids.

Montague started by saying that Cameron is putting £12 billion behind this and yet…

It’s hard to find almost anyone who thinks it’s a good idea. The Treasury Select Committee. The former Bank of England governor, Sir Mervyn King. The IMF. The Council of Mortgage lenders. We could go on to think tanks: the Adam Smith Institute, Policy Exchange.’

This is a pretty damning list, and you could add to it. It’s hard to find any sane economist who thinks that a British version of Fannie Mae is a good idea.

‘I would argue: you need to get out more and listen to ordinary people who want to buy a home who can afford mortgage payments. They’ve got good jobs but they can’t get a mortgage… Because of the damage done to our banks they are not offering the 90-95 per cent mortgages which have been part of our life for many many years.’


Really? The 95pc deals are certainly harder to find (the Bank of England has stopped collecting data on them). But for those with 10 per cent deposit, the BoE says teh average rate is 4.52pc, down from 6.44pc five years ago. Some, like Stafford Railway Building Society, are offering to lend at 3.6 per cent. It’s not clear that the ‘market failure’ – or need for state intervention – is as acute as Cameron suggests.

He then moves to a new problem: the oppression of having to rent. This really is a new one on me.

‘Currently they are trapped in rental accommodation, paying high rent to somebody else for their home.’

Trapped? Really? At this rate we will be sending foreign aid to Austria, Denmark the Netherlands, Korea and Sweden as well as France and Germany. Most people in these countries rent, perhaps unaware that they are ‘trapped’.

At the end, Cameron whipped out the class card again:

‘I don’t want to be the Prime Minister who stands aside and says: you can only buy a flat in this country if you have got rich parents.’

 Of course, Cameron and most of his Cabinet colleagues all have rich parents and many didn’t even need a mortgage to get their first home – a point Labour makes from time to time. So perhaps this line is intended to protect them from this political attack.

‘The problem is too much debt,’ said Montague. ‘And you’re encouraging people to take on more debt.’ No, said Cameron, ‘the problem was 110 per cent mortgages.’ Not what he was saying about ten minutes earlier: then, he did indeed say that the problem was too much debt.

Then, she moved to what is – for me – the killer point.  ‘You were very critical about Ed Miliband for interfering in the energy market in the way that he did. What is different about interfering in the housing market?’

‘The big difference today is that the mortgage market isn’t working… there is a market failure here which the government is trying to correct which will help hard-working people.’

But this – market failure – is precisely what Miliband says about the energy market. Having trawled the bars last night, I can tell you that many Conservatives believe their position is identical.

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  • Nkaplan

    The problem is that by ‘Market Failure’ Cameron, like most politicians, does not mean the market failing to do the only thing it promises to do (i.e. deliver prices which match supply and demand and create incentives for productive endeavour), but rather a failure to do what the politicians want the markets to do.

    Complaining that the market is failing because it is not providing dangerously cheap loans that encourage people to over-leverage themselves, strikes me as being a little like complaining that one’s alarm clock is failing because it doesn’t make you a cup of coffee every morning.

  • Nobody

    An excellent piece. Cameron & Osborne are laying an epic debt trap for the young. If they think they are “trapped” by renting, just wait until they’ve bought under this scheme and rates start ratcheting up. Oh and their nice friendly bank will have every incentive to repossess, as their nice friendly government has promised to cover the losses. Hello negative equity, goodbye life savings, etc.

  • CharlietheChump

    Subprime MkII, just wait.

  • chrisd87

    Arguably the comparisons go even further – both energy and house prices are being pushed up by government. There’s vast amounts of land that cannot be built on due to the planning system, green belts, etc. At the same time environmental regulations are pushing up electricity bills.

  • Smithersjones2013

    ‘I don’t want to be the Prime Minister who stands aside and says: you
    can only buy a flat in this country if you have got rich parents.’

    It’s not surprising. After all this is the Prime Minister who supported Section 289 and then imposed same-sex marriage (gays should be made equal under the law and their sexuality recognised formally), This is the Prime Minister who indulged in a raucous and unruly drinking club but wanted to impose Minimum Alcohol Pricing on the poor. This is a wealthy Prime Minister who spends his time proving how generous he is with other people’s (tax) money

    Cameron’s whole political persona is a denial of who he has previously been. We really should not be led by people who cannot see beyond their own guilt ridden regrets and their desires to be perceived differently from what they actually are because they are embarrassed by their privileged life.

    As for Help to Buy it is just plain wrong for government to laden people with cheap debt for votes when future conditions likely will mean that debt will no longer be cheap

  • HookesLaw

    The dofference the simple difference Mr Nelson which you are to dim to realise and too bigoted to admit to is that Miliband was lying andCameron is telling the truth.

    Your trouble now is that you are in no way capable of stepping out of the corner you have painted. You are well on your way down the rabbit hole to living in fantasy.

    There is no housing bubble and the BoE is examining the situation to check for one forming
    ‘Britain ‘a million miles’ from a housing bubble: Mortgage lending fell in August as experts say recovery is ‘unexceptional’
    Gross mortgage lending in August was £16.6billion, down by around £53million on July
    Recovery in the property market is both ‘healthy’ and ‘unexceptional’, according to the Council of Mortgage Lenders (CML)

  • chan chan

    Yes, there is a market failure here. And that failure is that house prices didn’t fall to their long-term average as they always do, because of government interference in the financial markets.

    Wherever governments interfere in markets, prices go up.

  • itdoesntaddup

    The oppression of renting is having to pay so much in rent that affording to save for a deposit on a house becomes all but impossible for those not lucky enough to be in council housing with its highly subsidised rents and the prospect of a subsidised right to buy. That oppression is a by-product of bubble priced property and subsidies to the BTL sector in the form of Housing Landlord benefit and artificially depressed interest rates that serve to bid up house prices, and the ratchet effect of CGT on BTL portfolios that means they are rarely for sale.

    Only snobs and socialists believe that ever higher house prices and subsidies are in the interests of ordinary people. I’m not sure which Cameron is – perhaps both, like Ed?

    • Colonel Mustard

      Well said.

  • @PhilKean1

    You can’t AFFORD, or deserve to buy a house if –

    (a) – You didn’t take the opportunity to save for a deposit while house prices have been depressed & stable for 6 years.
    (b) – You NEED this Government assistance measure to enable you to buy a house.
    (c) – You have only RECENTLY, say, in the past year, decided that you want to buy a house. Because buying a house takes a period of planning and saving. At least it did, until the Liberal-left elites decided that buying votes was more important than the national interest.
    (d) – You are NOT prepared to cut back expenditure on items such as, say, £100 per month mobile phone, £5,000 pa foreign holidays, £5,000 pa on nights out, £12,000 car purchase, £15,000 on a wedding, and many more items that would be regarded as luxuries, or excessive spending for those of us who were prepared to make sacrifices to buy our own home.
    (e) – You REFUSE to work extra hours & do extra jobs to help save for a deposit, and then get lodgers in, as we had to once we had bought our first house, in order to help with the bills.
    (f) – If you are IRRESPONSIBLE enough to think that you can start a family as soon as you are given the keys to the front door.

    • Colonel Mustard

      What a ridiculously dogmatic comment. One cannot generalise about peoples individual circumstances. Some people can barely make ends meet and work all the hours they can to do so, absolutely unable to save the amount needed for a deposit on a mortgage. The self-employed find it especially difficult to get a mortgage even with the deposit.

      • Alex

        So we should be encouraging these people to take on a mortgage, when a tiny change in their circumstances will mean they can’t afford it?
        It’s been tried before; it’s what caused the 2008 worldwide financial crisis.

        • @PhilKean1

          Well said. Alex.

          But Cameron NEEDS some quick-fired growth before the next election in order that a trickle-down benefit can get through to the wider economy.

          Unsustainable and irresponsible? Of course it is. But “Help-To-Buy” isn’t about the national interest, it is about getting Cameron re-elected in 2015.

          • Eddie

            I agree 100% – all political parties and governments over 40 years have depressed salaries/wages and instead made property go up to silly levels (which they are still at, despite small falls). All because if makes selfish people with mortgages happy and more likely to vote for the party in power.
            Since the early 70s wages have gone up by 10 times, property by 40 times, and yes there are a lot of smug selfish downsizing baby boomers out there who have been enriched by all this – and who often supported the irresponsible mass immigration which added to the problem.
            Property prices are being propped up by Buy-to-letters and also foreign buyers protecting their money in case the Euro collapse (plus criminal Russians, Chinese et al hiding their wealth).
            Property should fall a lot more, and would if the market was allowed to decide – interest rates should be much higher; there should be more taxes placed on investment buyers and 2nd home owners, and foreigners should not be allowed to buy (as I could not if I went to India or China, for example).

          • itdoesntaddup

            It’s unlikely to help him get re-elected. The landlords who stand to benefit most would vote for him anyway. The rest will probably largely see it as subsidies for banks and building companies.

        • Colonel Mustard

          No, that’s not what I wrote. I don’t agree with the scheme and I disagree with Kean’s comment too.

          • Alex

            Fair point; I shouldn’t have directed that at you. My apologies.

      • @PhilKean1


        I have contacts in the mortgage lending business. You, well, most people would be shocked to hear the true facts behind the current situation.

        Lenders are falling over themselves to lend money. It is how they EARN their money. But they are forced to decline an ever increasing number of applicants who really don’t have the means, haven’t saved for, or just generally don’t deserve to buy a home.

        • Colonel Mustard

          Yes, really. Whether you have contacts in the mortgage lending business or not you cannot generalise about individual circumstances or lending. There are too many variables. And shouting (putting your comments in capitals) adds no credence to what you have to say.

  • toco10

    How naïve and unworldly to compare assisting young couples to get a foot on the housing ladder with risking the ability of power companies to plan for the future and invest in energy capacity so necessary for the economic wellbeing of this country.As far as the BBC is concerned its Labour bias is deeply concerning and it never mentions that Red Ed’s house is worth £millions yet never fails to highlight the value David Cameron’s house.The Champagne Socialists at the top of the Labour Party and many of the BBC’s news hacks are being utterly deceitful and hypocritical.

    • 15peter20

      Where does ‘helping young couples get a foot on the housing ladder’ — actually helping old banks continue to make easy money — end? The result will be to inflate house prices. They are already inflated. Helping a fairly small number of these couples now will make it harder for the next lot. Will their mortgages, by that time in the million range no doubt, also be backed by the government?

      Is there some house-price-to-average-wage ratio at which the grown-ups have to say enough is enough?

  • Magnolia

    We had to save up a 10% deposit in order to get a mortgage in the early eighties and provide pay slips from both of our starter professional jobs before they would give it to us.
    We have paid interest at around 5% for years on end.
    If people cannot afford homes then either prices are too high, too many people are chasing too small a supply or wages are too low.
    Debt has never been easier to obtain in my opinion except during the froth of the credit bubble.
    The economic storm clouds are gathering again.
    Be careful out there.
    Houses can go down in value as well as up.
    But just because the sums do not add up does not mean that it is bad politics.
    Dave was faultless this morning.
    He stopped her interrupting.

    • Jethro Asquith

      “If people cannot afford homes then either prices are too high, too many people are chasing too small a supply or wages are too low.”

      Or people are spending too much of their money on things that they do not need (and which in the 80s probably did not exist – eg. Mobile Phones, Tablets, Broadband, Satellite TV etc) and also spending obscene amounts on holidays etc in a game of one-upmanship with their friends ( a couple near me that “cannot afford” to give their kids a couple of quid a week for school clubs but are more than happy to spend, and boast about, a holiday to the Carribean for £8k plus they bought whole new wardrobes of clothes for themselves and their two kids; they also regularly buy 2 new cars – not cheap ones, Volkswagens – every couple of years….etc….etc….

      • HookesLaw

        What a sad warped world view you have. In a word intollerant.

        or as UKIP say ‘Forward to the 1950’s’

    • itdoesntaddup

      If you bought in the 1980s you will have paid interest at 10%+ for a number of years. Who could afford that on today’s mega mortgages?

      • the viceroy’s gin

        If interest rates rose to that level, property values would inevitably fall to more affordable levels (as would monthly rents, most likely), and higher savings interest rates paid would mean that buyers would find it easier to save for a down payment. It’s almost, if not quite, a zero sum game.

  • @PhilKean1

    Cameron’s Help-to-Buy scheme is not only un-Conservative –

    – but his desperate, shameful and embarrassing attempt to defend a policy I am SURE he knows is wrong – is insulting our intelligence.

    What is Conservatism? To me it is not ONLY about good Governance, it is about helping and educating people to be of value to our country.

    The catastrophic price of 13 years of Labour maladministration.

    Labour gave kids everything. They made educational attainment easy. All children were told they were winners. There were to be no losers. Competition was dissolved.
    Labour’s kids eventually believed that starting at the bottom and working upwards was stupid and beneath them. They felt the world owed them a living.
    Uncontrolled credit permitted them to buy things without saving up. Luxuries became essentials and foreign holidays became the norm.

    And the buying of homes was seen in the same way. Sadly, that Labour legacy has continued under Cameron’s Coalition.

    We have had depressed and stable house prices for 6 years. Yet people STILL walk into lenders offices and ask for 100% mortgages because they have not BOTHERED, or been disciplined enough to save for a deposit.

    Kids don’t want to start in a small way and work up. No DIY for them. No one bedroomed flat to start. No getting in lodgers to help with the mortgage, as we had to.
    No scrimping, saving, second jobs and sacrifices to get that first deposit, like we had to.

    Buying a house in the past 6 years has never been MORE affordable and easy.

    But instead of trying to educate people and reintroduce an ethos of working hard and SAVING to buy a first home, your Government is continuing, no, worse, exacerbating the chaotic position that was created by Labour.

    If even so-called Conservatives are doing the left’s work for them, what chance do we stand of repairing Labour’s damage?

    • Colonel Mustard

      “Buying a house in the past 6 years has never been MORE affordable and easy.”


      • @PhilKean1

        A profound rebuttal, without reasoning or explanation, by someone calling themself Colonel Mustard.

        How can I NOT take his / her comment seriously !

        • itdoesntaddup

          You know you assertion was nonsense. Anyone who bought before 2004 paid less than anyone who bought since 2007. Inflation adjusted by RPI, the same applies to anyone who bought before 2003. Don’t confuse very low mortgage costs for those who bought a while back with the cost of property today.

          • @PhilKean1

            I stand by what I said.

            We had mortgage rates hovering around the 9% mark. We had higher costs for furniture and services.

            We never had a six year period of price stability where we could save for a deposit and feel confident that the amount we would need for that deposit wouldn’t rise.

            It is possible NOW to buy a nice flat in the south for £130,000. And a quick search on Rightmove will show up properties even cheaper than that.
            But even at £130,000 for a 2 bedroomed flat, that is just over 2 times the joint salary of a couple earning a modest £60,000 per annum.

            And a couple who hadn’t just jumped into bed together and decided to buy a property would have had SIX YEARS to saver for the deposit and the fees.

            • uberwest

              Your ‘modest’ £60,000 combined salary is significantly higher than the average combined salary of £50,000. The average combined salary of a young couple is likely to be even lower than this. How are they supposed to manage when they start having kids?

              • @PhilKean1

                Having kids or NOT having kids isn’t out of their control.

                Can’t afford them? Wait until you are in a better financial position.

                Let us get back to personal responsibility.


                • uberwest

                  It may well be too late for them to start having kids by the time they’ve got their mortgage under control, and even in the North of England £130,000 doesn’t buy much unless you buy in a socialist paradise like Hartlepool or an area inflicted with high immigration. Houses WERE (ie before the boom) on average, three times the salary of ONE worker. You’re saying that it’s not a problem that they are now 6 times the average salary of one worker. Where does that leave single people who want to buy?

  • Tom Tom

    IT could have been restricted to areas OUTSIDE London and the South East

    • dalai guevara

      oh dear, what a revolutionary thought!

      • the viceroy’s gin

        …but then you socialists wouldn’t have justification to slam through your mansion tax there.

        Better to help spike the market there, jack up property values, and THEN hit them with the levy. You can really cash in then.

        That’s how the socialist ponzi scheme works.

        • dalai guevara

          You’ve just explained the concept of raising standards, not socialism. Or is it the same thing? Fcuk knows.

          • the viceroy’s gin

            No, it’s socialism, and it’s your specialty, lad.

    • itdoesntaddup

      I have a much better idea: establish top notch grammar style schools in the areas you want people to move to. You wouldn’t be able to move for elbows in the estate agents.

    • Smithersjones2013

      I don’t think excluding around one sixth of the population is a good way to win their votes (particularly where London is one of the areas where the Tories need a significant improvement..

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