When Help-to-Buy Will Become Just "Help!"

The Coalition make a free gift to Labour

We learn with some incredulity that house prices rose in London by 10%, up £50,484 to an average of £544,232, in October; according to a Rightmove survey. No such boom exists outside the M25 however where the real economy remains much more muted. These ridiculous ramps within London aren’t a good thing, especially for the buyers, no matter how much politicians herald a new coming of economic prosperity. Unfortunately, it’s more likely a mendacious electioneering Jedi Mind Trick which will have consequences.... it always does.

On a national level, accelerating house prices in London are unhelpful lest they influence the Bank of England’s interest rate decision making. Mr Carney of course could introduce special measures for separate lending criteria within the London conurbation from the rest of the country. There is no reason why this should not be done and there will be some head scratching going on in the Carney inner circle. Citizens in the North West, North East or South West should hardly pay the price for the London market taking off like an unguided missile.

The Cameron and Osborne Help-To-Buy scheme which offers buyers interest free loans for 20% of the house price and a government guarantee to lenders of 15% will not correct in their words, “a mortgage market failure.” It will make it much, much worse.

It won’t surprise many readers to learn that UK houses have never been more expensive relative to average earnings. They have yet to revert to the long term average and were last at these stretched levels just before the crisis. So, where on earth does the logic come from that suggests encouraging young singles, many of whom are weighed down by student debt, and young married couples is a good thing?

The whole housing lift off appears anyway, contrived. Lloyds Bank (or rather its major shareholder, the Government), which in practice is a geared play on UK housing, benefited from positive housing headlines when £3.21bn shares were sold in an offering in September at 75p. Moreover, as another in a series of blatant electioneering bribes it appears too convenient and obvious by half. If the clowns in the coalition think the population is going to be cheered as they’re reading their new fuel estimates for the winter by the fact that a four bedroom house in Fulham went up by two hundred  grand in September then they are very much mistaken.

 

 "don't call me Stupid.."

Some, if not many buyers will be helped by their parents. For the most wealthy section of society to exploit an opportunity is not unlawful nor is it immoral but it hardly helps those at the bottom of the pile or even half way up the ladder. Lighting a fire under house price inflation is unwise because the rise in house prices simply makes them more unaffordable, not less. The screaming lunacy about this racket is that Cameron himself said, “"The current system only allows people to buy homes if they have rich parents and that “is simply not fair“. (Why do I keep thinking of “don’t call me stupid,” Otto in A Fish Called Wanda.” 

no, it's not clever to buy houses when interest rates are at multi century lows 

Moreover, the resultant lift in interest rates will bury the already struggling consumer. It’s not smart or clever to borrow huge sums of money when interest rates are below the lowest level for 320 years. To encourage them to do so is just stupid and irresponsible.

Incidentally, one might also ask if anyone has considered which direction prices will go when the subsidy is pulled. Great choice here, higher interest rates or negative equity. Sounds like a great plan.

There is only one way to help affordability and that is to increase supply, especially at the young marrieds / first time buyer end of the market. The government’s role here is in long term planning and infrastructure; something that Neville Chamberlain understood as chancellor in the 1930’s. If the Coalition was serious about wealth creation it would avoid quick illusory fixes, the implications of which they barely understand, and they would focus on economic growth and that means tax cuts. If they want to be creative for the young, they can do something about the penal rates of travel in the UK which force individuals to spend considerable amounts of their income on getting to and from their place of work.

Bloody Trains Rant

Coalition Transport Spending Plan

I don't believe for a moment that any of us war weary infantry in the trenches are in the least bit surprised in the supposed revelation that Vince Cable believes that he could bring down the coalition at any time of his choosing. The only surprise is that Vince Cable might think that any of us care in the least what he says. We're all just too familiar with the massive egos and arrogance of these people to be surprised which is not news given one of the people who has least earned the right to ego and arrogance is Mr Cable. Greatness doesn't come from just regurgitating the last thing you read on the internet.

Unfortunately for the rest of us, there is indeed no limit to the ego of all these people for they all leave humility at the front door of Westminster the moment they walk inside. The way they like to project their largesse and public spirit is, somewhat tragically for the long suffering taxpayer, by embarking on huge vanity projects at our expense. That we neither need not want them is irrelevant as they seek to concrete themselves in the public conciousness Oh you will lads, but for the wrong reasons.

£800m on the Millennium Dome would be a good place to start in the lesson, "How not to do it," but Westminster missed that and hurtled on to drive a coach and horses through what taxpayers wanted by throwing what will end up costing £20bn to keep Lord bloody Coe quiet on the Olympics. £20bn? Let's just stop for a moment and question this insanity. Yesterday a great big PR fuss was made of the floodlights being switched on and £65m being given to sport for schools. Here's a reality check - for £20 bn we could give every secondary school a top class gymnasium and small stadium. In fact, all our schools could be equipped just like those cutsy American High schools you see in the movies. Instead, we're spending an absolute bloody fortune on a bunch a minority sports that no one ever pays to watch. The utter waste is criminal and the servitude to the IOC is demeaning to every Briton that has ever drawn breath. The Russians got the World Cup; let's just give them the Olympic fools errand too, in fact, we should pay them to take it and retain some dignity and cash flow.

But political vanity projects are the order of the day for every administration and so the Coalition have theirs....... fast trains to bloody Birmingham. Well, that's a good way to spend £34bn isn't it?

Here's a little bit of context for you from our friends at Think Defence; despite all the drum beating about the Military Covenant, this is what the Coalition have achieved to date,

  • Reducing the planned purchase of 22 Chinooks to 12
  • Cancelling Nimrod MRA4
  • Reducing armour and artillery
  • Reducing surface vessels
  • Reducing Tornado
  • Withdrawn Harrier GR9′s
  • Withdrawing Sentinel
  • Slashing allowances and expenses
  • Setting up the armed forces for a post Afghanistan change in terms and conditions of service
  • Implementing a 2 year pay freeze
  • Reducing pensions
  • Reducing service personnel by 17,000
  • Reducing the MoD Civil Service by 25,000 which will likely result in more work for service personnel

Moving swiftly back to the £34bn we're about to hose on getting to Birmingham marginally more quickly than we already do, these people, well the Government I guess, (they could be aliens for all the familiarity they demonstrate to the lives of taxpayers), need a reality check. Obviously, I'd like the reality check to be a swift kick up the rear but instead I'll make this as simple as I can,

"We don't want to travel at 250mph, we simply want to travel at reasonable cost and with a reliable service."

My season ticket costs £5256, plus £800 a year to park my car at the station; that's after tax. Given we subsidise South West Trains anyway,  the true cost to the traveller can only be guessed at. I won't bang on about the wanton exploitation of the travelling public by South West Trains because I've talked before about them stripping out lavatories on trains to cram in more seats, about using small suburban trains for inter city services and that rather special couldn't give a damn attitude to snow clearing on their premises.

The point here, is that the Coalition should stow their egos and focus on just what would help the travelling public and the workforce and it isn't fast trains to Birmingham. Indeed, if I were a betting man I can almost guarantee that it will end up costing £50bn and the rest of us will enjoy fare increases to compensate for their utter stupidity. Muppets.

 As a postscript, I found this comment on a post on Andrew Gilligans blog interesting and exactly the sort of thing the government should be making their business to explore. They won't, it doesn't massage the ego enough and strangely, I can't now find the comment on the blog; here it is anyway:

"My favourite suggestion that went nowhere, was from a South-West Trains driver who had noticed that if you were to build a mile-long spur from a point a mile south-west of Feltham mainline BR station up between the Bedfont Road and the Primary school and past the Clockhouse Roundabout into Terminal 4, you could have a very cheap Heathrow Express, going into the surplus international-spec Eurostar platforms at Waterloo once the cross-channel trains started going into St. Pancras."

Stand up whoever you are and find that bloody driver; we can't afford to let original thinking like that fall by the wayside.