It seems to be a golden rule in British politics that nobody is ever actually playing 4D chess. This individual or that might think that’s what they’re doing. But the superficially ludicrous policy never actually turns out to be a key component in a (good) master plan.
This is a disenchanting epiphany. Hyper-competent people in shadowy boardrooms, like faeries dancing in toadstool rings, make the world that bit more magical, and it feels a smaller place once you realise they aren’t there.
(The realisation that bad policy is actually just bad policy cannot help but be depressing, too.)
It also means that we professional commentators can’t advance many of the more interesting possible explanations for events – unless set up with a suitably meta introduction, of course. Apropos of which, it was put to me the other day that the Government is reviving Help to Buy in order to deliberately push house prices up.
The logic was as follows: with only a year or so to go until the election, ministers couldn’t deliver genuine, sustainable growth even if they wanted to (which they don’t, because all the big policy changes that could deliver it are unpopular). The cost-of-living crisis is squeezing incomes, and there are few things more dangerous to an incumbent that voters entering the polling station feeling poorer.
So how do you make people feel richer without actually improving their economic circumstances much? You juice the price of their assets, of course. Those that have assets, anyway. And how better to do that than pump a fresh dose of demand into a supply crisis?
Thus, Help to Buy. After all, as one minister told the Times: “We all know that homeowners are more likely to vote Conservative and we cannot cede this ground to Labour.” Well, indeed.
It’s a fun theory. It is also (probably) not true. Hill’s Law of Disenchantment (“There is nobody behind the curtain”) stipulates that we must take at their word the unnamed government source who said:
“If we can’t do anything on housing supply we are going to have to do something on affordability.”
So we must laugh, if only to keep from weeping. That is proper, Alice through the looking glass, “if I had a world of my own” stuff. It’s a shortage. Affordability and supply are the same thing.
Actually that isn’t quite true. The state could intervene in various ways to try and fix prices, as it already does to an extent via “affordable housing” requirements.
But that doesn’t actually solve the problem, it simply shifts part of it away from rationing by price and toward rationing by official whim. That might well suit Labour; it would let them repeat their “X Days to Save the NHS” trick but with your controlled rent or subsidised house, and give them more excuses for micro-managing people’s lives.
It’s not obviously a good fit for the Tories. Which brings us back to the central problem: that the housing market is not a bubble. Sky-high prices reflect an entirely real gulf between demand for homes and the number of homes available.
Demand here doesn’t just refer to the great mass of people who want better – or any – housing (although it is they whose interests should ultimately be at the core of planning policy) but the amount of capital they have and are prepared to spend in pursuit of it.
Yet too often policy seems to conceive of the struggle as some sort of wrestling match between buyers and the market, and that powering up buyers with more money will balance the scales.
In fact, it just exacerbates the problem. If you funnel more money into a market that isn’t expanding, prices will just equalise upwards. More money divided by the same number of homes equals higher prices.
Such interventions might, at first, help a certain number of people get on the housing ladder, if they’re in a position to complete that first-time purchase before the ever-rising waterline of the market catches up with them. But even then, those individuals are left grappling with longer mortgage terms and higher repayments, an economic drag that will likely last their entire life.
That’s before we consider the other indignities that ministers and officials seem incapable of leaving out of such palliative measures.
The Lifetime ISA, for example, sports an entirely arbitrary, know-your-place cap on the cash value of the home you can buy with it. It was set at £450,000 in 2016, and isn’t index-linked, so the potential buying power of someone’s savings is falling year-by-year even as those savings accrue in cash value.
And if you try to take your money out, the Government takes back not only everything it put in but 20 per cent of your capital, too. That’ll teach you.
Help to Buy also sports purchase-price caps, with ministers having set the maximum proper price of a first home someone deserves on a region-by-region basis (is this Stalinism? Somebody ask Liz Truss) – although that does at least mean it recognises that buying in London is more expensive.
But it also stipulates that this support is only available for new-build housing. This not only bars people from buying in any area where there isn’t much housebuilding, but also forces struggling first-time buyers into what are often second-class properties.
Not only are new-builds notorious for quality issues, but many of the features people prize in period dwellings are actually illegal in new properties.
If you fancy living in one of those charming streets of houses with steps up to the door, bad luck – stoops are illegal. Are you, like me, a fan of big windows? Alas, the Government is currently bringing forward updates to building regulations which will set maximum sizes for them.
For all their faults, leaks, and maintenance costs, period properties in this country command a premium for a reason. Yet people who probably live in beautiful homes themselves are presiding over a system where growing numbers of people can’t get on the housing ladder without help, and help is only available for the sorts of home they think you (but not themselves) ought to live in.
Let’s be charitable and assume ministers forgo, this time, the opportunity to experiment with such novel forms of second-class citizenship and deliver a scheme which just gives someone a certain amount of help to buy whatever home they can afford.
Sooner rather than later, they will still find that they have just used debt to push prices further out of proportion with incomes. Again.