Monday, 30 September 2013

"Osborne in 'work for benefits' plan"

From the BBC:

Homebuyers who receive long term taxpayer-backed loans under the Help To Buy scheme will have to undertake work placements in return for their benefits, under changes being unveiled by Chancellor George Osborne.

From April, people who have not repaid the interest free loans within three years will face three options, including community work, or face losing benefits.

Mr Osborne unveiled the "tough love" plan at the Conservative conference.

Labour said it was proof the coalition's main house price support schemes - largely modelled on the schemes introduced by the Labour government five years ago - had failed.

In his speech to the party conference in Manchester, the chancellor is expected to say that while the government will not "abandon" long-term borrowers, no-one will be able to get something for nothing.


Ralph Musgrave said...

Osborne’s idea is 2,500 years old. Pericles put the idea into effect in ancient Greece. According to “Unemployment in History” by John Garraty (p.13)and quoting Plutarch, “Pericles undertook vast projects of buildings and designs of work, supervised by the sculptor Phidias, it being his desire and design that the undisciplined and mechanic multitude… should not go without their share of public salaries, and yet should not have them given them for sitting still and doing nothing”.

CityUnslicker said...

You may hate house prices and home-owenersism. Even I am not a big fan of the help to buy scheme.

BUT...where is this bubble, net lending is flat, net building is slightly up. net mortgage debt is still falling. Where is the bubble?

It is in equity being used, real money from overseas investors. How you can easily conflate overseas people storing equity in a safe haven and a property bubble for UK residents is disingenuous. The school fo Milliband in economic thinking.

Ralph Musgrave said...

The above comment of mine should have gone under the "Help to waste time" article below. Sorry.

Mark Wadsworth said...

RM, yes, you MMTers are big fans of such job creation schemes, as was FDR, in theory it works fine, in practice it works up to a point but can also go badly wrong.

CU, the bubble is mainly in London/South East as you are well aware. That's six or seven million homes, don't tell me that Johnny Foreigner has snapped them all up.

And if house prices weren't unaffordable (i.e. in a bubble) then there would be no need for the HTB scheme, by definition.

Mark Wadsworth said...

CU: "net lending is flat, net building is slightly up. net mortgage debt is still falling."


House prices are so high that there are fewer mortgage buyers and more cash buyers (in relative terms).

Interest rates are all time low, so people are overpaying a bit (or not falling into as much arrears).

Interestingly, total oustanding mortgages rose exponentially from the 1990s to 2007 but since then have been stuck at £1,200 billion.

Mark Wadsworth said...

And of course new construction is up slightly... from a hundred year all-time low of 100,000 per year.

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paulc156 said...

Read this this morning on Dean Baker:

"average [house] price in the U.K. is almost 25 percent higher than the $220,000 average price in the United States. This might provide some cause for concern, since the per capita income in the U.K. is more than 25 percent lower than in the United States. (Until the bubble years, house prices had typically been somewhat lower in the U.K. than in the U.S.)"

So Osborne et al think that already high prices relative to incomes need to go even higher in order to sort out the nation's housing issues. simples innit.

Kj said...

Ah, bubble or no bubble. I also keep hearing about the "fundamentals being sound" and all that crap. It doesn´t really matter. Never has a bubble been so until it pops. And never has the politician been so bold in using taxpayers money both to stoke and ameliorate the effects of bubbles. As long as houses are bought and mortgaged for prices way over and above sensible rebuild costs + profits for everyone involved actually doing stuff, there is money passing from the real economy to the rentier sector.