There’s a running joke in the Westminster bubble at the moment, if, by “running joke”, you mean something that you keep hearing that makes you want to cry. Several of the Tory leadership candidates have promised that fresh thinking under their leadership will end the Brexit impasse; yet their proposals are always, but always, things that have already been explictly rejected by the European Union (a time-limited backstop; technological solutions to the problem of the Irish border), making their thinking about as fresh as month-old milk.
I’m starting to wonder if this actually represents some deeper malaise in British politics, because it doesn’t just affect Brexit, and the latest wheeze from housing secretary James Brokenshire has a distinct whiff of familiarity to it. We’ve heard this before, haven’t we? At the very least, the problems with it are problems that have bedevilled almost every housing policy emanating from this benighted government ever since it took office in 2010.
Let’s hear from the Daily Telegraph shall we? Headline:
Allow young people to dip into pension pots to fund first home deposit, says Housing Secretary
Mr Brokenshire will call on the next Prime Minister to reform pensions to allow young people to “make the choice for themselves” if they want to spend them on property instead.
He is expected to say in a speech at the Policy Exchange, the think tank: “We should be looking at allowing an individual to use part of their pension pot as a deposit on a first time home purchase.
“We should be changing the necessary regulations to allow this to happen, protecting the integrity of pension investments but allowing lenders to innovate and design new products to bring this opportunity to consumers.”
To the newspaper’s credit, its story is quite critical of this obviously catastrophically stupid plan, and quotes former Liberal Democrat pensions minister Sir Steve Webb laying into it at some length. But since we’re all here, let’s list the ways in which Brokenshire’s bad idea is bad:
1) It involves sacrificing retirement income – basic security in the future – to pay for home ownership – basic security in the present. Bad trade.
2) …except it probably won’t even do that, because this policy would mean pouring more money into the housing market without building more housing, which is the absolute perfect policy for boosting house prices. So it would push basic security even further out of reach, and leave those who do manage to claw their way onto the housing ladder this way
a) with a much reduced pension, and;
b) at risk of the bubble bursting, leaving them having spent all their money with nothing to show for it at the end.
So: really bad trade.
3) Hey, you know what would create basic housing security for young people? Building more housing, or improving tenants’ rights. Funny how the housing secretary doesn’t want to tell Policy Exchange about those.
4) Implicit in Brokenshire’s plan is the assumption that young people have significant pension wealth squirreled away somewhere. This is probably more true than it was – auto-enrollment was introduced in 2012, and by early last year has been rolled out to every employer in the country, so most people with jobs will now have some kind of pension. Nonetheless, the average deposit a first time buyer needs ranges from around £20,000 in the north east to well over £80,000 in London. It does not seem likely, to put in gently, that most young people have enough saved up in their pension pots to cover their housing deposit.
So, to sum up, Brokenshire’s policy would make houses more expensive and leave young people facing poorer and less secure retirements. You know who would benefit? Existing homeowners, who don’t want the boom to end.
It’s a bad policy, is what I’m saying here.
Which raises the question of why Brokenshire is promoting it. Does he not really understand the basics of either the housing market or the pensions system? Does he genuinely believe, against all available evidence, that ever rising house prices are a good thing? Or does he just want to impress some very right-wing people because a change in leadership, and therefore a big reshuffle, is on the way? Answers on a postcard.
This isn’t the only infuriating housing story to emerge over the last couple of days. There was also this delightful effort from the BBC…
Girl and Tonic blogger: ‘Giving up booze helped me buy my house’
A blogger has told how giving up alcohol for good has helped her to buy her own three-bedroom house.
Laurie McAllister, 28, said one month she spent £1,000 just on going out, and that her lifestyle in London left her “struggling with anxiety”.
….in which some genius of an editor took a story of someone’s personal struggle with alcohol abuse, and managed to frame it as a morality tale about how the only reason young people can’t hope for the same level of financial security as their parents is because they’re chucking away all their money on cocktails and other fripperies like rent.
You know what housing story I would genuinely like to read? A column from a 60 year old about how they spent their entire youth out of their mind on drugs, pissed away every opportunity that came their way, but somehow still own a massive house because they were lucky enough to be born in 1958. Honestly, if you’re out there in your massive house and fancy writing a tell-all column about it, pitch me.