Adventures in government stupidity are of course nothing new: but to raising the bar to sheer howling lunacy is more unusual. Even that toxic brew of special interests, bureaucrats and politicians rarely produce something that is outright insane.
Rarely, but not never:
Local authorities will put up the deposit to allow first-time buyers to get on the housing ladder, under a scheme unveiled today. The organisation behind the ‘local lend a hand’ initiative, Capita business Sector Treasury Services, says it will free up social and affordable housing by making it easier for people to buy their own homes. The initiative is initially being backed by Lloyds TSB, and has been piloted by five local authorities, but Capita hopes to get more lenders and councils on board as the scheme progresses.
The local authorities will lodge funds with the lender to cover the shortfall in a first-time buyer’s deposit. This can be up to 20 per cent of the mortgage, so for a typical 75 per cent loan to value mortgage, the buyer would only need to find a 5 per cent deposit. Available funds in each area will be capped, although the council shouldn’t incur any actual costs unless there are problems with the mortgage repayments.
So let us try and get this straight. The world’s entire financial system is still reeling from its recent effort to walk straight off a cliff by lending money to people to buy houses they couldn’t afford. This lesson having been learned, said financial houses no no longer being willing to lend to people without a substantial deposit, showing that they’ve some skin in the game, that you don’t lend hundreds of thousands to people who have bupkiss, we now have the following bright political solution?
The taxpayers should subsidise these deposits so that when (no, not if) something goes wrong in the future the taxpayers have to pick up the bill? That, having seen what people buying houses they cannot afford does, we should insist that more people should buy houses they cannot afford?
This, this, is why we send our finest minds to Oxbridge so that they may rule over us all?
Somewhere up there the Goddess of Irony is weeping bitter tears into her nectar as not even she had thought of that one.
Look, it’s terribly, terribly, simple. If local councils want local houses to be cheaper they should grant planning permission for more local houses. Supply and demand really does work you know and it is the planning permission itself which is the most expensive part of a house these days. No, not the land, not the building, but the chitty allowing you to build on that land. The council even makes a profit issuing permissions rather than losses on paying people’s deposits.
With ideas at the above level of stupidity I fully expect both Ed Balls and George Osborne to announce next week that the way to close the deficit is to make cucumbers from Moonlight.