Home truths on property prices

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THE dream of home ownership today is no different to the early 1980s when Margaret Thatcher’s right-to-buy revolution, first put forward by Harold Wilson’s government, helped countless families to become property owners for the first time.

THE dream of home ownership today is no different to the early 1980s when Margaret Thatcher’s right-to-buy revolution, first put forward by Harold Wilson’s government, helped countless families to become property owners for the first time.

However there is a stark difference between present financial circumstances and those of 30 years ago. Then house prices were within affordable reach of people who had acquired a reasonably-sized mortgage. Today many couples, even those with considerable savings behind them and the support of relatives, can only acquire a foothold on the property ladder by mortgaging themselves to the hilt.

It is a difficult dilemma, even more so with the increased likelihood of a rise in interest rates after the latest fall in unemployment levels. Many are still haunted by stories of people losing their homes at the start of the recession, or of those trapped in negative equity, and are concerned that Britain’s economic recovery is being fuelled by property prices spiralling out of control in London and the South East.

Yet they are also acutely aware that home ownership does offer a degree of financial security in the long-term – and that there is nothing to be gained from paying rent every month. In many respects, this is why the Government launched its Help to Buy scheme. Its intention was to help the home ownership dream become a reality. Yet today’s “generation rent” report by Halifax suggests that the scheme is adding to the upward pressure on house prices.

This should not preclude Ministers from pursuing two strategies. First, housing associations need further incentives to build a new generation of homes which can then be acquired in time through schemes like “right to buy”. This will also help to create jobs.

Second, the Government, and councils for that matter, should compel developers to provide more affordable housing in return for planning permission. After all, there’s no point building homes on the scale envisaged if no one can afford to buy them.

Taken for a ride

Labour’s tirade on bus subsidies

LABOUR’S decision to blame the coalition for cuts to bus subsidies, and especially the diminution of services in rural areas, offers an early foretaste of the next general election campaign.

It is clear that Ed Miliband and his team of shadow Ministers will play to the gallery and criticise the Tories and Liberal Democrats for every policy grievance, and then say very little about their own intentions.

Buses are a case in point after it emerged that subsidies – the amount councils pay to bus companies to operate certain services – have been cut by approximately 25 per cent in recent times.

Presumably Labour would reverse this, judging by the tone of the latest comments made by Leeds Central MP Hilary Benn who is the Shadow Communities and Local Government Secretary.

Tantalisingly, his remarks – and those of Labour’s buses spokesman Gordon Marsden – offer no such guarantees. They amount to little more than a tirade against David Cameron.

Yet, given that Labour has said that it will have to operate within George Osborne’s financial framework because of the need to reduce the deficit, what services will Mr Benn cut so bus subsidies can be reinstated within existing means? This reasoning does not just apply to buses, but every other policy sphere where Labour has had the temerity to criticise the Government without offering a properly costed alternative plan. It is time that it started to do so.

Co-op’s dividend

Institution must return to roots

THE CO-OP is not the first cherished institution to pay a heavy price for inept management, and ineffectual corporate governance which proved to be as robust as the proverbial chocolate fireguard.

Yet what will disappoint so many of its members, and customers, is that this movement – formed more than 150 years ago and steeped in the fabric of the North – was supposed to be underpinned by the type of corporate social responsibility lacking in so many of the country’s banks.

That is why it needs to act swiftly after posting record losses of £2.5bn. It can begin by embracing the reforms proposed by Lord Myners who has accused former managers of being allowed to run amok like kids in a sweet shop – a spree which culminated with the downfall of the disgraced Paul Flowers who should never have been entrusted with the Co-op in the first place.