Due to a presentational balls-up, one housing policy - arguably the most substantial of today’s package - has been widely overlooked.

This is the strengthening of support for people who lose their jobs to keep paying their mortgages: Income Support for Mortgage Interest (ISMI).

Until the mid-1990s this was available for a large proportion of the public; it was axed by Peter Lilley in a bid to get people to take out their own employment insurance. That idea was largely a failure.

Now the government has strengthened the safety net again; up to a point. The waiting period for receiving ISMI (after losing your job) will shorten from 39 weeks to 13 weeks and the capital limit for claims will be raised from £100,000 to £175,000. The cost of the change will be an estimated £100m.

I’m told this could help roughly 20,000 people over two years.

It’s a tangible measure; but was left off the press notice handed out to the media at about 6pm last night. Apparently the PM and chancellor were debating it until late into the night. Today, it will be overshadowed by the stamp duty announcement which is less helpful but more expensive.

So, the stamp duty holiday for first-time buyers will happen. On homes up to £175,000. And for one year only.

The figure of £615m sounds reasonably generous…until you consider that the housing market is worth over £5 trillion.

Then again, is it based on the Treasury’s old forecasts for housing transactions or more realistic ones?

Last year’s stamp duty take was £14.3bn. Of that about a third was on commercial property deals and stock market transactions. Residential deals accounted for £10.1bn.

The Lib Dems have already forecast that this figure will slump to £5bn this year, not only because prices are falling but because the number of housing market deals has halved.

So is the Treasury’s £615m estimate based on a healthy market or a sick one? If the former, it may prove less generous than it looks.

UPDATE

Just spoken to the Treasury. They say the figure is based on current market assumptions rather than those made at Budget time. The new question is: Where will the cash come from?

Everyone knows that 125 per cent mortgages (Northern Rock et al) were a dreadful, top of the market idea. Most realise that 100 per cent mortgages are also a bad idea. Because a home-owner has no equity in his house, any fall in prices leaves him - immediately - in negative equity.

So what on earth is the new “HomeBuy Direct” scheme which will form part of today’s package of measures to help the housing market? Under the programme, first-time buyers can borrow up to 30 per cent of the value of a new-build home - interest-free for five years - co-funded by both the government and housebuilders.

In other words, they wouldn’t have to put in any equity at all. And when five years have passed, they will be owners of a property, funded 100 per cent by debt, on which they have to pay interest.

Presumably the government think that prices will be going up again by 2013. Hazel Blears, communities secretary, was on the radio this morning talking about how the housing market had risen phenomenally over the last 5 to 10 years. The implication: that it would keep doing so after a temporary glitch.

That’s the same muddled thinking which has got us all into today’s mess.

Alistair Darling may or may not be correct to say that economic times are “arguably the worst they’ve been in 60 years”. The UK may be facing recession but is not quite there yet. I’ll leave that debate to economic historians.

More depressing is that his honesty has been met with such an over-wrought media furore. Those damning the Chancellor for his “gaffe” are no doubt the same ones who accuse politicians of being mendacious and dishonest.

This is where we are; house prices are falling, banks are writing off tens of billions of pounds, mortgage lending has slumped by two-thirds, the price of oil has leapt since last year, retailers are reporting falling sales, the stock market was recently down 20 per cent from its peak. It’s not exactly rosy.

Do we really want senior cabinet ministers to continue pretending that everything is alright?

Here is some intelligent analysis of the situation.

UPDATE: Evan Davies agrees. Even if the rest of the commentariat doesn’t.

Newsflash: I’ve just been told that Tesco is withdrawing plans for an ecotown at Hanley Grange, near Cambridge.

We ran the story last week that the wheels were falling off the ecotown project, with three having withdrawn, one having been cut from 15,000 homes to 5,000 and another three - including Hanley Grange - running into difficulties.

After that article, a DCLG official called me to say that Hanley Grange was going fine, despite the fact that one major member of the consortium, Wellcome Trust, had dropped out of the scheme.

Now it seems that Tesco, the remaining landlowner, has some reservations about the way in which the government is bulldozing local authorities to get its new conurbations built. It still wants to do the project, but in a more conciliatory way.

TESCO STATEMENT ON HANLEY GRANGE ECO TOWN PROPOSAL:

“Tesco put forward a strong proposal for an environmentally-leading mixed-use development at Hanley Grange through the Government’s Eco Town initiative – combining housing, employment and cutting-edge environmental technology.

The site was shortlisted as one of 15 out of an original list of 57 sites, and we think the proposal had very good prospects of succeeding under the Government’s Eco Town initiative. 

However, we recognise that a proposal of this type has implications not only for the local area, but for the region.  We also believe that a genuinely sustainable community stands

the best chance of being delivered successfully if a broad range of stakeholders in the region feel that they have been fully engaged in the process leading up to a decision. 

We believe this is most likely to be achieved through a review of the Regional Spatial Strategy (RSS), which involves a wide range of organisations and interest groups in the region.

We look forward to setting out our plans for a sustainable community at Hanley Grange through the RSS process, and to engaging on the broad range of views that will be expressed through that process.”    

There’s more on this website.

Leave aside the question of whether energy companies are charging too much for power. There is the separate question of the European emissions trading scheme (ETS) windfall, addressed elsewhere on this blog.

Earlier this year, Ofgem said power companies had ended up with a £9bn windfall because of a quirk in the scheme. In its second phase polluting companies must buy on average 7 per cent of the permits they need to pollute. For power companies it’s about 30 per cent.

Yet the price of electricity has risen as if companies had to pay for 100 per cent of their permits. Thus the Ofgem figure.

But the £9bn was based on carbon permits at £20 each, whereas the market price is now £25 to £30. That means MPs, unions and others who complain about the ETS windfall can now use a new figure……well north of £11bn.

The scene: A newsroom. The date: September 2008

Reporter (on the phone to Treasury).

“So this windfall tax…”

Official

“It’s not a windfall tax”

Reporter

“OK well it certainly sounds like one. Aren’t you raising billions from the energy companies?”

Official

“Um”

Reporter

“Something to do with ETS?”

Official

“Under the EU’s emissions trading scheme (ETS) companies get permits which allow them to pollute. They can trade these amongst themselves. In the first round they got the permits for free. In the third round, which begins in 2012, they will have to pay for all of them.

In the second round, which has just started, they will have to buy just 7 per cent of the permits on average. That mean figure ranges from electricity companies having to buy over 30 per cent of their permits to steel and cement companies being exempt for now.

The process has already started and will raise £1.7bn-£1.9bn over four years. The money will be frontloaded, with greater cashflow this year and next. So I would imagine you’re looking at well over half a billion before Christmas.”

Reporter

“So it’s not a windfall tax?”

Official

“You can call it whatever you like. Ministers are also thinking about shifting the 7 per cent figure to 10 per cent - the maximum allowed under EU rules at present. That would bring in another £700m or so. And you could frontload the process further to get even more of the money now.”

Reporter

“But there won’t be any clawing back of the estimated £9bn which energy companies have got from their free permits?”

Official

“Well, maybe a smidgeon. If they raise it from 7 to 10 per cent. ”

Reporter

“I’ve just thought of something. I heard that Gordon Brown wants a big giveaway for 7 million families this winter. Up to £150 each to help with bills. That would cost just over £1bn. Maybe this ETS thing could cover that?”

Official

“You might think that. I couldn’t possibly comment.”

10 minutes later

Reporter

“I’ve got this great story. It’s a bit complicated though - have you got five minutes?”

News Editor

“What’s the top line?”

Reporter

“Well, energy companies are paying up a billion, well, much more than that actually, and Gordon will probably use it to help the poor.”

News Editor

“£1bn Windfall Tax on Energy Companies Revealed!”

Reporter

“It’s not really a windfall tax. And we knew it was coming, well, the industry did, apparently.”

News Editor.

“Explain it. But I haven’t got much time.”

Reporter

“Under the EU’s emissions trading scheme (ETS) companies get permits which allow them to….”

News Editor

“Boring”

Headline the next day: “£1bn Windfall Tax on Energy Companies Revealed!”

One week later…

Gordon Brown: “We are raising ONE BILLION POUNDS from the energy companies to help the most vulnerable people in our society with their fuel bills….” cheers from Labour backbenches etc etc

The typical household in the UK has seen disposable income drop by 15 per cent in the last year as food prices and utility bills soar.

Disposable income now represents 28 per cent of average household income, down from 35 per cent a year ago, according to a survey published on Monday by uSwitch.com, the price comparison website. This is the equivalent of £14,520, down from £17,102.

On one level the figures are unsurprising given the well-publicised double-digit rises in the prices of many staples ranging from petrol to a loaf of bread.

But the survey quantifies the pressure on household finances which has helped to erode Labour’s popularity at the ballot box. Prices have risen by 28 per cent for gas, 20 per cent for electricity, 28 per cent for petrol and 25 per cent for food and drink.

The average family is also spending 6 per cent more on mortgage repayments as a result of higher interest rates.

People living in Newcastle are now spending 77 per cent of their net income on bills – far more than the 35 per cent spent by those in Surrey or Buckinghamshire.

It’s not hard to see why the Scottish National party will be campaigning at the next Scottish by-election, Glenrothes, on the cost of living. This was the clinching factor in Glasgow East.  

You could almost feel sorry for Labour…if they hadn’t taken the entire credit when times were good.

That will be the inevitable response within most of the Labour party to the imminent departure of Lord Jones of Birmingham, former head of the CBI.

One of the “goats” (non-partisan ministers in the, ahem, ‘government of all the talents’) hired last summer by Gordon Brown, he was hardly an outright success.

Seen as a natural Tory, he wouldn’t join Labour or even pretend to back many of its policies. Most strikingly, he carried on opposing the minimum wage - years after most business leaders had given up this fight. (Bear in mind that the CBI predicted 100s of 1000s of job losses from the original measure, which turned out to be nonsense).

Jones carried on driving a Jaguar - while the cabinet debated driving green vehicles and Mr Brown persistently talked the talk about electric cars.

And he refused to tone down the outspoken, bluff persona. At a gathering of Arab businessmen, he said: “We don’t care what colour you are, we don’t care if we can’t pronounce your names . . . we just want you to invest in our country.”

And then there was the FT interview where he single-handedly undermined the new tax on non-doms, prompting the first of several damaging fiscal U-turns by Alistair Darling. 

We already knew Lord Jones was stepping down before the next general election; now he says he will quit later this year. He is no doubt a “character” and admirable in many respects. But did he ever belong in a Labour government?

David Cameron must be spitting tacks. The Tories’ favourite think tank, Policy Exchange, has put out a report urging the government to - in effect - abandon the north.

Why bother using money to prop up dying conurbations on the fringes, the report asked this morning? Wouldn’t we be better off concentrating on London, Oxford and Cambridge? The latter two university towns could expand in the way that Manchester and Liverpool (pictured below) did in the 19th century, it argues.  

But people in the north have votes. And they don’t like being told that their communities are doomed and therefore should be abandoned. As far as Labour is concerned, this is an open goal.

Peter Kilfoyle, Labour MP for Liverpool Walton, said the report was “utter nonsense”. “It doesn’t ring true economically, socially or politically,” he said.  

The timing is dreadful for Mr Cameron, who has just embarked on a two-day tour of marginals beyond the Watford Gap, where the party’s support is still patchy. He has wasted no time distancing himself from the independent report, which he today described as “insane”.

“Regeneration of our northern cities has been a key Conservative theme over the past three years, and one of the first things I did as leader was to set up the Cities Taskforce to look in to how we can further renew and regenerate our great cities,” he said. “The authors of this report have themselves admitted it is barmy, it isn’t, it is insane.”

 The report has also gone down badly in the South-east, where the idea of accepting another million incomers would put further pressure on transport, housing and green spaces.

Ideologically, however, the debate is not unique to the UK. In Brussels, a team of academics led by Belgian economist Andre Sapir - from the think tank Bruegel- recently put forward a similar argument re European funding. Sapir argued that the money should be used to target areas, industries and projects which are already successful. This would better improve the EU’s overall competitiveness, he argues, citing projects such as Airbus and Galileo.

Perhaps unsurprisingly, the idea hasn’t gained much traction in the EU either.