There’s a section at the back of the Building Britain’s Future document where Labour spells out key “deliverables” for the next decade.

Some of these are indeed likely. Others less so. Alex and I have picked out some of the more controversial ones.

2013: Budget deficit halved since 2009/10.

8/10: Yes, this is the plan - the annual deficit should be back down in four years’ time. Although the national debt will keep on rising. The distinction between the two has been the subject of a ferocious row between Ed Balls and Fraser Nelson.

2014: £16bn of asset sales achieved

2/10: I revealed on Monday that this target is based entirely on a buoyant property market. Of the total, £11bn has to come from local authorities. But the LGA says council property sales have slumped from £4bn a year to £1bn a year. (Incidentally, if councils keep the receipts, how exactly does this plug the public finances - as No. 10 seem to suggest?)

2016: 240,000 new homes provided each year, improving affordability.

4/10 Given that only about 100,000 homes will be built this year, the forecast implies a dramatic recovery in the housing market. And the mortgage market. Clearly it is possible but this is crystal ball gazing. For now affordability will only be improved by house prices falling further. You’ll notice that the BBF document doesn’t refer to the ludicrous 3m homes by 2020 target.

2017: First Crossrail trains are expected to start running.

6/10 This afternoon I spoke to Stephen Glaister, the transport expert. He has serious concerns over whether the government will be able to afford the £5bn needed to make Crossrail work. He pointed to the line in the Budget saying government investment will drop in the next five years from 3.1 per cent of GDP to 1.3 per cent. “That is a terrifying figure,” he observers.

2017: 400,000 new green jobs

2/10 When it comes to green jobs Gordon Brown likes to pluck figures from thin air. I pointed out in January that he has so far predicted 100,000 new green jobs, 140,000 and 1million. I suppose 400,000 is neither less likely nor more likely than these other random numbers.

2020: Child poverty eradicated in the UK

3/10 Unlikely. The government was supposed to halve the figure by 2010 and has signally failed to do so. That doesn’t bode well for the bigger target.

2020: 90 per cent of children leave primary school having mastered the basics in English and Maths

?/10 I sincerely hope this one will happen. But it shows a desperate poverty of aspiration. A tenth of children aged 11 still illiterate and unable to add up - celebration time!

2020: 15 per cent of all our energy coming from renewable sources

4/10 Not exactly on track. Britain is still behind almost every other EU country in producing renewable energy. Here is a reminder of Shriti Vadera’s attempts to water down the target by asking if the UK could include, um, overseas projects funded with British cash.

2010: Up to 10 new ecotowns developed

1/10 Even the DCLG’s own internal report admits that only some of the remaining ecotown proposals will survive without public subsidy. For now, at least, the project appears doomed.

We are about to see the full details of Labour’s new policy of giving priority on council housing waiting lists to local residents.

This is an obvious dog whistle to working class voters who might otherwise vote BNP.

Here is a reminder of what happened to Margaret Hodge when she suggested something very similar two years ago. She was attacked by senior Labour figures including Alan Johnson, Peter Hain, Jon Cruddas and Ken Livingstone.

Here’s a recap of what she suggested. A need for social housing policy to take account of length of residence, citizenship and national insurance contributions.

This was Livingstone’s riposte: “Margaret Hodge’s suggestion that housing allocation should be based not on need but factors like length of residence would be catastrophic for community relations.”

Johnson accused Hodge of “using the language of the BNP.”

And now it’s going to be government policy.

UPDATE

Here is the page in the BNP’s manifesto which includes: “Make length of residency in an area the key criterion for council house allocation.”

Labour love to talk about the environment and housing - and the ecotown project combines both in a single grandiose project.

Even now, with the property industry in meltdown, no minister will admit that Gordon Brown’s cherished idea is heading for the grave.

I wrote this morning that a report by the DCLG itself admits that several of the projects would need massive public subsidies (tens of millions of pounds) to go ahead. On others, the maths is uncertain. Only three of the last eight (from 57 proposals and a shortlist of 15) are deemed to be definitely viable.

A flak from DCLG rang this morning to point out that I’d ignored another three schemes which weren’t on the shortlist but have been added to the list. Apologies, the relevant sentence was cut from the story by a sub-editor.

In fact the reality could be even worse than the government believes.

Continue reading "RIP Ecotowns"

The prime minister won favourable coverage over the weekend for his claim that he would abolish 100 per cent mortgages.

Forget the fact that he was Chancellor during the decade when such products grew 10-fold without any intervention from the government. Forget the point that the horse has already bolted; most of the 150-odd products letting people take out a mortgage with no deposit have now been killed off by newly cautious banks.

The real proof that Gordon Brown never understood the risks attached to these loans lies in the fact that his own government introduced a new product - well after the crash began - letting poor people buy homes with zero equity.

Under the new “HomeBuy Direct” scheme introduced last September, 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. The other 70 per cent would come from a conventional mortgage.

In case you need a link to my original story it’s here.

UPDATE:

Guido has some more interesting thoughts on the issue here.

This blog asked yesterday morning whether Gordon Brown really meant what he said when he demanded that banks should quantify all of their toxic loans.

A research note put out on Friday by analysts - at RBS, ironically - points out that “the domestic UK banks are technically insolvent on a full marked-to-market basis” (although it adds that this is not unusual at this stage in the economic cycle). Is the prime minister sure that he wants them all to come clean?

Meanwhile here is the reaction from Capital Economics to this morning’s package:

“It will now be hard to criticise the UK Government for lacking the initiative seen so far in the US. The
Government has also tackled criticisms of its so far piecemeal approach. However, as we have argued
before, there is no magic solution to this crisis and even these measures may not be enough to get
banks lending at reasonable levels again, at least for some time.

“We continue to think that state-decreed lending controls, perhaps via widespread nationalisation, may ultimately be required. While we are not there yet, today’s measures are a crucial step in the right direction. But we still think that a contraction, or at least sharp slowdown, in bank lending will lead to a prolonged period of economic weakness.”

*

Yesterday I didn’t bother to comment on Margaret Beckett’s daft* comments in the Sunday Times that the government needed to brace itself for the next housing boom and that first-time-buyers “shouldn’t delay” (“when the upturn comes, there will probably be a mad rush”).

Beckett sympathises with the view that renting is money down the drain: “Why is it that people in places like France or Germany or the Netherlands, or wherever, don’t want to, don’t care, about owning their own homes? Maybe it’s they who are the people whose attitudes are a bit surprising.”

The obvious answer lies deep in the RBS report.

“Debt servicing affordability is the best measure to predict property price levels, if not theoretical ‘fair value’…..It is currently cheaper to rent than buy UK residential property. To generate a rental yield 1 per cent higher than the average mortgage rate would require a further 20 per cent drop in house prices.”

* William Hague described the housing minister as “divorced from reality”.

It’s taken months and years for anyone in Labour to admit that the government’s housing policy has been based on false assumptions. Time after time, ministers claimed that there was a desperate under-supply of housing in the UK; ignoring the role of speculation and cheap debt in the housing boom.*

But Ed Balls came close on this morning’s Today programme.

Here is what the education secretary said:

“There was a pretty strong view that we had a growing demand for housing in this country and a rising population, but we had much lower levels of house building than we’ve seen in previous generations in the private and the public sector.

“Therefore, there was a pretty strong view, which may still in part be true, that the real level of house prices had gone up, because there was more demand and less supply.”

In politician speak this is code for: we are distancing ourselves from the old line. Maybe 2009 will be year when the government drops its target of 3m new homes by 2020.

Continue reading "Balls admits that there was a housing bubble"

The Council of Mortgage Lenders firmly denied reports from the BBC a fortnight ago that its 2009 forecast for repossessions would be 75,000. The CML’s spokeswoman said on the record that this was the wrong figure and the real number was likely to be significantly lower. This is what we said at the time.

Today, lo and behold, the CML has put out its forecast. It is of course 75k. Maybe we shouldn’t expect anything different from the group - which spectacularly failed to spot the crash coming.

The other striking prediction today involves the number of households in arrears increasing at an even more rapid rate:

“By the end of 2008 the CML expects 210,000 households to be more than three months in arrears, and this number is expected to increase to 500,000 by the end of 2009.”

The Treasury has just put out details of how its new anti-repossession scheme will work. (The one in which, if you lose your job, the bank will defer part of your interest payments for up to two years.)

They still only have support “in principle” from eight lenders. That means no change from last week’s announcement in the Queen’s Speech.

Here’s the link if you want to know more.

UPDATE: The Council of Mortgage Lenders are still lukewarm. “We still need clarification as to what the costs of the scheme may be for lenders.”