Jim Pickard The risks of Osborne setting up a UK Fannie Mae

March 21, 2013 1:56 pm by Jim Pickard

George Osborne is edging Britain closer to an American-style government-backed mortgage market by promising to underwrite £130bn of new home loans over the next three years.

Mr Osborne’s advisers insist that the new “Help to Buy” scheme will not lay the foundations for a UK-style Fannie Mae or Freddie Mac. Yet there are striking parallels to the way that the former was set up by FD Roosevelt at the height of the Great Depression, underwriting about one in five US mortgages during its early years.

The two entities enjoyed implicit government backing for 50 years, and were nationalised during the financial crisis of 2008. At that time they were blamed for fuelling the sub-prime loan for relaxing lending criteria to low-income groups under pressure from the Clinton government.

By stepping up government involvement in the UK housing market and helping to

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Posted in UK politics |
From backed lending cause the US housing bubble? March 20, 2013

by Kate Allen

Britain’s Chancellor has today announced a substantial expansion of the government’s intervention in the housing market. Specifically, he’s going to give government backing to a great deal more mortgage lending. There have already been cries of “Fannie Mae!” as commentators remember the disastrous housing bubble in the US.

But were Fannie Mae and Freddie Mac really responsible for driving up house prices? Hmm, maybe not actually.

US mortgages and house prices

 

The striking thing about this chart is the divergence between total mortgage

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Posted in UK politics |

Budget 2013: FT readers’ reactions from Twitter and Facebook

March 20, 2013 6:37 pm by Financial Times

What was your response to the Budget? We asked readers on social media what the most important decisions were for them.

For Peter Curnow-Ford it was the stamp duty cut: Read more

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Posted in UK economy |

Tom Burgis The Budget

March 20, 2013 9:19 am by Tom Burgis
This is a Live Blog transcript. Read more

George Osborne fights to retain confidence in his stewardship of the economy with a crunch mid-term Budget.

By Ben Fenton, Lina Saigol and Tom Burgis on the newsdesk in London with contributions from FT correspondents in Westminster and beyond. All times are GMT.

 

Jim Pickard Changes to state pension will give exchequer enormous stealth windfall

March 19, 2013 12:55 pm by Jim Pickard

George Osborne will use his Budget on Wednesday to announce a further squeeze on public sector spending and pay to shore up government finances and provide some money for his pet projects.

Changes to the state pension announced at the weekend will bring the exchequer a stealth windfall of almost £6bn a year from 2016-17, mostly paid by public sector employers and employees in the form of increased national insurance contributions.

By banking much of the money generated, the chancellor will be able to challenge Labour to match his tough attitude to public sector workers or face a further black hole in the public finances.

Officials have indicated Mr Osborne will bank £3.3bn, more than half the windfall, with the remaining £2.2bn used to fund projects such as the Dilnot proposals on social care and other Treasury initiatives.

Mr Osborne’s windfall will come from the small print of the plan to introduce a single-tier pension at a minimum of £144 a week in 2016-17.

The chancellor said on Sunday the new pension would be a “huge boost” for pensioners but did not add that associated changes would see steep rises in national insurance bills  Read more

Posted in UK politics |

Jim Pickard Osborne plans new stealth raid on public sector workers’ pay

March 19, 2013 10:31 am by Jim Pickard

The chancellor has drawn up plans to find fresh savings from the public sector payroll by ending the historic system of “pay progression” enjoyed by millions of workers.

Teachers, NHS workers, police and civil servants in six departments currently enjoy regular pay rises along a sliding scale for their pay grade, so long as they meet career appraisals.

That explains why public sector pay has continued to rise despite a headline “freeze” to salaries since 2010.

But the Treasury has just set out new plans for departments to propose an end to “automatic time-served progression” as a way to save costs in the 2015-16 spending review, scheduled for June. Those changes would apply to the six departments which still Read more

Posted in UK politics |

Elizabeth Rigby The downsides of the childcare voucher scheme

March 19, 2013 10:30 am by Elizabeth Rigby

David Cameron and Nick Clegg were this morning falling over themselves to claim the credit for helping “hard working families” with news of a new voucher scheme that could be worth up to £1,200 per child.

After weeks of wrangling, the coalition was finally ready to press the button on a tax-free childcare scheme to replace the current “employer supported childcare” system. The new scheme will eventually reach up to 2.5m families – compared with the 450,000 who access the current voucher system – and include the self-employed. Read more

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Posted in Coalition, David Cameron, Nick Clegg, Tax, Treasury, UK economy |

Kiran Stacey Tory MPs voice concerns over Leveson deal

March 18, 2013 5:22 pm by Kiran Stacey

David Cameron is currently leading a debate in the Commons over the deal struck late last night to regulate the press with a Royal Charter. That debate has so far been characterised by a great deal of backslapping by all three party leaders, to the extent that Nick Clegg joked:

If all three parties behave like this after the general election, they’ll have problems fitting us all into Downing Street.

He had a slightly tougher time however when trying to explain the measures to the parliamentary Tory party, which met before the debate started. Read more

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Posted in Conservatives, David Cameron, UK politics |

Kiran Stacey Was Cameron asleep while the press deal was done?

March 18, 2013 12:59 pm by Kiran Stacey

British newspapersSince Thursday, the manoeuvrings over press regulation have taken increasingly more surreal turns.

First we had the prime minister abruptly calling off the talks, citing irreconcilable differences with Labour and the Lib Dems. Clegg and Miliband were only given a couple of hours’ notice about the announcement, journalists were given 30 minutes.

After that, it looked like the prime minister was heading for inevitable defeat in a vote today on the Lib-Lab proposals for a Royal Charter backed by statute. His aides seemed to recognise such, saying that the prime minister would promise to repeal such a law if there was a Tory majority in 2015. Read more

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Posted in David Cameron, Ed Miliband, Nick Clegg, UK politics |

Kiran Stacey Just how unpopular is George Osborne?

March 14, 2013 4:27 pm by Kiran Stacey

George OsborneSome fascinating economic research by Ipsos Mori, published today, shows that George Osborne is the least popular chancellor in nearly a decade, with net approval ratings of -33. Nobody has had such bad ratings since Ken Clarke in the early 1990s.

At first sign this is unsurprising: this is the first recession we’ve had since the early 1990s (if you take 2008-now as one recession). But actually when you plot the popularity of chancellor’s against economic growth, the two are surprisingly unconnected.

Plotting chancellors’ approval ratings since 1976 tells us a few things: Read more

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Posted in Conservatives, Recession, UK economy, UK politics |

Kiran Stacey PMQs: Miliband had all the ingredients and made Cameron mincemeat

March 13, 2013 1:19 pm by Kiran Stacey

Sometimes when a leader of the opposition has a lot of different attacks to make on a prime minister at PMQs, they try to spread themselves too thinly and end up not hitting home with any of their pre-prepared lines.

Not so today. Ed Miliband was faced with a choice selection of easy pickings with which to attack the prime minister, and blended them together perfectly to leave David Cameron looking red-faced and ineffectual.

The Labour leader began with an uncharacteristically well-delivered joke about the apparent u-turn on minimum alcohol pricing: Read more

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Posted in Conservatives, David Cameron, Ed Miliband, UK politics |

Kiran Stacey Tory MPs lash out at Welby

March 12, 2013 11:36 am by Kiran Stacey

Justin Welby outside the LordsThis morning we reported in the FT that bishops in the House of Lords are leading an attempt to exempt children from the below-inflation rise in benefits. This follows on from the comments of Justin Welby, the Archbishop of Canterbury, over the weekend, who said:

By protecting children from the effects of this bill, they can help fulfil their commitment to end child poverty.

But just as interesting as the bishops’ response to government attempts to slash the welfare bill has been the reaction of Tory MPs to the archbishop’s comments. Read more

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Posted in Conservatives, Treasury, UK politics |
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