Welcome for £1.6bn boost to housing markets

From The Herald

September 3, 2008

Welcome for £1.6bn boost to housing markets

he policy's cost to the UK taxpayer is estimated to be £600m. However, neither No 10 nor the Chancellor could say where the money would come from, noting only that all would be explained in the pre-Budget report, due in November.

Political opponents yesterday accused the beleaguered Prime Minister of simply cobbling the package together to save his political skin and some senior Labour figures still predicted a leadership challenge by Christmas, believing the party cannot win the next General Election under Mr Brown.

Whether the measures will affect the housing market was being hotly debated but at a political level Gordon Brown left his own supporters unconvinced by what was meant to be the beginning of his autumn relaunch. At Westminster, one UK Government minister insisted Labour could not win under Mr Brown.

Another MP declared how there would definitely "be a challenge" to the PM, probably before Christmas, while a third was adamant that it was now a question of "damage limitation".

"We're going to lose the next General Election; the question is whether or not we lose a few seats or are out for years. We can't win under Gordon but we might just win it narrowly under someone else or at least limit the damage. He'll be out by the New Year."

Mr Brown, who faces a crucial month culminating at the Labour Party conference, said the package of measures showed the government was taking action to help people through difficult times "Homeowners need to know that we will do everything we can to keep the housing market moving," he said.

Alistair Darling, who claimed at the weekend that the economic circumstances were the worst in a generation, said he remained optimistic. "We will get through it and today's measures, helping the housing market, are one example of how the government can help people," said Mr Darling.

George Osborne, the Conservative Shadow Chancellor, seized on the Treasury's failure to identify how the stamp duty holiday would be funded while the Liberal Democrats said the beleaguered Prime Minister was trying to "bribe" voters.

"This is a short-term survival plan for the Prime Minister, not a long-term recovery plan for the economy," said Mr Osborne. "They've had months to prepare and on the day it's launched they can't even tell us how much it costs, or where the money's coming from."

The SNP Government said the package had not gone as far as it would have liked. In common with the Conservatives, the SNP have pressed to suspend stamp duty up to £250,000 and point out that the revised mortgage interest support scheme, starting in April 2009, would come too late for those facing difficulties right now.

Estate agents and building industry representatives in Scotland cautioned that the package would have limited impact on lenders' reluctance to offer mortgages.

Jonathan Fair, chief executive of Homes for Scotland, which lobbies for the building trade, said the raised stamp duty threshold was a "positive step" that would improve consumer confidence but added: "If the government is serious about re-energising the housing market, it must immediately address the fundamental issue of mortgage funding."

Michael Luck, managing director of Slater Hogg & Howison estate agents, said of the Chancellor's announcement: "It will be helpful in allowing first-time buyers, who are unlikely to get more than a 90% mortgage, to save a bit more to put towards their deposit. It will definitely assist in bringing more buyers into the market."

In common with the Scottish Government's affordable housing package, Westminster is raiding future budgets to kickstart a social housebuilding programme.

This meant, explained the Treasury, that there would be no Barnett Formula consequence for Scotland because the money was not new.