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Wanted: new Government strategy

Own (v): to possess, be in charge of, manage, run…

It being party conference season there’s been the usual avalanche through of ideas that the various parties have had for boosting a) the economy and b) – probably rather more importantly in their leaders’ minds – their chances of election next time round.

So far, so so-so, I’d say. It looks like every man and his dog has realised the headline potential in saying that we need action to get the country building again.

The Lib Dems want to see an “aggressive programme of house-building”, the Labour Party is proposing to build 100,000 new homes and pay for them using the revenue for the sale of 4G mobile licenses.

And the Tories, OK they aren’t due to meet until Sunday but, if I can bring out my crystal ball here for a moment, will say that they are doing everything they can to get the economy back on track, the deficit down and… yada, yada, yada.

A year ago, Ed Balls announced at the Labour Conference that he supported the call for a reduction of VAT to 5% on housing RMI work. Not a sausage about that this time round.

The plaudits have all been for Ed Millband’s triumphant centre-stage speech, which he learned off by heart. (Jolly hard to remember all those lines and perform them in the right order in front of an audience. As any actor who’s played King Lear will tell you).

It’s all very well to go on about the key to economic growth being to build more houses. We – those in and on the periphery of the construction industry – have been banging on about it for years. But we need to see more action, less rhetoric.

The VAT reduction argument has been aired in these pages before (and will be again) as has the need for some QE to be spent on housing. Bu it also occurs to me that there’s another tactic that could help to boost the economy a little sooner than waiting for the Lib Dems’ 100,000 council house homes. The high street banks took such vast sums of tax-payers’ money that we, the general public, can be said to own a large chunk of them.

Well, if we own them then why doesn’t the government take action on our behalf and force them to lend some more of it back to us.

We need the Government to grow some you-know-whats and to square up to the banks and say: we bailed you out – now it’s payback time. Stop dicking around with lending decisions and just get on with it. For many, many people, the actual mortgage payments aren’t the problem and wouldn’t be, even if rates were to rise.

No, what most first-time, even second time in some cases, buyers are struggling with is the huge deposits required.

Start making 90% mortgages freely available to first-time buyers again. It would kick-start the property market (itself no bad thing), and it would enable young people – by which I mean those in their late 20s and early 30s – of this world to get into property ownership for the first time.

And for builders merchants, DIY retailers and their suppliers, it would give an immediate boost to sales, because most serious home improvement spending on kitchens, bathrooms, extensions and conservatories is linked to house sales.

Chances of this Government growing a pair and actually doing this? I’d say slim to none.

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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