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Help to Buy is nothing but an election ploy....
Comments
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What fuelling a credit led recovery where people are saving less, and house prices are spiralling in a corner of the country whilst people are being lured into a bubble with artificial low rates. It seems to confirm his incompetence.
Indeed. The current government came to power talking about the need to "rebalance" the economy, and move away from the consumer spending / debt model. Three and a half years on, we have (on paper) a recovery driven largely by consumer spending and debt. HTB2 is just adding fuel to that particular fire, hence the almost universal doubts about the wisdom of the scheme from serious economic sources accross the political spectrum.
The shame for me, is that for all the problems caused by the credit crunch / recession, they provided an opportunity to do something truly different, and move away from the spending / debt model of recent decades (and under both main parties). HTB2 seems to me to be proof that rather than grasp this opportunity, the government has instead chosen to inflate the bubble in the run up to an election. Still, nothing can go wrong with this surely. After all, that approach has worked out so well for us in the past
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Indeed. The current government came to power talking about the need to "rebalance" the economy, and move away from the consumer spending / debt model. Three and a half years on, we have (on paper) a recovery driven largely by consumer spending and debt. HTB2 is just adding fuel to that particular fire, hence the almost universal doubts about the wisdom of the scheme from serious economic sources accross the political spectrum.
The shame for me, is that for all the problems caused by the credit crunch / recession, they provided an opportunity to do something truly different, and move away from the spending / debt model of recent decades (and under both main parties). HTB2 seems to me to be proof that rather than grasp this opportunity, the government has instead chosen to inflate the bubble in the run up to an election. Still, nothing can go wrong with this surely. After all, that approach has worked out so well for us in the past
what form would you have favoured for doing something truly different?
high interest rates?
restrictions on banking lending?
25% min house deposit?
increase in VAT to discourage consumer spending?
government setting up their own manufacturing industries?0 -
what form would you have favoured for doing something truly different?
high interest rates?
restrictions on banking lending?
25% min house deposit?
increase in VAT to discourage consumer spending?
government setting up their own manufacturing industries?
Well for starters, I wouldn't have done anything to support house prices. So no funding for lending for mortgages (although FLS for business was and is a good idea), and certainly no htb2 (although again, htb1 makes sense as it supports housebuilding and therefore jobs). I'd also have changed the tax treatment of btl (principally by removing the ability to offset costs against tax) to ensure that it was not a viable investment in most cases. This would be a start in terms of dealing with the relliance on ever rising house prices and consumer spending.
I'd then look at how more productive and viable businesses could be supported. Big tax breaks for green energy, scientific research, techology, and the R&D for manafacturing business would be a start. Someone on these forums made the excellent point that many inventions / breakthroughs are carried out by British Nationals, but very little of the IP behind these developments is British owned. Trying to address that would be a great start in moving forward.
The problem with that approach of course, is that it involves long term thinking, is difficult, and requires people to accept a greater (and probably longer) hit in their immediate living standards than will be the case if we simply pump up the debt bubble for the next cycle. So the short term route has been taken again, as it has been consistently in the UK for at least the last 50 years or so.0 -
Indeed. The current government came to power talking about the need to "rebalance" the economy, and move away from the consumer spending / debt model. Three and a half years on, we have (on paper) a recovery driven largely by consumer spending and debt.
We're coming through the biggest financial crisis that, touch wood, none of us will experience again but we're meant to be fussy about the shape of what tentative recovery there's been to date?0 -
Well for starters, I wouldn't have done anything to support house prices. So no funding for lending for mortgages (although FLS for business was and is a good idea), and certainly no htb2 (although again, htb1 makes sense as it supports housebuilding and therefore jobs). I'd also have changed the tax treatment of btl (principally by removing the ability to offset costs against tax) to ensure that it was not a viable investment in most cases. This would be a start in terms of dealing with the relliance on ever rising house prices and consumer spending.
I'd then look at how more productive and viable businesses could be supported. Big tax breaks for green energy, scientific research, techology, and the R&D for manafacturing business would be a start. Someone on these forums made the excellent point that many inventions / breakthroughs are carried out by British Nationals, but very little of the IP behind these developments is British owned. Trying to address that would be a great start in moving forward.
The problem with that approach of course, is that it involves long term thinking, is difficult, and requires people to accept a greater (and probably longer) hit in their immediate living standards than will be the case if we simply pump up the debt bubble for the next cycle. So the short term route has been taken again, as it has been consistently in the UK for at least the last 50 years or so.
all businesses get tax breaks already for R&D as it's a charge against profits
tax breaks for 'green' energy is already a disaster which is pricing many UK industries out of existence.
The idea of the government's civil servants 'choosing' economic winners doesn't seem very realistic.
lowering taxes on UK businesses (e.g. abolish corporation tax ) and increasing them on consumers (VAT) may well be good ideas.0 -
We're coming through the biggest financial crisis that, touch wood, none of us will experience again but we're meant to be fussy about the shape of what tentative recovery there's been to date?
Perhaps, yes. If all we've got is a short term increase in GDP caused by increased debt and reduced savings, then unless that in turn leads to something more substantial backing that up, we don't have really have a "recovery" at all. We've got the roots of the next crisis0 -
Perhaps, yes. If all we've got is a short term increase in GDP caused by increased debt and reduced savings, then unless that in turn leads to something more substantial backing that up, we don't have really have a "recovery" at all. We've got the roots of the next crisis
http://www.telegraph.co.uk/finance/comment/10422712/UK-economy-its-rebalancing-but-not-as-we-know-it.htmlThe UK economy is rebalancing – but not as we expected. Rebalancing is happening within the services industries rather than in favour of manufacturing industry. As long as this is accompanied by export success and rising employment, as it has been so far, we should welcome and support Britain’s services-led recovery.
Probably the 'wrong' sort of rebalancing to go with the 'wrong' sort of reductions in unemployment.
I'm much less worried. The direction of travel seems clearer than at any point in the last 5 years. If our economic partners pick up then our pace of recovery will quicken.
Doesn't mean everything will always be rosy (it won't) or that life will be perfect for everyone (it won't) or that there won't be future recessions or crises (there will).0 -
We're coming through the biggest financial crisis that, touch wood, none of us will experience again but we're meant to be fussy about the shape of what tentative recovery there's been to date?
Yes, because short term election fixes can be worse in the long run, and I doubt if that crisis was any more than a blip. The Financial sector hasn't been sufficiently reformed, and a disaster is always on the horizon until it is.0 -
Yes, because short term election fixes can be worse in the long run, and I doubt if that crisis was any more than a blip. The Financial sector hasn't been sufficiently reformed, and a disaster is always on the horizon until it is.
It's a work in progress. I don't see anyone getting carried away about the strength of the recovery - there's a long way to go.
However, after 5 years of doom and gloom there are glimmers of light - it's far too soon to worry about whether they're the wrong colour or intensity.0 -
- it's far too soon to worry about whether they're the wrong colour
Why should the colour matter?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0
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