Tuesday, September 02, 2008

Blears-Taxpayers Subsidise Housebuilders

Government attempts to dig itself out of an economic hole have begun with a short term fix to use taxpayers cash to prop up the struggling housebuilding industry, neatly spun as help for first-time buyers. 

Communities secretary, Hazel Blears, announced the scheme 'HomeBuy Direct', where people earning less than £60,000 will be offered loans free of charge for five years, followed by a "fee", on new properties, co-funded by the government and developers. 

Predictably both the BBC and Guardian report the government-spun line.

The scheme, along with other measures in a £1 billion package, is being spun to "help first time buyers". It will do nothing of the sort but it will help private house builders. 

This means taxpayers are to subsidise the big private house building firms which have suffered badly in the housing slump. This is despite the fact that private house builders already make a profit on the sale of new houses. 

Even the long-winded department for communities and local government (DCLG) admits to the hot air:

"This will help the housebuilding industry weather difficult conditions, so that, when the market recovers, they are ready to expand and get back on with building the new homes the country needs for the long term."

In addition the DCLG says there will be a "fee", once the five-year "free" period is up. 

The £300m move may help big business but will do nothing for people struggling with debt due to the steep rise in the cost of living and food and fuel prices. 

And just how many people actually want to buy a new house and want to be saddled with the debt and a "fee" in five years time, when the so-called loan runs out? 

Blears and Brown say it shows the government is listening. But both the Conservatives and LibDems have been quick to see the whole £1 billion package for what it really is. 

Conservative shadow chancellor, George Osborne, said: "I suspect that what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather that the long-term economic plan the country needs."

LibDem leader, Nick Clegg, said: "This looks like a hotchpotch of measures thrown together to save Gordon Brown's political skin. Yet again the government is desperately scrabbling around for a way to fix problems of its own making."

This first raft of measures to 'kick-start the economy' due to be announced by Brown's ailing New Labour government  is not a promising start. 

No comments: