Consider the financial realities. If a young person wishes to buy a home and is fortunate enough to have an incredibly secure job, then they will need to raise a 5% deposit and can expect to borrow 3 times their income. How many young people have £15,000 at their disposal and have a steady job that pays £95,000 a year?
But the government doesn't want them to worry. It has introduced a new right to buy ISA which means that a few lucky purchasers will get a £3,000 contribution to the deposit. This will mean that they will now only need to earn £94,000 a year.
This doesn't immediately seem like the most worthwhile or sensible use of taxpayer's money. Particularly as every new person who is able to buy a house as a result adds to demand and simply drives the price up for others. Unless the Chancellor is seriously ignorant of the laws of supply and demand then he must know this. So his policy can only be designed as a piece of window dressing to enable him to tell voters he is trying to help them. I was therefore not entirely surprised to hear a major radio campaign, paid for with tax payers money, advertising the new policy. Taxpayers money is being used to subsidise Conservative propaganda.
A better way of using the available funds would be to set up a fund to help housing associations and local councils to borrow money to build new homes and increase supply. Even a small amount of national government funding could be used by councils and housing associations to lever in very large amounts of finance for building projects as it could be used to back borrowing.
A determined policy of increasing supply of dependable public sector housing requires little or no additional government revenue expenditure. Any government should be enthusiastically using the option if it cares about the security of tenure of the great mass of young people who don't earn £94,000 a year and don't have families who can stump up substantial chunks of £300,000 from their savings.
The Chancellor's policy is the exact reverse. He has committed himself to refuse to allow any expansion of public sector borrowing to invest. And he has threatened security of ownership of the assets of housing associations via trying to force charities to sell off their most valuable assets, thus weakening their reliability as borrowers.
Instead he is trying to solve the problem of supply by weakening planning restrictions on private sector building developers. This is being sold as a brave determination to remove tiresome restrictions. Nothing could be further from the truth. The regulations which have been in place under governments of every persuasion for over 60 years are there to ensure two things. Firstly that developers build in places which are suitable and secondly that they build what is needed. When restrictions are removed what builders do is to buy up cheap and easy green field sites to build expensive three and four bedroom homes for people who already own one home and are looking to trade up. Without serious planning regulations they rarely go for the harder option of transforming derelict land or ageing buildings into apartments that young people might conceivably be able to buy.
In the absence of the right kind of supply from the private sector and anything like an adequate availability of public sector housing more and more young people are being forced into private rented accommodation. Increased demand has pushed up rents and made landlords and their agents increasingly confident of being able to rent out properties at frighteningly high rents. Across the country the average rent for a household is £995 per month before running costs. This represents the entire after tax earnings of a typical graduate I know who has just started out in a reasonably good job in Yorkshire. In London and surrounding areas salaries are better but the rents are also massively higher. For many young people a huge proportion of what they earn is going simply in paying rent and associated costs. In return their only security is a six month lease that can be ended at any time. These are not circumstances in which anyone would wish to try and bring up a young family.
The government's programme to help and support the over 60% of young people who now rely on the rental sector is ...... well it isn't. There is no sign of any legislation or action to try and control problem agents who charge large signing on fees and then force tenants out after six months so that they can charge someone else. There is no sign of any help to rent programme. If anyone proposed such a thing the government would quickly squash it by saying, quite rightly, that subsidised rents simply distort the market. Yet taxpayers money is being spent on useless market distorting right to buy subsidies.
The ideological blind spot could not be more clear. A government that claims to represent the entire country is completely failing to represent the rental generation. It is busy repeating mantras about home owning democracy just as the phenomena disappears for the next generation. We are gradually returning to a Victorian world where the only realistic way of acquiring property is to inherit it or to receive massive support from a wealthy family.
I don't know about George Osborne but I don't see that as a sign of a particularly healthy direction of development for society.