It’s a long-standing joke that Labour and Conservative activists dislike the Liberal Democrats more than each other. But as so often, there is more than a kernel of truth to the humour – and the enmity is entirely merited.
This week’s announcement from Ed Davey that his party now supports a ‘Mortgage Protection Fund’, which will dole out free cash to homeowners whose repayments have increased by more 10%, is an almost perfect case study in why.
As a political move, it makes perfect sense. The Lib Dems are trying to peel away Tory voters in the so-called ‘Blue Wall’; many of those voters are or will soon be struggling with their mortgages, and thanks to Kwasi Kwarteng’s mini-Budget the Conservatives may end up taking much of the blame.
Indeed, the Government may be especially exposed because those homeowners facing the steepest rises will be those who have paid off the smallest share of their principal, i.e., recent buyers, many of whom will have acquired their houses under one the various demand-boosting schemes the Tories have advanced in lieu of supply-side solutions over the past decade, such as Rishi Sunak’s Covid-era stamp duty holiday.
With an estimated 100,000 households a month coming off fixed-rate mortgages and having to lock in higher rates, a lot of voters face years of being poorer, even if Jeremy Hunt does somehow manage to deliver strong economic performance overall.
But outside the realm of pure political calculation, the Mortgage Protection Fund is a grossly immoral policy.
For starters, it elevates the struggles of homeowning households over those of renters for no good reason. London in particular is in the grip of a spiralling rent crisis – if subsidising housing costs is the name of the game, why not use scarce public money to support tenants instead?
They have not chosen to make an investment, after all, whereas mortgage holders have. And whilst our dysfunctional property market means that it has generally been a safe bet that house values will rise over the past couple of decades, it is not an actual entitlement. Buying a home with a mortgage is an investment, and investments, as every advert takes care to warn you, carry risks.
However difficult higher rates make life for some households, they are nonetheless paying towards a future in which they own a fabulously valuable asset outright and can live mortgage-free. Tenants, on the other hand, are stuck paying other people’s mortgages – and getting hit by exactly the same squeeze as landlords try to pass on their costs.
As one wag on Twitter put it: English housing is pretty cheap when you factor in that you’re buying your way into a politically-protected class when you acquire it.
In theory, the Mortgage Protection Fund could at least have the merit of being targeted at younger homeowners rather than Boomers – but since the stated policy is cash support for any household that sees a 10% rise, regardless of the actual cash sums involved, it would still almost certainly see cash going to those who don’t need it.
Unfortunately, the recent story of British politics is that there is no surer way to get ahead than pandering to the asset-holding classes at the expense of everyone else. Meanwhile the Tories’ poll ratings with younger voters are so abysmal that there are plenty who will lend their support to the Lib Dems, even though they are just the party of the property interest in a yellow tie.
Just as the their NIMBY-based victory in Chesham and Amersham spooked the Government away from planning reform, it seems likely that this move will provoke the Tories into throwing even more money at subsidising soaraway housing costs and those who will eventually benefit from the attendant inflated prices.
If so, it will fit into what looks to be the broad pattern of the coming Budget, with taxes on working-age people going up and up whilst their services are cut, all in the name of making sure entitlements continue to be paid out.
Ultimately the major parties have to own what they do in government, even if pressure from smaller parties helps to explain it. David Cameron can’t blame the EU referendum on UKIP, nor Boris Johnson his abandonment of urgent reform on the Lib Dems.
But all of us stuck on the wrong side of this broken economy are entitled, I think, to hope there is a special place reserved in Hell for the Lib Dems, a fitting punishment for the totally shameless gap between their rhetoric and their actual politics.
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