George Osborne's flagship Help to Buy housing scheme is dangerous and risks "detonating a bomb under the British economy", David Cameron's new housing advisor has said.
According to today’s Times, Alex Morton, who joins the Number 10 team next week, has expressed strong misgivings about the Chancellor’s Help to Buy scheme, which provides loans to prospective homeowners worth up to £600,000.
As the Times (£) reports:
‘Mr Morton, who was poached by Downing Street from the centre-right Policy Exchange think-tank, has warned that Help to Buy is likely to lead to “boom and bust”. He also compared the scheme to a US government attempt to bolster the housing market that ended in “complete disaster”.
‘Writing about the controversial scheme in the summer, he said it risked “creating a mini property bubble that will then collapse in early-2017 as the funding is withdrawn”. He said it may dent the political recovery enjoyed by the Chancellor since the disastrous 2012 Budget, which appeared to have damaged his chances of becoming Tory leader. Mr Morton added that the scheme should be “heavily revised”.’
Help to Buy was first announced in April, and in July George Osborne promised stricter testing of those who can afford mortgages as well as a ban on second home purchases through the scheme.
Help to Buy has been strongly criticised by a number of experts since it was introduced by the chancellor to help first time buyers get on the housing ladder. The Institute of Directors described the scheme as “very dangerous”, and former United States secretary of the treasury Larry Summers said it “goes against basic things taught in economics textbooks”.
In June, Albert Edwards of French bank Societe Generale also called the policy “truly moronic”, and said it stood “head and shoulders above most of the stupid economic policies I have seen implemented during my 30 years in this business”.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.