Henry G Manson on George’s cabinet quip
George Osborne is said to have quipped at a Cabinet meeting earlier this year ‘hopefully we will get a little housing boom and everyone will be happy as property values go up.’ Like Gordon Brown before him, Osborne is political to his fingertips and his dual role as general election co-ordinator explicitly reflected that. The policy seems to owe much more to the political tactician rather than the office of Chancellor. The £600,000 cap is tailor made for the South East where the Conservatives need to keep a lock on seats if they’re to have a chance of denying Labour a majority and home owners are more likely to support Conservatives than those in rented accommodation.
While the policy itself will no doubt be quite popular, there are risks. The questioning of the Chancellor’s motives by analysts, journalists, think tanks and groups ranging from Shelter to the Institute of Directors could undermine the Conservative’s wider message that it is taking difficult decisions now for longer term gain in the future. Similarly rising house prices could manufacture a modest feel good factor among property owners, but it will mean more mortgage debt and some discomfort for first time buyers.
This particular government policy also undoes Conservative arguments against some of Labour’s other flagship pledges. At PMQs this week Graham Jones asked the most effective question of the session: “Why is market intervention in mortgages okay, but market intervention in the energy market is not?”
Will the political benefits to the Conservatives exceed the costs of this policy? I imagine broadly they will. But the future economic costs and risks are uncertain and the reputational harm to the Chancellor being seen to be overly political calculating shouldn’t be entirely dismissed.