Afternoon summary
- Boris Johnson has raised the spectre of a 1970s-style “wage-price spiral” that could force the Bank of England to push up interest rates dramatically, if workers demand to be compensated for rocketing prices. The PM made the speech in a major speech in Blackpool on the cost of living and housing. See 3.33pm for a full summary.
- Charities and housing experts have criticised plans announced by Johnson to extend right to buy to housing association tenants. (See 12.01pm.) Labour criticised the plans too. Lisa Nandy, the shadow levelling up secretary, said:
This speech was yet more evidence that the prime minister and his tired government are out of ideas. You can’t solve a housing crisis with back of the envelope policies that have no realistic chance of success.
Every family deserves the security of their own home, but under the Conservatives housing has become more insecure and unaffordable. Homeownership rates have plummeted. Nearly 200,000 socially-rented homes have been sold off. The impractical proposals announced today will do nothing to fix that.
The Resolution Foundation thinktank has welcomed the fact that the housing plans announced by Boris Johnson today would address an anomaly in the benefits system. But only a small number of people are likely to benefit, it said. Lindsay Judge, a research director at the foundation, explained:
The prime minister has identified an anomaly within our benefits system, where renters are treated significantly more generously than homeowners on identical incomes. 5.4 million renters receive help with housing costs compared to fewer than 15,000 mortgagors. This is hard to defend in principle.
His proposal is to partially address this by allowing first-time buyers on benefits to keep receiving help with housing costs after they become an owner. This will be significant in cash terms for some – a typical renter on housing benefit currently receives £112 per week in housing support.
However, the number of people affected is likely to be small given that the deposit is the main barrier to home ownership. More than four-in-five families on means-tested benefits have no savings at all and high cost of living pressures means a second change that allows benefit recipients to save into certain savings accounts without seeing their benefits cut is unlikely to lead to a surge in savings. In reality, those most likely to benefit will be receiving support from elsewhere – be that via right to buy or financial support from family members.
Starmer accuses Johnson of taking 'wrecking ball' to relations with Ireland and EU
Keir Starmer has accused Boris Johnson of taking a “wrecking ball” to relations with Ireland and the EU. Speaking on a visit to Dublin, where he met the taoiseach (Irish PM), Micheál Martin, and the president, Michael D Higgins, Starmer said the UK should reach an agreement with the EU on changes to the Northern Ireland protocol instead of pushing ahead with legislation to allow it to be changed unilaterally. (See 4.05pm.) Starmer said:
As someone who cares deeply about the relationship between Ireland and the United Kingdom, I’m concerned about the comments that have been made.
Of course there are challenges with the protocol, but I think that we have faced much greater challenges than that in our shared history and I think we can deal with the remaining issues.
We’ve faced bigger problems than this. With good faith, statecraft and trust around the negotiating table, which is what a Labour government would bring, these problems can be overcome. But a prime minister without those attributes taking a wrecking ball to the relationship is not going to help anybody.
Trust is very important in all of this and this prime minister does not have the trust, or I fear he doesn’t have the trust, to negotiate in the way that I actually think would lead to a solution to the problems.
Updated
Greensill scandal could happen again because conflict of interest rules not tough enough, MPs told
The Greensill scandal could happen again because the government has not changed procedures enough since it came to light, Tory peer Eric Pickles has warned. PA Media reports:
Lord Pickles, who chairs the advisory committee on business appointments (Acoba), said there is still a “deeply worrying” lack of systems for “managing conflicts” when civil servants leave government departments.
Acoba guides the government on its approach when hiring former ministers and senior civil servants, and when they leave for other jobs.
Pickles gave evidence to the public administration and constitutional affairs committee in the Commons, which was discussing standards in light of the Greensill scandal.
He told the committee: “I am not confident that something like Greensill couldn’t happen again because I don’t believe that departments have put in a system that’s robust and clear. Much of what we exposed on Greensill was that it was all on the basis of a wink and a nod and it all seemed perfectly okay.”
The Greensill scandal relates to lobbying activities on behalf of the now defunct financial services company Greensill Capital, which implicated former prime minister David Cameron.
It also involves the government’s former chief commercial officer, Bill Crothers, who began working as an adviser to Greensill Capital in 2015 while still employed in the civil service.
When asked whether his concerns about government departments’ internal processes for managing possible conflicts for civil servants who leave the service without going through Acoba had been assuaged, Lord Pickles said: “No. If anything my concerns have increased in the last year.
“Government departments are rubber stamping things that are plainly wrong, so you have to go through the process of explaining to the departments themselves that there’s a problem that they need to address. If that is happening at the very top it makes you wonder about what’s going on further below the surface.”
Updated
Northern Ireland protocol bill expected to be published on Monday
The long-awaited plan to “fix” problems with the post-Brexit protocol under which Northern Ireland is treated differently to Great Britain were hoped to be published today, but have been pushed into next week.
The frenzied focus of government ministers on saving Boris Johnson’s premiership means the controversial legislation to unilaterally override the protocol is likely to be published on Monday.
There will also be a summary of the legal position released, which the government says confidently will show it is not breaking international law. However, the full legal advice will not be disclosed.
It is understood the foreign secretary, Liz Truss, has no upcoming meeting or talks with senior EU figures, so the UK will pursue the plans and leave it up to Brussels to change its negotiating stance.
Given the tumult of the Brexit days, Tory MPs said they faced a “nerve-wrecking wait” for the publication of the bill. When it starts its progression through parliament it is expected to trigger a significant number of rebellions because many MPs believe it could break the deal signed by the UK and EU.
Today the senior Conservative backbencher Sir Bernard Jenkin said he voted for the withdrawal agreement “against my better judgment” and added that if the bill did not seriously improve the chances of restoring the executive in Stormont, “I will vote against it”.
Updated
Summary and analysis of Johnson's speech and Q&A on cost of living and housing
Boris Johnson’s keynote policy speeches haven’t always been a triumph. At times (particularly when Johnson started banging on about olives and bananas) this one started to sound rather peculiar. But in the end it covered a lot of ground, which Johnson fleshed out a bit in his Q&A at the end.
Here is a summary and analysis of the key points. I have not covered the housing announcements much here because they have already been covered extensively in the blog earlier.
On the cost of living and the economy generally
- Johnson signalled that public sector workers should expect below-inflation pay rises. Responding to inflation just by putting up pay would be inflationary, he said. And he warned that if a wage-price spiral took hold, the only solution would be higher interest rates. He said:
We can’t fix the increase in the cost of living just by increasing wages to match the surge in prices, I think it’s naturally a good thing for wages to go up as skills and productivity increase - that’s what we want to see.
But when a country faces an inflationary problem you can’t just pay more and spend more, you have to find ways of tackling the underlying causes of inflation.
If wages continue to chase the increase in prices then we risk a wage-price spiral such as this country experienced in the 1970s.
- Johnson restated his desire to cut taxes later this in this parliament. He is now under intense pressure from Tories to cut taxes and, although he gave no firm commitments, he strongly signalled that tax cuts were being planned. The clearest sign of this came when he was asked about a report in today’s Times claiming ministers are considering cutting income tax by 2p in the pound in 2024, not 1p in the pound (as Rishi Sunak has already promised). Normally ministers play down stories like this (even if they are true, or especially if they are true) because otherwise they risk raising expectations. But Johnson made no attempt to do this, simply telling the reporter who asked: “You are just going to have to contain your impatience there.” He also said the government was “strongly inclined to stimulate further growth, further productivity with tax cuts as and when they become sensible”.
- He said the current level of the tax burden was very high and “an aberration”. He said:
The overall burden of taxation is now very high. Sooner or later - and I would much rather it was sooner than later - that burden must come down.
It’s an aberration, the burden of tax, caused in no small part by the fiscal meteorite of Covid.
Johnson was right about the tax burden being very high. But he was wrong to imply that this was mainly due to the pandemic. The biggest single tax increase announced recently has been the £12bn a year health and social care levy, which was introduced to fund the promise Johnson made in 2019 to reform social care.
- He suggested he would like to cut tariffs on food imports. He said:
We need to grow and eat more of our own food in this country and it is sensible to protect British agriculture from cut-price or substandard food from overseas.
But we are also on the side of British consumers.
We do not grow many olives in this country that I’m aware of. Why do we have a tariff of 93p per kilo on Turkish olive oil? Why do we have a tariff on bananas? This is a truly amazing and versatile country, but as far as I know we don’t grow many bananas, not even in Blackpool.
Johnson did not elaborate in his speech on what he meant by this passage, and he was not asked about it in the Q&A. It is probable that he opened a window into a policy debate that is live within government. Some Brexiters think the government should unilaterally reduce tariffs on food imports to cut prices for consumers. But other ministers are argue that cutting tariffs unilaterally throws away the main bargaining chip the UK has when negotiating post-Brexit trade deals with other countries.
- Johnson refused to rule out further cuts in fuel duty. He said the government wanted companies to pass on the cut already announced to consumers. But when it was put to him that fuel duty was already too high, he replied: “I hear you.” He also said the government would continue to do everything in its power to look after the British people.
On housing
- Johnson effectively confirmed that the Tories no longer feel bound by the commitment in the 2019 manifesto to reach a target of building 300,000 homes by the middle of this century. Asked if this still applied, Johnson replied: “I can’t give a cast-iron guarantee we are going to get to a particular number in a particular year.” Michael Gove, the levelling up secretary, effectively abandoned this target in an interview last month.
- Johnson confirmed that the government will extend right to buy for housing association tenants, launch a review of the mortgage market, and make it easier for benefit claimants to save and fund a mortgage. The full details are in a news release here.
Other topics
- Johnson said there are too many manned ticket offices in rail stations and some need to close. He said:
It is time for us all to grasp the nettle of reform, and move – sensibly and responsibly – to the end of some outdated working practices.
There are fully manned ticket offices in this country that barely sell a ticket a week.
Ten years ago, as chairman of Transport for London, I moved to take advantage of new technology by closing those ticket offices on the underground.
It was initially painful and the union chiefs predicted catastrophe, but we successfully made the argument that staff were better and more productively deployed on the platforms, interacting with the public.
The time has come to do the same thing across the transport network.
The union barons will once again protest.
But the winners will be railway staff – whose industry will be placed on a much sounder long-term footing – and the fare-paying travelling public.
Adam Bienkov from Byline Times says the closure of ticket offices on the underground by Johnson as mayor of London was a breach of an election promise.
Boris Johnson boasts about closing all the ticket offices on the Tube when he was Mayor of London, against opposition from unions.
— Adam Bienkov (@AdamBienkov) June 9, 2022
Here’s a reminder of what he promised when running for mayor. pic.twitter.com/TtdcCnrWYL
- Johnson said he could cut the size of the civil service without affecting the delivery of government services. He said:
It cannot be right that the size of the central government has increased by 23% since 2015. There are 91,000 more officials than there were. I believe we have the best civil service in the world but, in view of the pressure now on families, we have got to find efficiencies, prune back Whitehall to the size it was only five or six years ago. I think that’s something we can achieve without harming the public services they deliver.
The civil service unions argue that one reason why more officials are needed is that Brexit has created a great deal more work for central government.
- He said Ukraine should not be forced to accept a “bad peace”. He said:
Never mind that abandoning the Ukrainians would be morally repugnant, since they are the victims, and they have an absolute right to defend a free and independent country.
We are simply not in a position to tell them what to do ...
To encourage a bad peace in Ukraine is to encourage Putin and to encourage all those around the world who believe that aggression pays.
That would be a mistake that would open the door to further conflict, further instability, further global uncertainty and therefore further economic misery.
This was seen as a rebuke to other European leaders who are more keen on finding a resolution to the war in Ukraine.
Updated
And here is the government press release with full details of the housing package announced today.
The press notice claims 2.5 million people could benefit from the right to buy proposals. It says:
Two and a half million tenants renting their homes from housing associations will be given the right to buy them outright, the prime minister has announced.
In a speech today, he has confirmed an extension of the popular right to buy scheme, which has made home ownership a reality for two million households since the 1980s.
Currently, tenants in council homes are eligible to buy their homes at a discounted price, up to 70% off the market value dependent on how long they have lived there. However, the scheme is less generous for those in homes owned by housing associations.
Extending the scheme could benefit up to 2.5 million tenants who would gain the right to buy, freeing them up to become homeowners, and add value and make improvements to their home as they wish. The government will work closely with the housing association sector on the design of the scheme.
But this is misleading because Michael Gove, the levelling up secretary, said clearly this morning that there would be a cap on the number of homes that could be sold under this scheme. See 10.18am.
Here is the full text of Boris Johnson’s speech.
I’ll post a summary and analysis of the key points from the speech, and the Q&A, shortly.
Updated
Peter Apps from Inside Housing says Boris Johnson’s claim to have built more homes as London mayor than Sadiq Khan, his Labour successor, is misleading.
A slightly out of date (but still broadly relevant) factchecker from me on Boris Johnson's claim to be "massively outbuilding" Sadiq Khan as London mayor
— Peter Apps (@PeteApps) June 9, 2022
TL;DR - no, he did not, if you apply any sort of fair criteriahttps://t.co/VmScwvfJcV
Johnson's claim can only stand up if you credit him with homes started by the preceding Labour government which happened to be finished on his watch, but he had no control over. If you look at the programmes he actually designed, they performed pretty badly
— Peter Apps (@PeteApps) June 9, 2022
Since we're talking about social housing, I'd also draw particular attention to this bit: pic.twitter.com/iJFH3jaGmV
— Peter Apps (@PeteApps) June 9, 2022
Updated
Johnson warns of ‘wage-price spiral’ if workers demand higher pay
Here is my colleague Jessica Elgot’s snap story on the Boris Johnson speech.
Q: Why does the OECD think the UK will have the lowest growth in the G7 next year? What is the UK doing wrong?
Johnson says that because of the steps the UK took, it came out of the pandemic first. It had a faster recovery.
And it is particularly exposed to the energy price shock. It is not self-reliant enough. It failed to invest in nuclear.
The government is trying to rectify that, he says. It is “stampeding” towards more offshore wind and more nuclear.
There will be an abatement of those costs in the forseeable future, he says.
The IMF has the UK returning to, or near to, the top of the G7 growth league in the near future, he says.
He says his speech was designed to show that there will be pressures, but we will get through it.
Q: What will you do if petrol companies do not pass on the fuel duty cut?
Johnson says the government is watching this. He will not anticipate the fiscal decisions to be taken by the chancellor.
And that’s it. The Q&A is over.
Updated
Q: Shouldn’t you be cutting tax now?
Johnson says some tax cuts are already in the pipeline. But he says the government will look at how it can sensibly reduce taxes in the future.
Q: Are you considering cutting income tax by 2p in the pound in 2024, not by 1p in the pound as planned?
Johnson says the questioner (Geraldine Scott from the Times) will have to contain her patience. But he says the government does want to stimulate further activity with tax cuts, when it becomes sensible.
Q: You are committed to building 300,000 new homes a year by the middle of this decade. Can you promise to hit this? And doesn’t that mean dealing with nimbyism?
Johnson says you have to go back to 1968 to find a time when we were building more than 400,000 homes a year. We have never built houses fast enough.
But we are sensitive to development, he says. He says that is right. Development needs to be in the right place. He says the Michael Gove reforms address this; they should allow the right development to go ahead.
He says he cannot give a cast-iron guarantee that the government will hit a particular number in a particular year.
He says you do not want to build on precious green belt land.
The trick is to make sure you put in the right infrastructure, to enable development to go ahead.
He discusses Barking Riverside in London. Without transport, these developments are not viable for developers. And if they are not viable, there will be no affordable housing either.
He says government infrastructure spending is partly designed to ensure that developers build homes where people want them.
Q: Petrol prices have now reached £100 for the price of filling up a family car. Isn’t fuel duty still too high?
On this, Johnson say: “I hear you.”
He says he wants to see cuts to fuel duty passed on. The government is watching the companies very closely.
Asked about fuel duty being cut, he says he cannot comment on budget matters. But he says people know the government will look after them.
Updated
Q: Isn’t the main problem with housing supply? There aren’t enough affordable homes. Won’t this plan just lead to the few affordable homes that are available being sold off?
Johnson says he does not accept that. He says a “huge number” of affordable homes are being built now. He claims in one year the Conservatives built more affordable homes than Labour did in 13.
The UK has a large amount of social housing, he says.
It sounds like he has been reading the CPS report, which makes exactly this argument. See 1.05pm.
He says the way to have more affordable housing is to have more housing full stop. Any development should have a mixture of housing. But Labour imposed such tough restrictions on developers that building did not take place. He says he wants to “get the market going”. He goes on:
That is always how we outbuild the Labour party.
The speech is over. Johnson is now taking questions.
Q: People are worried about the cost of living. You say you can deliver. Yet 40% of your MPs think you cannot.
Johnson says he hoped the questioner (the BBC’s Chris Mason) would ask about policy. But he says he respects the BBC. The answer, he says, is, look at what the government has done already. He says this is a problem following on from Covid. It is important to level with people about the problems they face.
He says people find home ownership difficult to attain. That is wrong. He wants to change that, he says.
As for delivery, Johnson claims he built more social housing than both Labour mayors of London, Ken Livingstone and Sadiq Khan.
Johnson repeatedly stresses that the goverment is “on your side”.
As the BBC’s Peter Saull points out, that was Labour’s local election slogan.
Boris Johnson now doing some proper trolling of Labour, by borrowing their local election slogan and repeatedly insisting "we're on your side."
— Peter Saull (@petesaull) June 9, 2022
Johnson says it is wrong for the government to be spending so much money on landlords. Quoting the figures given out at the No 10 lobby briefing (see 12.46pm), he says it is time to put this “huge wall of money” to better use.
He explains the plan to let claimaints use their benefit money to pay for a mortgage, instead of just using it for rent.
And he ways the government will allow claimaints to save for a deposit.
Promoting home ownership like this will be a massive social benefit, he says.
Johnson says the government is legislating to protect the rights of tenants and leaseholders. It will make it easier for leaseholders to buy their freehold, he says.
He presents this as the completion of Margaret Thatcher’s right to buy revolution.
Johnson is now talking about right to buy.
The number of tenants using this freedom has diminished, he says.
So now is the time to expand it. He wants to deliver on the longstanding promise to extend the right to buy to housing associations, he says.
He says there are 1.6m households in council houses, but 2.5m households in housing association homes.
The government will work with the sector on a plan to achieve this, he says. He says there will be one for one replacement.
Johnson confirms review of mortgage market, saying 'we want to make it easier to get mortgage'
Johnson now turns to housing, which he says accounts the biggest single chunk of household spending.
He says just 31% of people from the millenial generation own their own home in the UK. In France it is 41%, he says.
He says too few homes are being built.
And prices have escalated, with the result that deposits are becoming unaffordable.
We want to make it easier to get a mortgage.
He says the government will work with the industry to achieve this. There is a healthy supply of 95% mortgate, he says. But the government wants to go forward, and so he is announcing a review to ensure a better supply of low-deposit mortgages.
Johnson says government wants to cut number of manned ticket offices at rail stations
Johnson says there are too many manned ticket offices at rail stations that are underused.
He says the government wants to close some of them, as he did on the London underground when he was mayor of London. He says the unions will complain, but customers and staff will benefit, because the finances of the railways will be placed on a sounder footing.
Johnson suggest tariffs on food imports should be cut
Johnson suggests he wants to cut tariffs on food imports.
He asks why the UK has tariffs on Turkish olives and Turkish olive oil, and on bananas.
This is a truly amazing and versatile country. But as far as I know we do not grow many bananas, not even in Blackpool.
Johnson says the government can cut the amount it spends on administration without affecting services.
And it will cut the burden of regulation, he says.
Liam Halligan from GB News thinks this is reminiscent of the Jim Callaghan speech from 1976 (which was seen as a harbinger of monetarism).
This is a really weird speech so far. Boris Johnson sounds like Jim Callaghan in 1976:
— Liam Halligan (@LiamHalligan) June 9, 2022
“We used to think you could spend your way out of recession. I tell you now in all candour that we can’t … “
It’s pretty astonishing a Tory PM has to restate such basic economic nostrums...
Johnson says current level of taxation burden is 'an aberration'
Johnson says the government is levelling up, and keeping promises that will transform lives.
But this costs money. And the burden of taxation is very high.
Sooner or later that must come down, he says. He says the current level is an aberration - partly caused by Covid.
The tax burden must come down. And to do that, government must introduce supply side reforms and cut the burden, he says.
From the i’s Paul Waugh
Johnson: "if wages continually chase the increase in prices...then we risk a wage price spiral"
— Paul Waugh (@paulwaugh) June 9, 2022
Big contrast with his remarks at last Tory conf, when he talked of high wage Britain and told @BethRigby fears of inflation were 'unfounded'.
Johnson says government cannot simply respond to rising inflation by paying people more
But government must face some realities too, Johnson says.
He says the government cannot do everything. During the pandemic, it focused support on people who need it most.
Johnson says the government has to accept that some forms of support could be inflationary.
And he says that means, when inflation is going up, the government cannot just “pay more and spend more”.
Government must tackle the causes of inflation. Otherwise there is a danger of a “wage-price spiral”.
When a wage-price spiral starts, the only cure is higher interest rates. But that is bad for jobs, bad for everyone, and it adds to the cost of borrowing for government.
Johnson says the headwinds are strong. But engines the government has are stronger.
Johnson sums up some of the measures already taken by the government to help people with the cost of living. They are worth £37bn in total, he says.
He says the government has the “fiscal firepower” it needs to help.
But it can only do this because of how it responded to the Covid, which allowed the economy to open up quickly.
He says the government will continue to do what it can for as long as it takes.
Johnson says, even though war has driven up prices, abandoning Ukraine would be 'morally repugnant'
Johnson says he wants to address the causes of the problem.
People can see the effect of rising prices.
Six months ago there were grounds for thinking that the laws of supply and demand would kick in, and address the problems caused by the post-pandemic surge in demand.
But the Russian invasion of Ukraine changed that, he says.
Markets have responded with a significant spike in prices, partly driven by sanctions, partly by the elevated risk premium, the inevitable increase in what businesses have to charge to compensate for raised global levels of uncertainty.
The price of oil and gas looks likely to remain high for a while to come, and the same goes for grain and feed and fertiliser.
Johnson says some people will argue that the price of supporting Ukraine is too high.
But abandoning Ukraine would be “morally repugnant”, he says. And it would encourage President Putin.
[Putin] would be able to continue to twist the knife in the wound, the crocodile would simply come back for more and he would be able to claim that his aggression and his violence had paid off.
That would be a disaster for Ukraine and all the other parts of the former Soviet Union that he might attack.
Updated
Boris Johnson's speech on housing and cost of living
Boris Johnson is delivering his speech in Blackpool. He is starting now.
He says that over the last 70 years, while the Queen has been on the throne, there has been an “unimaginable” change in the quality of the lives that people lead.
But progress has been uneven, he says.
Today we are living in the aftermath of the pandemic. We are “steering into the wind”. But we will get through it, just as we got through Covid.
People are not facing the misery of the 1980s and the 1990s, when there was mass unemployment.
Now there are more job vacancies than people to fill them.
That is fuelling inflation, he says.
Housing experts are generally sceptical of the government’s plan to extend the right to but the Centre for Policy Studies, a Conservative thinktank, is strongly in favour. It has published a report today suggesting the government should be going further.
Here is a summary of what the report says.
A major new Centre for Policy Studies paper, published today, welcomes the government’s reported commitment to restoring the right to buy to the two million housing association households currently denied a chance to own. It also sets out the scale of the discrimination within the benefits system against low-income owners as opposed to working renters.
The report, ‘Right to Own’, by former No 10 housing advisor Alex Morton, demolishes many of the myths that have grown up around the right to buy. It shows that waiting lists for social housing actually fell when the policy was most popular. It shows that rather than having sold off too much social housing, we still have the fourth highest stock in Europe. And it explains that rather than costing the government money, the policy delivers long-term savings for the Treasury of around £140,000 per house sold, largely due to the reduced cost of housing benefit when someone becomes an owner.
It also shows that the benefit system is fundamentally biased towards keeping people as tenants rather than owners, with CPS calculations finding that just 2.3p is spent on incentivising ownership among low and middle earners for every pound that subsidises renting. It calls for this imbalance to be redressed by making the benefit system as tenure neutral as possible.
Robert Colville, head of the thinktank, has also posted a long thread on Twitter explains the plans in the report. It starts here.
Want to know about the Right to Buy? Confused by this stuff in Boris’s speech about benefits and mortgages? We’ve got a new CPS report out today that makes everything clear – and debunks a truckload of myths along the way. Thread follows. (1/?) https://t.co/nWlUhSkuHq
— Robert Colvile (@rcolvile) June 9, 2022
Colville stresses that he does not know exactly what Boris Johnson will be announcing.
Now, big disclaimer: I don’t know exactly what will be in the speech. It could be quite different from our ideas. But the idea that we are spending £30bn on housing benefit overwhelmingly in order to keep people renting is bad for them and bad for the country long-term
— Robert Colvile (@rcolvile) June 9, 2022
Government review of mortgage market to consider extending low-deposit mortgages, No 10 says
At the Downing Street lobby briefing the PM’s spokesperson also said the review of the mortgage market being announced today would look at “extend low-deposit mortgages and create a greater market for them”.
It will start in the next few weeks and report back in the autumn, he said.
We want to look at access to low-deposit mortgages and what our mortgage industry can learn from others around the world.
No 10 claims some benefit claimants could save enough for deposit on house in five years under new plan
At the Downing Street lobby briefing the prime minister’s spokesperson gave a few more details of the plan to allow benefit claimaints use housing benefit payments to pay for mortgages. The spokesperson said:
We have a bill for housing supports around £30bn a year, and it could reach £50bn by 2050 if we don’t take action. That’s money currently going to private landlords or housing associations.
So we’re looking to change the rules so, rather than taxpayers’ money going to private landlords, those on housing benefits can spend their benefit on rent or towards a mortgage, either for full or shared ownership.
The spokesperson said that the government would change the rules so that people on universal credit who save money for a deposit through a lifetime ISA or a help to buy ISA would not have to worry about their benefit payments being cut once their savings hit a certain level. Under the current system, those savings are not exempt, and do lead to benefits being withdrawn.
As an example of how this might work, the spokesperson quoted a hypothetical case study involving a couple with two children living in Derby on universal credit, with a total monthy income of £2,549. He said that if they could save £167 per month over five years, they would have enough for a 5% deposit on a property valued at £200,000. He said they would then have a monthly mortage payment £1,002, of which £595 would be covered by housing support.
Asked how many people the new scheme might help (the questioned that Michael Gove could not answer in his interviews this morning - see 10.18am), the spokesperson was unable to say.
Asked if this scheme would be of any use to people living in London, where property prices are much higher, the spokesperson replied: “I think it will vary per area.”
Average cost of filling up family car with petrol passes £100 for first time
The average cost of filling a typical family car with petrol has exceeded £100 for the first time, PA Media reports. PA says:
Figures from data firm Experian show the average price of a litre of petrol at UK forecourts reached a record 182.3p on Wednesday.
That was an increase of 1.6p compared with Tuesday, taking the average cost of filling a 55-litre family car to £100.27.
The average price of a litre of diesel on Wednesday was 188.1p.
But the Tony Blair Institute for Global Change thinktank has welcomed the news that the government will be reviewing the way the mortgage market works as a whole. (See 10.18am.) Ian Mulheirn, its chief economist, said:
Overhauling mortgage finance to give people on moderate incomes access to mortgage insurance and long-term fixed rate loans would address a major intergenerational unfairness in the housing market. This could return home ownership to levels seen in the mid-2000s, putting up to 1.4m people back on the property ladder.
The thinktank published its own plans for reform of the sector last month.
Peter Apps, deputy editor of Inside Housing, and Miatta Fahnbulleh, CEO of the New Economics Foundation thinktank, have also strongly criticised the proposal to let benefit claimaints use housing benefit payments to pay for mortgages.
These are from Apps’ thread on Twitter.
I also don't understand how you get the mortgage thing to work without increasing benefits. Let's say that after the discount, a tenant in a relatively high market area needs a £150,000 mortgage and (presumably if on benefits) doesn't have a large deposit to hand
— Peter Apps (@PeteApps) June 9, 2022
Even spread over 30 years, that's more than £700 a month. Average social rents are closer to £400. So are we massively boosting their benefits? And what about the benefit cap? Is that going to go too, but just for those who are getting mortgages?
— Peter Apps (@PeteApps) June 9, 2022
And, crucially, who are the mortgage lenders who are going to offer deposit free 30-year mortgages, taking the risk that a future government won't rip this scheme up over the course of that period?
— Peter Apps (@PeteApps) June 9, 2022
And this is from Fahnbulleh’s thread.
And Boris’ policy to use #housingbenefit to pay for mortgages is totally detached from reality: social security has been cut so much that those receiving benefits can barely feed their kids, let alone save for a deposit or afford a mortgage when house prices are sky high.
— Miatta Fahnbulleh (@Miatsf) June 9, 2022
3/5
Plan to extend right to buy condemned by experts as unworkable
Charities, thinktanks and housing experts are highly critical of the plan to extend the right to buy for housing association tenants, which Boris Johnson is set to announce in his speech later. Here is some of the reaction to the proposal out this morning.
From Polly Neate, chief executive of the housing charity Shelter
The prime minister’s housing plans are baffling, unworkable, and a dangerous gimmick. Hatching reckless plans to extend right to buy will put our rapidly shrinking supply of social homes at even greater risk.
For decades the promise to replace every social home sold off through right to buy has flopped. If these plans progress we will remain stuck in the same destructive cycle of selling off and knocking down thousands more social homes than get built each year.
The maths doesn’t add up: why try to sell off what little truly affordable housing is left - at great expense - when homelessness is rising and over a million households are stuck on the waiting list. The government needs to stop wasting time on the failed policies of the past and start building more of the secure social homes this country actually needs.
From Ian Mulheirn, chief economist at the Tony Blair Institute for Global Change
The latest effort to breathe life into right to buy might appeal to Tory nostalgists, but it’s a bad idea in principle and an even worse one in practice. If it works it risks further eroding the much needed social housing stock. But in practice it’s unclear where the money will come from to compensate housing associations anyway so it won’t move the needle on home ownership.
Peter Apps, deputy editor of Inside Housing, has posted a long thread on Twitter criticising the plan. It starts here.
I think we do need to talk about the cost and consequences of the Right to Buy extension, because it appears the policy is writing cheques it can't cash
— Peter Apps (@PeteApps) June 9, 2022
Thread: https://t.co/nuGbnTxtYJ
And these are from Miatta Fahnbulleh, head of the New Economics Foundation thinktank.
.@BorisJohnson is right to focus on housing, but today’s policies are half baked and won’t solve the housing crisis.
— Miatta Fahnbulleh (@Miatsf) June 9, 2022
Right-to-Buy is a relic of a policy that has fuelled our housing crisis for decades. Extending it to solve a problem it catalysed is completely nonsensical.
1/5
2 million council homes have been sold since #RightToBuy was introduced in the 1980s, but only 1.2 million homes have been built to replace them.
— Miatta Fahnbulleh (@Miatsf) June 9, 2022
The policy effectively slashed the number of social homes at a time when more & more people need them.
2/5
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Burnham calls for £3bn saved from cancellation of HS2 link to be used on new station for Manchester
The bookies still think Andy Burnham is most likely to be the next Labour leader. But at an event in Manchester this morning promoting Greater Manchester’s 2030 strategy, he made a quip which suggested he doesn’t think he will be heading back to Westminster any time soon.
“I was thinking, in 2030 I’ll just be sitting down to write my fifth manifesto,” said Burnham, who won his second term last year with 67% of the vote.
He used his speech to call on the government to use the £3bn earmarked for a scrapped stretch of HS2 to be used to build an underground multi-level station at Manchester Piccadilly instead.
The Golborne Link, in Burnham’s old Leigh constituency, was ditched quietly on Monday night while all eyes were on Boris Johnson’s leadership wobbles. This followed concerted lobbying from local Tory MPs — though not Burnham, who actually lives in Golborne.
Burnham said:
This week a £3bn chunk was taken out of HS2 that would have connected HS2 to the west coast mainline and improved rail capacity across the region and would have levelled up Wigan more than anything that has ever been proposed before ...
That £3bn tranche should stay in Greater Manchester. That £3bn is pretty much the cost of building HS2 right at Manchester Piccadilly, and that is building an underground station. The surface of our city is already congested when it comes to rail services. Build it right at Piccadilly, so a future government can build Northern Powerhouse right so that you can build a through-service to Bradford and Leeds and beyond.
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Johnson will not survive as Tory leader until next election, says former chancellor Philip Hammond
Boris Johnson will not survive as Conservative leader until the next election, according to Philip Hammond, the former chancellor. Hammond told Bloomberg:
I can’t say whether he will be prime minister going into 2023, but I don’t think that he will lead the party into the next general election. A rebellion on this scale is very difficult to survive and I think he will find that his authority in the party ebbs away over the next few months.
Hammond, who is now in the House of Lords, resigned when Johnson became PM in 2019 and he subsequently had the Tory whip withdrawn in the Commons when he rebelled over Brexit.
"A rebellion on this scale is very difficult to survive. He'll find that his authority in the party ebbs away"
— Bloomberg UK (@BloombergUK) June 9, 2022
Ex-chancellor Philip Hammond says Boris Johnson won't lead the Conservatives into the next general election after his bruising leadership vote https://t.co/6UvvH9mN7Z pic.twitter.com/rJx1FPqAFL
The Queen has received a present from the cabinet to mark her Platinum Jubilee, No 10 says. It is a specially-commissioned musical box, with pictures of all the 14 prime ministers who have served here around the side. When it opens it plays Handel’s Hallelujah.
In every office there is always someone who organises the presents and this picture, on the No 10 Flickr account, suggests that in cabinet that job falls to Michael Ellis, the paymaster general.
And this is what the present looks like.
According to No 10, cabinet gifts for the Queen are a tradition. No 10 says:
James Callaghan’s cabinet marked the Queen’s silver jubilee in 1977 by presenting her with a silver coffee pot. Then in 2002, for the Queen’s golden jubilee, Her Majesty received a silver gilt plate from her cabinet ministers, which was engraved with their signatures.
To mark Her Majesty’s platinum jubilee, a hand-painted enamel-on-copper musical box, commissioned from Halcyon Days has been gifted. 100% hand made in England, finished with a platinum mount, when opened the musical movement plays Handel’s Hallelujah. A symbol of praise, this gift honours her exemplary service and phenomenal achievements.
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The Green party has criticised the proposal to extend the right to buy as divisive. In a statement, Carla Denyer, its co-leader, said:
This is clearly a cynical attempt by the prime minister to gain a quick headline for a policy that is supposed to sound aspirational but is in fact divisive and will actually harm the poorest households.
Extending the right to buy to housing association tenants would simply reduce the amount of affordable social housing we have in this country, when we are already chronically short of places for people on the lowest incomes to live.
James Cleverly, the Foreign Office minister, has told MPs that he is “confident” that the proposed government bill allowing ministers to ignore parts of the Northern Ireland protocol will be lawful. Responding to an urgent question in the Commons, he said:
The government is confident that our actions are lawful under international law and in line with longstanding convention that we do not set out internal legal deliberations.
As PA Media reports, Cleverly was responding to a question about whether the government had consulted a senior legal adviser, the first Treasury counsel, on the proposals. Boris Johnson rejected the claim that the independent barrister on major legal issues had not been asked to give a view on the plans at PMQs yesterday.
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Labour’s Lisa Nandy says government housing policy should focus on increasing the supply of affordable housing. (See 10.45am.) This is from Nick Macpherson, a former permanent secretary at the Treasury, who seems to agree.
One day many years hence HMG will accept that the way to make housing affordable is to ensure supply outstrips demand: that would be leadership. Until then, expect numerous initiatives to pump up demand to support those who own property at the expense of those who don't.#politics
— Nick Macpherson (@nickmacpherson2) June 8, 2022
Key event
In interviews this morning Lisa Nandy, the shadow levelling up secretary, claimed that that right to buy plans being announced by the PM could make the housing supply crisis even worse. (See 9.32am.) Here are some of the other points she made.
- Nandy said that by the government’s own figures only a few thousands families would benefit a year from the right to buy plan.
- She said that when the right to buy plan was piloted, “only around half of the landlords were planning to replace those homes [that were sold] and the homes that they did replace them with were actually more expensive and lower quality than the ones that were sold”.
- She said the government should be focusing on increasing the supply of affordable housing. She said:
I’m not sure why they wouldn’t come forward with a proper plan that actually starts to increase the supply of affordable housing, cuts costs for lease holders, which is one of the things that we’re proposing today, and get money back into people’s pockets right now.
- She said that although in principle helping housing benefit claimants buy a home was good idea, she did not believe the government had thought through the detail. She explained:
In principle, it’s a great idea to try to get more people the security of their own home, particularly people who find themselves in the benefits system. The problem is that, as always, the government has not thought through the detail.
There’s no sign that any of the lenders are on board with this.
The government can say that it wants to open up mortgages to people on housing benefit, but unless the lenders agree to do it, it’s not going to happen.
There are real practical problems as well. To qualify for universal credit, you’ve got to have savings of less than £16,000, which means that most people who the government are trying to reach with this announcement are not going to have anything near the amount that they need for a deposit on a home in order to qualify for that mortgage.
According to a story by George Parker and Peter Foster in the Financial Times, Michael Gove was one of several cabinet ministers who this week expressed concerns that the bill to allow the UK to ignore parts of the Northern Ireland protocol, which Liz Truss, the foreign secretary, is due to publish next week, would break international law. The FT says:
Chancellor Rishi Sunak, who has previously warned of a “worst-case scenario” trade war with the EU, was among those demanding assurances that Britain would not be accused of lawbreaking.
His concerns reflect misgivings in Whitehall over whether new legal advice obtained by attorney-general Suella Braverman would sufficiently protect the government from accusations it was breaking international law.
Michael Gove, levelling-up secretary, has also expressed concerns about the impact of the legislation on Britain’s reputation, said people with knowledge of the situation.
On LBC, asked this morning how furious he was with Truss over this proposal, Gove replied: “Minus five. I’m super cool with it and I’m a big, big Liz Truss fan.”
Gove claims all housing association homes sold under new right to buy scheme will be replaced
Michael Gove, the levelling up secretary, has giving interviews this morning about the housing plans being announced by Boris Johnson in the speech later. Here are some of the key points he made.
- Gove said that under the right to buy plans for housing association tenants, all homes sold would be replaced. “One of the things that we will be doing is making sure that there is a replacement - a like-for-like, one-for-one replacement,” he said. Asked on ITV’s Good Morning Britain how quickly homes that were sold would be replaced, he replied: “Instantly.”
- He said there would be a cap on the number of homes that could be sold through this right to buy scheme. Asked what the cap would be, he replied: “That’s something I will be discussing with housing associations.”
- He dismissed complaints that this was an old policy, because it had been in the 2015 Conservative manifesto. He said that because the policy had now been piloted in the Midlands, the government was in a position to roll it out nationwide.
- He said the government would be reviewing the way the mortgage market worked as a whole. He hinted that this could lead to people being able to get mortgage with smaller deposits.
- He said the government was looking at creating a new savings vehicle to allow people claiming housing benefit to save up for a deposit. This is necessary because under the current system, if people do have savings worth more than £16,000, they cannot qualify for means-tested benefits.
-
He refused to saw how many people were likely to benefit from the proposal to let benefit claimaints use housing benefit payments to pay for mortgages. It was a “significant number”, he said. But, when pressed on this by Julia Hartley-Brewer on Talk TV, Gove admitted that he did not know how many people would benefit from it. Eventually he claimed it was a “silly question”.
The Government plans to let the low paid use housing benefits to pay mortgages.
— TalkTV (@TalkTV) June 9, 2022
Julia asks Housing Secretary Michael Gove SEVEN times: "How many people will this policy affect?"
Mr Gove: "A significant number...I don't know"
"It's a silly question."@JuliaHB1 | @michaelgove pic.twitter.com/X4SoHAzhKO
Labour’s Lisa Nandy backs rail strikes if government talks fail
Lisa Nandy, the levelling up secretary, has become the first Labour frontbencher to break ranks and publicly say she supports strikes by rail workers in the coming weeks if ministers fail to address their concerns. My colleague Jamie Grierson has the story here.
Smoking age should go up by one year every year until no one can buy cigarettes, independent government review proposes
The government has just published its independent review on smoking policy. It has been carried out by Javed Khan, the former chief executive of Barnardo’s, and yesterday my colleague Jessica Elgot revealed that it would propose raising the legal age of smoking to 21.
In fact, the review goes even further. It recommends raising the age at which people can buy tobacco by one year every year, until no one can buy cigarettes. This is the key recommendation:
The government must stop young people starting to smoke, which is why I recommend increasing the age of sale from 18, by one year, every year until no one can buy a tobacco product in this country.
This is a policy that has already been adopted in New Zealand. And this is what the report says about it.
Never starting to smoke is much easier than having to quit. This recommendation will lead to a new smokefree generation, where young people below a certain age are legally prevented from buying tobacco products, including cigarettes, throughout their entire lifetime.
While other recommendations will help us reach smokefree 2030, this is about that as well as the long-term impact that will make smoking obsolete.
New Zealand, which is banning all sales of tobacco to anyone born after 2008, estimates that it could half smoking rates within 10 to 15 years of implementation, assuming effective enforcement of the law.
Hon Dr Ayesha Verrall, New Zealand associate minister of health, said in a speech at the launch of the Smokefree 2025 Action Plan, 9 December 2021: “We want to make sure young people never start smoking so we are legislating a smokefree generation … As they age, they and future generations will never be able to legally purchase tobacco, because the truth is there is no safe age to start smoking.”
Current smokers would not be prohibited from their addiction, but over time this action would help to protect millions of children and young people from ever becoming addicted. It will create a future society where smoking is no longer in demand or even relevant, as the legal age of sale to smoke tobacco becomes higher and future generations avoid becoming addicted to this deadly and costly practice.
A summary of the report is here. And here is the full document.
Boris Johnson is certain to be asked about this during the Q&A after his speech later. As an instinctive libertarian, it is very hard to see him supporting this proposal. He is one of those Tories who instinctively believes that banning things is un-Conservative.
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Labour says some of Boris Johnson’s plans will make housing supply crisis ‘even worse’
Good morning. Since winning his no-confidence vote on Monday Boris Johnson has been determined to show that he has put Partygate behind him and is now focused entirely on delivering on his policy agenda and today he is going to demonstrate that by delivering what is being described as a major speech. It will cover housing, but also the cost of living and the economy more generally.
But in the past Johnson’s keynote policy speeches have not always landed particularly well (his levelling up one last year was seen as a flop) and the overnight preview for today’s one is hardly inspiring. “The prime minister will tell the British public he is firmly on their side as he reaffirms his commitment to supporting them throughout this challenging period,” the first sentence of the press notice says. Given that the PM is unlikely to tell the public that he is not firmly on their side, this does not count as news.
The press release says Johnson will address housing without giving detail of what he will propose. However, other briefing ahead of the speech has flagged up at least two policies he will set out: extending the right to buy to housing association tenants (a policy the Tories have been promising since 2015, when it was in the party’s manifesto); and letting benefit claimaints use housing benefit payments to pay for mortgages.
In his First Edition briefing, my colleague Archie Bland looks in detail at the right to buy proposal and points out that experts are sceptical as to its value. Archie’s article is here.
And Robert Booth has looked at what happened when this policy was piloted in the Midlands in 2018. Many of the homes that were sold were not replaced.
Lisa Nandy, the shadow levelling up secretary, has been giving interviews this morning and – in a reference to concerns that right to buy diminishes the stock of affordable homes because houses that are sold are not replaced – she claimed the PM’s plans could make the housing supply crisis even worse. She told Sky News:
We should be taking more action to increase the supply of affordable homes.
In the end, it’s the only way to really solve the housing crisis for most people.
The measures that the government announce today won’t begin to do that for most people, and in fact some of them will make the housing supply crisis even worse.
I will post more on what she, and Michael Gove, the levelling up secretary, have been saying in their morning interviews shortly.
Here is the agenda for the day.
10am: Lord Pickles, chair of the advisory committee on business appointments, gives evidence to the Commons public administration and constitutional affairs committee.
11am: Katharine Birbalsingh, chair of the social mobility commission, gives a speech to the Policy Exchange thinktank.
Lunchtime: Boris Johnson gives a speech on housing and the cost of living in Lancashire.
And Keir Starmer is visiting Dublin and Belfast for meetings to discuss the Northern Ireland protocol, including one with the taoiseach, Micheál Martin.
I try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest, I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.
If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.
Alternatively, you can email me at andrew.sparrow@theguardian.com.
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