Ed Balls worked with Gordon Brown to wreck UK Government fianances. Even Keynes ( not my idol) argued that Governments should only run deficits in times of recession. In good times they should pay down debt. Balls is quoted today as saying that “Labour d not do balanced budgets”. That is indeed true. As someone said, the trouble with socialists is that they eventually run out of other people’s money. And so Balls was a key part of the team that ran up huge deficits in good times and bad.
As a result, I remind you get again that by 2016 the UK will be approaching a debt to GDP ratio of 90% – the point of no return. If one includes the numerous “off balance sheet items” we are there already. And so Balls has a plan which must win a prize for sheer lunacy. When the UK auctions of 4G mobile licenses in a few years he will use the £3 billion netted to give first time buyers relief on stamp duty on homes up to £250,000 (cost £500 million) and spend £2.5 billion on building 100,000 affordable homes.
It is hard to know where to start. But firstly Balls should regard avoiding bankruptcy rather than trying to buy votes as his priority.
Secondly there are already stacks of affordable homes –semi deserted terraces in Northern mill towns and council stock mis-managed by inner city local authorities across the land. It is just that folks do not want to live in those houses. Tough. Why should the taxpayer subsidise them to make a lifestyle choice. If folks want to move to a better house then they need to earn more money and save more not get a better home simply as a result of taxpayer largesse.
And thirdly what Balls proposes is a subsidy for housing via the Stamp Duty exemption. This will of course create more demand so push prices up so will have no effect on the affordability of housing – it is a con. All it will do is piss away another £500 million that Balls could not afford if, heaven help us, he was Chancellor. The way to make housing “affordable” for first time buyers is to stop the ludicrous system where private landlords can charge “market” rents to welfare claimants who recoup all the funds from the taxpayer. Scrap that housing allowance or at least cap it at a much lower level and suddenly rents will fall and – assuming yields stay the same – so too will prices of the sort of houses first time buyers want.
Of course this solution would a) save taxpayer’s cash and b) annoy the welfare clientele of the Labour party. C) be something the wicked Tories would be too spineless to do as they merrily increase the deficit/push the UK towards bankruptcy in a Ballsian manner. So the chances of it happening are nil.