Even by the devalued standards of this Government, it has been a week of dizzying incompetence. The Brown era, the "age of change", was supposed to be one of less spin. What we are witnessing is an age of less effective spin. Indeed, spin that has had a worryingly real and costly impact on people's lives. The stamp duty saga has been a perfect example of the failure of news management across government. It was never going to be a good idea to leak a market-sensitive move such as a suspension of stamp duty, and so it has proved. No doubt the motives were mixed, a wish to be seen to be doing something, anything, for hard-pressed first-time buyers, happily coinciding with the baser motive of wanting to distract attention from the leadership potential of David Miliband.
In all events, the stamp duty story has been a small disaster for the Government and left the property market in some confusion. Is a move on stamp duty "proposed"? No, it seems. Is it an "option"? Yes, it would appear. So is a move possible? Some sources brief that it is. When? Maybe in the pre-Budget report, scheduled for October, and maybe sooner, in the British economic recovery plan, or Berp as we may soon learn to call it. Clear as mud. Doubt about the future of stamp duty will put buyers off entering the market, the last thing it needs, and it is what ministers have now delivered. Staggering. It finds an earlier parallel in the selective leak of the collapse of Northern Rock last autumn, which led to a run on the bank and all the misery and hardship that followed for savers, people's jobs and shareholders who lost everything. The culprit has still to be identified, despite the efforts of the Treasury Select Committee. It should not give up.
Yet there is a larger paradox here. Is what we are seeing now an inevitable correction that we cannot, and should not, try to prevent – the necessary unwinding of the credit boom of the past decade? Do we want to go back to 130 per cent mortgages? What do Caroline Flint or Alistair Darling actually want to see? Obviously a housing crash is a "bad thing", but do we want to return to soaring property prices? If house prices were to be stabilised now, they would still be at completely unaffordable levels for many first-time buyers, even if they could find a mortgage, which, of course, they can't.
Ministers seem to be seeking an elusive "Goldilocks" scenario: a housing market that is not going up too much, nor going down too much, but which is "just right", or "stable" – where houses are cheaper but no one goes into negative equity. That is an impossible world. "Stability" in the real estate world would be impossible to achieve even if the Government and the Bank of England were to focus the entire panoply of fiscal and monetary policy on it.
The truth, as the banker Sir James Crosby hinted in his review of the housing finance market, is that ministers are almost powerless in the face of the global credit crunch. Better, perhaps, to focus aid on the most distressed sector – the housebuilders. It will need some boldness, but a public purchase of unsold properties would perform the neat trick of helping the sector, injecting funds and confidence as well as providing a ready new supply of social housing, which, we should recall, was such a feature of the Labour deputy leadership race last year, and about which many promises were made. Social housing has been shamefully neglected, and few would argue with investment in it at such a critical time. Politically it would pay a dividend too. It would be a clear signal of intent by the Government, for a change.Reuse content