We can’t have it all…

In yesterday evening’s annual speech delivered to the great and good at Mansion House, George Osborne caused many people to ponder and ruminate.  Firstly, I thought it rather ironic that in what may well be deemed to be a seismic moment of the coalition government, the (Conservative) Chancellor of the Exchequer was addressing a gathering of the wealth makers  and generators of the nation at a building that sits grandly under the moniker, ‘Mansion House’ whilst over the past few days, the Liberal Democrat members of the coalition have been getting all agitated over their plan to bring in a mansion tax on anyone who has the temerity to choose to live in a large house that has more bedrooms than is absolutely necessary.  How dare they.  Clegg and Co, (I admit that the ‘and Co’ part is diminishing by the day), have this week relaunched their party manifesto that will, as a priority post the next general election, introduce the levy on homes valued at more than £2 million.  Whether this will still seem such a good idea when, post election various former MPs are sitting in the kitchens of their (at least) £2 million homes wondering what they are going to do with their day, remains to be seen. Back though to yesterday. As had been trailed continually in the media, Mr Osborne announced that new powers would be granted to the Bank of England to cap mortgages; either by limiting the amount of money that potential buyers can borrow, or by restricting the proportion of the purchase price of a property that can be covered by a mortgage. All very sensible and to be applauded. 2007 and 95% mortgages still appear as spectral visions in many a nightmare of borrowers and lenders.  Mr Osborne also announced further plans to redevelop brownfield sites with new incentives for local authorities. Therein lies the ever present challenge of the housing market in the United Kingdom; we live on a crowded island where space is at a premium, particularly in areas where employment and economic activity are at their busiest. As always, there aren’t enough houses where there is employment and where there are any number of houses to choose from, there are insufficient numbers of jobs. As George surmised, “..the British people want our homes to go up in value, but also remain affordable; and we want more homes built, just not next to us” [sic]

It could be argued though, that the show stealer was the Governor of the Bank of England, Mark Carney, who announced that interest rates could go up sooner than the expected 2015 rise. Such an intimation would invariably be met with nervous displeasure by any Chancellor about to embark on an election campaign.  On the contrary, Mr Osborne and his team seem intent on portraying this (with justification) as a portent of the success of the Government’s austerity measures and hard evidence that the economy is recovering and will continue to do so.  Raised interest rates effect everything; credit card bills, investment and mortgage repayments. To return (painfully), to 2007 and the heady days, weeks and months prior to the economy careering with its foot flat to the accelerator off the edge of the cliff; far too much (make that almost everything), was on the ‘never never’ and we had cultivated a society that never really believed that they would actually have to produce cold hard cash to pay for something.  I think it is a fair observation that we were all recipients in some way or another of the hard lesson that eventually, some one has to pay. To return to the road analogy; the speed limits are there for a reason, as are the penalties incurred if they are broken.