Getting it wrong again

One rule in politics is that you should not arouse expectations that you cannot meet, particularly if they have damaging side effects. This is what the Government has managed to do by dangling the possibility of some kind of action on stamp duty on house purchases.

Of course, given the fiscal hole they are in, the most they could offer is a suspension, or more likely a deferral, of this lucrative tax and then only for first time buyers. However, their hints have frozen the housing market with purchasers delaying transactions in the hope of cutting their tax liability.

This is once again evidence of a government having lost its touch. Pressured to produce some good news, they manage to make a mess of things again.

Vince Cable, always a sound judge of economic matters, has raised the question of why the Government are intervening in the housing market at all. Credit crunch or no credit crunch, a big correction was long overdue. The ratio between average earnings and housing prices had risen to unsustainable levels.

Of course, as the wily Vince well knows, the reason the Goverment has tried to intervene is that the whole British economy is far too reliant on the state of the housing market and in turn this has a big influence on the electoral 'feel good' factor.

An even deeper problem is an under supply of housing in Britain. The Government has tried to do something about the planning system, but has run into fierce opposition from a coalition of highly influential conservationist organisations. The 'eco towns' initiative has run into fierce NIMBY opposition and in any case was badly conceived from the start. There's little point in having carbon neutral houses (which you can build anywhere) if you have to drive miles to work.