The Government’s Help to Buy scheme has inflated house prices in England, according to a House of Lords report. The Help to Buy: Equity Loan scheme will have cost around £29billion by the time it comes to an end in 2023, according to the report by the Lords’ built environment committee. It said that this did not provide ‘good value for money’ for the taxpayer. In particular, it claimed that the value of homes in more expensive areas had been pushed up by ‘more than the subsidy value’ – meaning that home buyers would have paid less for their properties had the scheme not existed. This suggests that housebuilders charged more for their Help to Buy-eligible homes, knowing that buyers would be able to borrow 20% of the purchase price from the government, interest-free for five years. The report said the money would have been better spent on building more homes instead. If there are more homes available to buy, this can decrease house prices as supply and demand become more evenly balanced. Evidence suggests that, particularly in areas where help is most needed, these schemes inflate prices by more than their subsidy value, the report said. In the long term, funding for home ownership schemes do not provide good value for money, which would be better spent on increasing housing supply.

Sunak set to boost pensions?

Rishi Sunak, UK chancellor, is facing calls to revisit his decision last year to suspend the “triple lock” on annual state pension increases, adding to pressure on the government over big cost of living increases. Two former pensions ministers have urged the government to offer help to the most vulnerable, as they struggle to cope with rising energy bills and with inflation expected to rise above 6%. Senior Conservatives admit the issue is of increasing concern to Tory MPs. “It’s just begun,” said one. “Some people want the triple lock reinstated.” Ministers say they are braced for parliamentary trouble. Tory MPs are already urging Sunak to take a range of measures to alleviate cost of living pressures, including cutting VAT on energy bills, suspending “green levies” on fuel bills or scrapping planned tax rises in April. Since 2011, people have received protection for their state pensions under the triple lock, which guaranteed an annual rise based on inflation, average earnings growth, or 2.5%, whichever is the highest. The Conservatives pledged to maintain it in the party’s 2019 general election manifesto. Under the triple lock, the state pension would have risen in April by more than 8%, thanks to a Covid-related anomaly in average wage growth, surpassing Goldman Sachs’s expectation of 6.8% annual inflation in that month. But Sunak, under pressure to find savings, has suspended the wage element of the triple lock for one year; instead the state pension will rise by 3.1% in April, based on inflation in September 2021.

Financial Advice Including Pension Advice, Bristol

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