UK Politics

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailSenior Conservative have backed a radical plan being considered by Rishi Sunak’s government to guarantee mortgages requiring only 1 per cent deposits.Tory MPs largely welcomed the idea of a scheme to boost 99 per cent mortgages, after The Independent first revealed the March Budget proposal aimed at first-time buyers.Economists and housing experts warned that such a scheme – aimed at helping young people onto the property ladder – would create “massive risk” for taxpayers and would push up prices.They argued that boosting demand without fixing the shortage of housing was a “high-stakes gamble” that could fuel “yet another house price bubble”.But Tories from both the left and right wings of the party are excited by the plan. Former cabinet minister Robert Buckland said: “A bold idea like this is very welcome.”Mr Buckland said the problem of overheating the market could be avoided “by ensuring that mortgages are easily available for new homes built by modern methods of construction”.The leading Tory moderate said the government should combine “an increase in speed of supply of housing with easier to access mortgages, in order to avoid excessive house price inflation”.Chancellor Jeremy Hunt’s team considering scheme to boost home ownership Shaun Bailey, one of the red-wall MPs pushing the government to boost housebuilding to win back young voters, said it was a “positive” idea and his initial assessment was “favourable”.The Tory MP for West Bromwich West said young constituents “struggle to transition from paying high rents to affording a mortgage due to hefty deposits”, adding: “Overcoming this hurdle would be beneficial – it’s crucial to help young people step onto the property ladder.”Former Tory minister John Redwood: “I’m keen to support any proposal to boost home ownership, as long as its suitable people and you assess affordability and credit status.”The senior right-winger said the benefits outweighed the risks. “A young person starting off with a decent job, why shouldn’t they borrow [at 99 per cent] – taking a 99 per cent mortgage is perfectly sensible because you will get pay rises,” said Mr Redwood.Government sources have said a Treasury-backed scheme to help first-time buyers get 99 per cent loan to value (LTV) mortgages is one of the big ideas being discussed for chancellor Jeremy Hunt’s Budget on 6 March.House prices have pushed ‘generation rent’ away from ownership dream Bright Blue – the centre-right think tank which has been pushing the government address the needs of young voters in “generation rent” – also welcomed the idea.“We need bold demand-side and supply-side measures to improve the affordability of home ownership,” said executive chair Ryan Shorthouse.“The size of the deposit is the biggest barrier for prospective first-time buyers. It is right that the government looks to guarantee mortgages to the extent that the upfront deposit which is required is significantly smaller.”“Frankly, there are much bigger causes of house price inflation than government subsidy for first-time buyers,” Mr Shorthouse added.Housing secretary Michael Gove has said homeownership offer will come in election year But mortgage brokers were among those sounding the alarm on the proposed scheme. Peter Stamford at The Mortgage Uni said the “sting in the tail” would be the higher interest rates that come with low deposits.“There is also a risk it could once again cause the property market to overheat, driving prices up further. It’s a high-stakes gamble and could potentially fuel yet another house price bubble,” the expert warned.And Riz Malik, director at R3 Mortgages, said with house prices so high, affording monthly payments would remain a barrier for many young buyers.“However, for a government that looks set to be massacred at the general election, desperate times call for desperate measures,” he said.Torsten Bell, chief executive of the Resolution Foundation, said the low-deposit proposal would “permanently raise home ownership rates” – but warned that it would also mean the government “taking a massive chunk of house price risk”.“The last 15 years have taught us recessions are now VERY expensive for the state – causing huge increases in national debt,” the top economist posted on X – making clear the plan would “take even more risk onto the public sector balance sheet”.Mr Sunak’s party is struggling to win support among younger adults. Only 10 per cent of voters under the age of 50 intend to vote for the Tories, the latest YouGov poll has found.Housing secretary Michael Gove last month hinted the government were exploring ways to boost home ownership – saying the party would “definitely” have a new offer for prospective buyers before the general election.“We have been asking the question, how can we ensure that people with decent incomes who are finding it difficult because of the scale of deposit required can get on to the housing ladder?” he told The Times.“I don’t want to pre-empt anything … but it’s about looking at some of the rigidities in the mortgage market which they haven’t got in other jurisdictions.” More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailCabinet minister Grant Shapps has condemned “disappointing” comments by Israel PM Benjamin Netanyahu rejecting Palestinian statehood.The defence secretary saying the UK government remains “wedded” to the idea of a two-state solution – arguing that there “isn’t another option”.Rishi Sunak’s government has largely resisted criticism of Israel since it launched strikes on Gaza in the wake of the 7 October Hamas terror attack.But Mr Shapps offer a strong rebuke of Mr Netanyahu’s rejection of Palestinian sovereignty and insistence his country needs full security control over the territories.“I think it’s disappointing to hear Benjamin Netanyahu saying he doesn’t believe in a two-state solution,” he told Sky News’ Sunday Morning With Trevor Phillips.Mr Shapps added: “In fairness, he’s said that all of his political career, as far as I can tell. I don’t think we get to a solution unless we have a two-state solution.”Addressing the Netanyahu remarks on the BBC’s Sunday With Laura Kuenssberg programme, Mr Shapps said: “Palestinians deserve a sovereign state. Israel deserves to have the full ability to defend itself, its own security.”Grant Shapps visited Israel in December to offer support in wake of Hamas terror attack He added: “Now, you’ll get a lot of different views within the Israeli government, of course, it is a rainbow coalition. So we very much distinguish between the views of individuals and our overall support for Israel as a country.”Mr Netanyahu raised the stakes with the US, UK and other allies by doubling down on his rejection of a two-state solution with a statement on X late on Saturday.“I will not compromise on full Israeli security control over the entire area west of Jordan – and this is contrary to a Palestinian state,” the Israeli leader said.It came in defiance of Joe Biden, who hours earlier had voiced hope that a two-state solution was still possible even while Mr Netanyahu remains in office, following a call with the Israeli leader.The US president had claimed that Mr Netanyahu was not opposed to all two-state solutions.Israeli PM Benjamin Netanyahu insists his country must take control of Gaza But in a new statement, the Israeli prime minister’s office said Mr Netanyahu told Mr Biden that “after Hamas is destroyed, Israel must retain security control over Gaza to ensure that Gaza will no longer pose a threat to Israel, a requirement that contradicts the demand for Palestinian sovereignty”.Sir Keir Starmer’s Labour party has also rebuked Mr Netanyahu’s position. Shadow home secretary Yvette Cooper on Sunday echoed the Labour leader and shadow foreign secretary David Lammy in saying: “Those words from Netanyahu were completely unacceptable.”She told Sky News: “Statehood of a people is not in the gift of its neighbour, it is the right of a people and it is the right of the Palestinian people.”Mr Lammy on Saturday said Mr Netanyahu’s stance would mean “occupation and siege continues” in Gaza, where the Palestinian death toll is now above 25,000, according to local health authorities.David Lammy dashes off stage as speech interrupted by pro-Palestinian protestersMr Netanyahu has vowed to press ahead with the offensive in Gaza for many months despite mounting pressure on Israel to rein in its military action as the scale of death and destruction intensifies.The White House earlier this week announced it was the “right time” for Israel to lower the intensity of its military action in Gaza.Israel launched the offensive after an unprecedented cross-border attack by Hamas on 7 October, in which 1,200 people were killed and some 240 others taken hostage.Roughly 130 hostages are believed by Israel to remain in Hamas captivity. Israel’s assault on Gaza has been one of the deadliest and most destructive military campaigns in recent history. More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailNorthern mayors have hatched a cross-party plan to bring HS2’s axed northern leg back to life with help from the private sector.The Independent first revealed the radical move by Rishi Sunak to ditch the Birmingham to Manchester section of the high-speed rail project.The PM was met with howls of outrage from business chiefs and senior Tories after he used his conference speech confirm our exclusive that he was scrapping the link.Tory mayor of Birmingham Andy Street and Labour mayor of Manchester Andy Burnham are now set to hold talks with transport secretary Mark Harper to discuss whether the project could sbe revived.Mr Street told the Daily Express that a new high-speed scheme, or major upgrades to the existing rail connection in the north, could be mostly paid for by the private sector.“The mayors of the two regions are leading this but to be clear, with government support,” said the popular Tory mayor. “By inviting the private sector in to play the maximum possible role, it can be significantly less costly for the public exchequer.”A plan to revive parts of the northern stretch of HS2 are back on track, according to government officialsThe northern section replacement project is being overseen by Sir David Higgins, the former chairman of HS2, now chairman of Gatwick Airport.Train operating companies would reportedly meet the initial costs of a new line, but some input from the taxpayer would still be required.Leading engineering giants Arup and Mace Engineering are at the forefront of discussions aimed at getting private finance to rescue the Birmingham to Manchester link.Mr Street said: “We have to be realistic about this. If I say it won’t cost the Exchequer anything, that’s probably not the case. But we are definitely looking for it to cost substantially less.”The Tory mayor added: “We have got around the table organisations that do the private-sector funding of rail in other parts of the world, and people who either own or are linked to operators.”The rail link could connect the end of the HS2 line in Handsacre in Staffordshire, just north of Birmingham, with Stockport, which is set to be the final stop on a high-speed networkHowever, with the government ending “safeguarding” of land on the axed HS2 route, there is a race to progress with the project.The idea of reviving the northern leg could prove controversial among some Tory MPs who fought against the impact on their constituencies.Manchester mayor Andy Burnham wants to revive HS2’s northern leg Sir Keir Starmer has spoked to Mr Burnham about ways to boost rail connectivity in the north – but he has warned it would not be possible to bring back the original taxpayer-fund northern leg.The Labour leader told the BBC earlier this month that he “can’t stand here and commit to reversing” the government’s decision, adding: “Contracts are going to be cancelled.”Mr Sunak announced in October said the government would re-invest £36bn from the HS2 project in a series of road and rail schemes across the country.Andrew McNaughton, HS2’s former technical director, said Mr Sunak had created a “growth reduction scheme” by axing the route. He said the “whole strategy for connecting the north and south of England was HS2”.“Any other plans were all predicated on HS2 creating the new capacity either directly or indirectly for the next 100 years,” he said.He added: “If there is nothing to replace it, you would need to ration. What’s the rationing on the railway? You have to price people off. That’s how it’s always been done as the only way of managing demand.”A Department for Transport spokesperson said: “The government is supportive of work to improve rail connectivity between Birmingham and Manchester.” More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailFor many young Britons hoping to buy a home the biggest barrier in the way remains the lump sum needed for a deposit.The struggle has become harder over the decades as soaring house prices have outstripped pay and robbed many on decent salaries the chance to get onto the property ladder.The Independent has revealed that Rishi Sunak’s government is considering a bold plan to help “generation rent” by creating 99 per cent mortgages.Instead of having to save tens of thousands, 1 per cent deposits could make the home ownership dream a reality with just a few thousand pounds.So, could it work or will it prove too risky for many banks?How can the government create a 1% deposit scheme?The idea of encouraging 99 per cent loan to value (LTV) mortgages – with deposits of just 1 per cent required up front – is being seriously considered at the Treasury as part of discussions for chancellor Jeremy Hunt’s March Budget announcement.Jeremy Hunt and Rishi Sunak hoping to give young people a reason to vote Tory The Conservative Party is in terrible trouble with young voters. Only 10 per cent of voters under the age of 50 intend to vote Tory, the most recent YouGov poll found. Thus, Mr Hunt’s team at the Treasury is exploring ideas to boost the fortunes of first-time buyers.Lenders typically require 10 per cent for the deposit but if the government guarantees to underwrite some of the larger, riskier loans offered with a deposit of just 1 per cent, it could open up home ownership to a much larger group of people.Ministers have some recent templates to work with. The Help to Buy scheme, which ran between 2013 and 2023, saw the government offer 20 per cent equity loans and back 5 per cent deposits to boost homeownership at new-build developments.And although much smaller in scale, the government’s “mortgage guarantee scheme” – set to run until 2025 – is also aimed at boosting the number of 5 per cent deposit deals available with lenders.The government backs a portion of any mortgage offered under the low-deposit scheme, so it is willing to compensate the bank or building society if a home has to be repossessed.House prices have long been unaffordable for great swathes of young people Would it really mean buying a house for just a few thousand pounds?Someone looking to buy a house at the national UK average of £290,000 would pay just £2,900 under the proposed 1 per cent deposit scheme.But it would not magically secure young Britons’ financial future. Low-deposit mortgages typically have higher interest rates than those with larger deposits because of the greater risk for the lender.And while 99 per cent mortgages would address the issue of finding money for a deposit, it doesn’t address the issue of passing an affordability test. House prices are still high, as are interest rates, so the monthly costs will remain daunting for many.But getting more young adults started on a mortgage earlier would allow them to pay off the loan over a longer period, and could increase the prevalance of 35-year repayment plans to keep monthly costs down. Will lenders back the plan?Lenders will be wary, even if the scheme is aimed at the most credit-worthy of young buyers. The smaller the deposit, the greater the risk.The government may offer to underwrite a portion of the loan, but banks and building societies could look for additional capital buffers to support 99 per cent mortgages.From a lender’s point of view, such low deposits means borrowers have less capital invested in the building. So there is less incentive to stay in the property if prices fall, because the borrower would only be losing a 1 per cent equity stake.Could it affect house prices?Housing experts are already warning that the radical proposal for 1 per cent deposits could “backfire” by pushing up prices in a potentially damaging way.Making it much easier to buy would certainly provide a sugar-rush high in the market – but fuelling demand for the very limited supply of homes available could then create a price spike that would make it harder for the next wave of young people to afford the monthly costs.The Home Builders Federation have welcomed the idea of a government-backed scheme that promotes new developments, arguing that the Help to Buy scheme boosted Britain’s sluggish construction rates.Mr Hunt is believed to have concerns about moves to boost demand in the housing market if there are not equal measures to boost supply.It remains to be seen if the chancellor feels the government’s policies to create more new homes are strong enough to push the button on a radical new mortgage support scheme. More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailInequality in the jobs market is costing the UK economy £34bn a year, according to new analysis by Labour shared with The Independent.Sir Keir Starmer’s party accused the Conservatives of “dismal failure” in tackling unfairness at work – arguing Britain is “less productive and less equal” after 14 years of Tory rule.The opposition is vowing to close the major employment gaps which see women, disabled people and black, Asian and ethnic minority Britons facing costly barriers.Labour’s shadow equalities secretary Anneliese Dodds will today say that the state of inequality in the UK is “a scandal we cannot afford”.As election-year pitches heat up, Tory chancellor Jeremy Hunt is said to be considering extending child benefits to more middle-class families in a pre-election budget giveaway.Labour insists that the ethnicity employment gap is costing the economy around £20bn a year, pointing to figures from the Office for National Statistics (ONS).The stats show that the current employment rate of “all other ethnic groups combined” is 68.4 per cent – nine points below that of white people (77.1 per cent).Closing that gap would mean an additional 650,000 employees in the economy, sparking a major boost to tax revenues and growth, say Labour.Labour’s Anneliese Dodds says inequality is ‘scandal we cannot afford’ Helping the 333,000 women who have left work due to menopause to stay in work would add up to £11bn to the economy, the research also shows.And closing the disability employment gap by just 2 per cent points to the OECD average could also provide an additional £3bn to the UK economy.Speaking at the Fabian Society conference on Saturday, Ms Dodds will slam the Tory government’s record of “dismal failure” on inequality at work.She will argue that employment gaps have seen women, black, Asian and ethnic minority people and disabled people “put more and more in and get less and less out”.The party chair will pledge that equality will “run through Labour’s plans like the words in a stick of rock”, as she sets out a plan to close employment gaps.The party says banning zero-hours contracts will benefit some black, Asian and ethnic minority workers who are disproportionately impacted. The party has promised to introduce mandatory ethnicity pay gap reporting for firms with more than 250 staff.Large employers will be required to produce “menopause action plans” to set out how they are supporting women experiencing menopause at work, and providing guidance for small employers.Sir Keir’s party has also committed to more specialist help for disabled people at job centres, as well as introducing disability pay gap reporting for large employers.Chancellor Jeremy Hunt is said to be planning an extension of child benefit It comes as a new report suggests Mr Hunt is considering a plan to extend £2,000 a year child benefit to a much greater number of middle-income families.The chancellor is mulling whether to raise the £50,000 threshold at which child benefit starts to be withdrawn, according to The Times. Raising it to £60,000 would cost around £1bn, while ditching any income limits would cost £4bn.However, Mr Hunt is said to be plotting a spending squeeze on departmental spending to help fund his tax giveaways. Day-to-day spending limits, currently set to rise by 0.9 per cent in real terms until 2028-29, could be cut, according to the Daily Telegraph.Rishi Sunak and Mr Hunt are widely expected to announce further tax cuts in the March Budget in a bid to boost their party’s dire polling fortunes. Tory MPs have expressed their preference for cuts to income tax rather than moves to slash or axe inheritance tax. More