Two days ago, the U.K. prime minister announced a tax break for lower-earning married couples, an action often demanded by rank-and-file Tory lawmakers. A day later, he brought forward the start of the Treasury’s Help-to-Buy program, under which the government will underwrite risky mortgages, a move he said will help young people who don’t have the savings to buy a home.
“We always have to do more,” Cameron told the BBC yesterday in Manchester, northern England, where his party is meeting. “So far, as this economy has started to recover, it’s still very difficult for people to make ends meet, because they see their wages are relatively fixed, and yet the prices are going up.”
The opposition Labour Party put pressure on Cameron last week with a pledge to freeze energy prices for 18 months if it wins power in 2015. A YouGov Plc (YOU) poll in yesterday’s Sunday Times newspaper gave Labour an 11 percentage-point lead over the Tories. The pollster had the two parties tied on Sept. 18.
Cameron’s relationship with his own lawmakers this year has been characterized by a series of unprecedented defeats, with record numbers refusing to back his legislative program and then a smaller number voting against his call for military action in Syria.
The Conservatives have lost support to the U.K. Independence Party, which campaigns for British withdrawl from the EU and has drawn voters unhappy with equal marriage and government programs on immigration, according to polls. Chancellor of the Exchequer George Osborne ruled out an electoral pact with the party.
“There aren’t going to be any deals with UKIP and there aren’t going to be any Conservative-UKIP candidates locally,” Osborne told BBC Radio 4’s “Today” show. “Candidates have to be approved by the party and the Conservative Party will be fielding Conservative only candidates.”
The premier’s critics within the Conservative party have regularly called for a marriage tax break. Starting in 2015, a person who doesn’t earn enough to use all of his or her 10,200-pound ($16,400) tax-free allowance will be able to transfer 1,000 pounds of it to his or her spouse. It won’t apply to couples in which one person pays tax at the 40 percent rate -- likely to be on earnings of more than 42,285 pounds.
Help to Buy
The policy, which would also apply to same-sex civil partnerships, will be worth 200 pounds a year to a couple in which one partner earns less than 10,200 pounds and the other between 11,200 and 42,285 pounds.
The Help-to-Buy plan has drawn criticism from the International Monetary Fund and Business Secretary Vince Cable, a member of Cameron’s Liberal Democrat coalition partner, who say it may spark a property bubble. The first phase, interest-free loans for buyers of newly built homes, began in April and has already contributed to the strongest housing market since the financial crisis.
The second will provide government-guaranteed mortgages for buyers with a down payment of as little as 5 percent of the value of a home costing as much as 600,000 pounds. The guarantees are meant to spur 130 billion pounds of mortgage lending.
“I am not going to stand back as people’s aspiration to buy their own home is being trashed,” Cameron told the BBC. He said the nation should put its trust in the Bank of England, which has “tools to stop bubbles from occurring.”
Royal Bank of Scotland Group Plc (RBS), its NatWest unit, and Halifax, the mortgage unit of Lloyds Banking Group Plc, confirmed they will offer 95 percent Help to Buy mortgages, Cameron said on his Twitter feed.
Chancellor of the Exchequer George Osborne said Sept. 27 he will introduce checks every September on the program with the Bank of England in response to concerns it might spark a bubble. The bank’s Financial Policy Committee will advise Osborne on whether key parameters, such as the price cap and the fee charged to lenders, remain appropriate.
Cameron reiterated his opposition to the so-called mansion tax, a levy on houses valued at more than 2 million pounds that’s favored by Miliband and Liberal Democrat Deputy Prime Minister Nick Clegg. “To go after someone’s house every year with a wealth tax, I don’t think that is a sensible thing to do,” Cameron said.
The Conservatives were greeted in Manchester by a demonstration against government policies, including changes to the state-funded National Health Service. Inside the conference center, Defence Secretary Philip Hammond was heckled by veterans of one of the army units he plans to abolish.
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