Reform UK's "Contract with You" 2024
Written on 18 June 2024 by
Reform UK's “Contract with You” has already been dubbed “Liz Truss on steroids”, a criticism I suspect will be repeated frequently - an obvious open goal for journalists and political opponents.
In theory the “contract”, which Reform admits is a work in progress, is very landlord friendly:
- Bring landlords in line with other businesses for tax purposes by allowing mortgage interest as a business expense
- Abolish the Renters (Reform) Bill (difficult to see a Parliamentary majority for this!)
- Cut residential SDLT to 0% up to £750,000 (which presumably means landlords would pay just the 3% surcharge), with reduced rates above this level
However, there is very limited detail on reforming the planning system or any other measures to increase housing supply.
The opening quote in the Housing section says: “The UK population has grown by over 1.3m in just over 2 years. Yet only 425,000 homes have been built.” Presumably they had to say “just over” 2 years to get the figure up to 1.3m but, based on 2 years for both figures, if these 425,000 new homes were simply used to accommodate the population growth that would be equivalent to 3.06 persons per new home.
Obviously, it is not that simple but with the UK birth rate (along with many other countries) falling, apart from a small part of the population increasing due to improving longevity - although it is now fairly stable - virtually all of the population increase is due to immigration.
As Reform’s policy is to reduce immigration to net zero, or close to it, perhaps the reason it hasn’t set a housing target is that if its immigration policy is successful population growth will be close to zero!
It is good to have a new party questioning whether we can do things better and some Reform policies in isolation will be attractive to many people, but unfortunately it takes a long time to grow a magic money tree!
Looking at where Reform claims it will make savings, the second largest figure is £35m (23% of total projected savings) by stopping interest payments by the Bank of England on reserves held by banks at The Bank. I can just imagine what the reaction of some naïve consumers will be to support any proposal that imposes extra costs on the big bad banks without understanding the consequences.
I can see no reference in the Reform “contract” to what impact it expects this proposal to have on consumers, but you don’t have to be a genius to realise that if banks are no longer allowed to generate an income from a large slice of their assets they will charge borrowers more and/or pay depositors less to make up for the lost income.
Understanding how one policy will impact other parts of the economy is critical but conveniently policies are looked at in silos, except for the ridiculous trend by some other political parties (something Reform is not guilty of) to effectively hypothecate one proposed item of revenue to a particular item of expenditure. With 25% of Government debt indexed linked, relatively small movements in CPI will have a much bigger impact on the net borrowing requirement than a £2bn saving here or there!
How fortunate for political parties they don’t have to comply with FCA Consumer Duty rules requiring promotions to provide a balanced view of the benefits and risks to allow consumers to make well-informed decisions!
Categories:Property Market, Ray Boulger
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