Darling blows smoke into punctured bubble

The housing bubble burst splattering mud on the faces of the government. Blair sneaked out just in time to let Brown take the heat, though it’s as much his doing as Brown’s. Now Brown has the impossible task of looking like a good leader when he’s up to the neck in it.

So today, after Brown confirms he's sticking with the Chancellor, Alistair Darling tries to blow some smoke back into the bubble. He preps us by telling us over the weekend that we’re entering the worst economic period going back 60 years.

Darling’s puff seems rather short. The main measure, estimated to cost the Treasury £615m, is a one-year stamp duty holiday on house purchases valued between £125,000 and £175,000. The stamp duty on these properties is, in any case only 1%.

Buyers are not likely to coming flocking back to the market with such a tiny incentive, especially when mortgage providers have reduced the proportion of the property value that they're prepared to lend by much greater percentages.

Moreover, the entire housing market has burst, not just the cheap end. Properties valued over £500,000, which attract 4% stamp duty, have also stopped changing hands.

It seems, then, that this is a populist measure aimed at getting grassroots traditional Labour supporters to get behind the party. These are the people who are most likely to benefit from the shared ownership proposals whereby Housing Associations could take part ownership through partial sale-and-rent-back deals.

If, on the other hand, the government really wants to pump up the housing market, we have a big problem. The bubble needs to deflate. Never before has there been such a disconnect between earnings growth and house price inflation as has been seen in the last 10 years.

House prices have risen beyond the growth of the economy and ultimately to its detriment. The house bubble was bound to burst and the economy to implode when property values were increasing because buyers were taking on debt of greater and greater proportions to the total value of the purchase.

Demand was being stoked by gearing. Supply, meanwhile, was being choked by the vast number of government-subsidised buy-to-let deals.

Just a thought.
Lord Goring

Brown's apartheid

On 1 May 1963, the apartheid government of South Africa enacted the General Law Amendment Act. Better known as the Ninety-Day Detention Law, it waived the right of habeas corpus and authorised any commissioned officer to detain - without a warrant - any person suspected of a political crime and to hold them for ninety days without access to a lawyer. This was followed in 1965 by the Criminal Procedure Amendment Act, which provided for 180-day detention and re-detention thereafter. While the Terrorism Act of 1967 allowed someone suspected of involvement in terrorism, defined as anything that might "endanger the maintenance of law and order", to be detained indefinitely without trial on the authority of a senior policeman.

This piece, however, is not about African politics. It is not about Mugabe's repressive regime. It is about the politicisation in the West - and especially in the UK, yes, the UK, not the US - of terrorism. There are no solid arguments for extending detention. None at all. Indeed, after the goverment was defeated on the 90-day proposal two years ago, ministers dithered for months before coming up with another proposed time limit. As Diane Abbott said:

"They did not have a number of days because this is not an objective, evidence-driven bill. It is the purest politics. It is about the polls and about positioning. It is about putting the Conservative party in the wrong place on terrorism."

When so many key figures in counter-terrorism have spoken openly against the need for this extension, one cannot help but wonder what kind of authoritarian state Gordon Brown is building purely for political purposes.

Lets not be too dramatic - no one wants to come across as a preening David Davis - the UK is not on this soil going to impose apartheid measures, surely. It would not be possible, for example, for a person to be detained without trial and without charge for several weeks, would it? One can only hope that the Lords kill the terror bill; and that both Davis and Brown lose their re-elections.

Just a thought.
Lord Goring

*Sources: Nelson Mandela, Long Walk to Freedom; Terrorism Act No 83 of 1967 - Wikipedia, the free encyclopedia; The Liberation Struggle: South Africa at War 1600-1994