Tony Blair’s announcement that he is to step down as Prime Minister on 27 June put an end to months of speculation of when the Blair era would finally be over. Next up on the agenda will be the Labour party’s vote to decide the next party leader – and along with that, Prime Minister.
While it technically remains an open contest – the new leader is to be elected at a party conference in London on 24 June – few people would predict anybody other than Chancellor Gordon Brown will claim the top spot. And if that happens, what kind of changes does the mortgage industry expect a Brown premiership may result in?
For Andy Pratt, chief operating officer at Alexander Hall, a strong focus on helping more first-time buyers onto the ladder seems inevitable. That is not to say first-time buyers will be the winners of any new political focus, but they will also not be losers. “I would predict that Gordon Brown will hit buy-to-let investors very hard,” Pratt comments. He suggests that more punitive measures for landlords could not only stretch the UK’s insufficient property supplies further, but would also enable Brown to make a statement about his style of leadership. “It is possible that if it was spun right, it could help him become a man of the people, portrayed as a kind of Robin Hood, taking from the rich and giving to the poor.”
Pratt is not alone in his assertion that the plight of first-time buyers will become a political talking point. David Hollingworth, head of communications at broker L&C, points out that existing Government initiatives to tackle the problem could benefit from further extension. He says: “OpenMarket Homebuy has been successful in terms of implementing some kind of scheme for affordable housing, but hopefully it will continue to be pushed forward and extended, as there is still only limited availability.”
Decisions for change
However, Hollingworth thinks that any political impact experienced by the industry will not be limited to the actions and intentions of the new Prime Minister, and points too to the power held by the Treasury. “Where we have had a focus on Government-related housing issues, a lot of it has come from the Treasury – for example, the Miles review, led by Brown, the U-turn on self-invested pension plans (SIPPs), Stamp Duty. In a lot of areas, the crucial decisions made have been Treasury-related, so change will also depend on what Brown’s successor at the Treasury brings to the table.”
Brown’s Treasury has come under attack over the past decade for these changes in policy – and some say the Treasury’s relationship with the financial services industry has been damaged irreparably.
Several areas in which the desire for change has been expressed are tax-related, and so transformation would be more at the next budget in April as opposed to immediately. As Hollingworth adds: “A lot of people would have like to see Brown’s last Budget address Stamp Duty.”
For Chris Cummings, director general of the Association of Mortgage Intermediaries, a focus on tax is essential. He says: “Personally, I would like to see significant moves made in terms of both Inheritance Tax and Stamp Duty, and also tax breaks given for professional advice in the workplace.”
While Cummings acknowledges the power of the Treasury, he believes its working model could change, and suggests a greater emphasis on regionalism and localism could see some Treasury power being regionally devolved. However, he stresses any such predictions remain guesswork for the time being. “We know very little about Gordon Brown as a Prime Minister, so it is just too early to tell,” he asserts. “With David Cameron doing so well in the polls, what is clear though is that Brown will feel the need to review his place and the presentation of himself as a leader.”
In addition to Brown’s focusing on how the country perceives him as Prime Minister, Cummings suggests he would do well to show he acknowledges the opinion of the industry, and adds: “I would like to see home information packs (HIPs) withdrawn. Brown could see the opportunity to demonstrate he can listen to the concerns of the industry, as he could even present any change as a repackaging, as opposed to an abolition.”
There are others who hope a new Prime Minister will place a greater emphasis on HIPs, not less. Jenny Erwin, spokeswoman for Ecology Building Society, comments: “I hope the next green initiative would be Council Tax linked to the energy efficiency of a home, as demonstrated by the energy performance certificate of a HIP.” Erwin cites the Ecology’s record lending figures so far this year as evidence of the public’s increased consciousness surrounding green issues, and suggests a Brown premiership could see that environmental interest paralleled politically. “Gordon Brown has personally backed the energy efficiency of houses, and ‘green’ mortgages, from the beginning, so if he comes into power I would definitely expect a greater focus on green issues.”
Brown has already jumped on the green bandwagon with an announcement on zero-carbon homes in this year’s Budget, and plans to build a host of eco-villages across the country.
Perhaps the only certainty is that whatever industry speculation may take place, it will remain impossible to second-guess political focus – the massive changes that have been made to HIPs since their inception being a case in point. It could also be argued that worse than a new Prime Minister who fails to devote attention to the UK housing market would be a leader who attempted to do too much. As Hollingworth warns: “The market does not want too much intervention. Brokers and lenders have the ability to innovate themselves.”
Whether that innovation is deemed sufficient by the Government, or the industry finds itself neglected, remains to be seen. n