The Guardian view on help to buy: entrenching housing inequalities, rather than helping | Editorial

The results are in. The biggest winners from the Conservatives’ help to buy scheme were high-earners who were already likely to buy a house. The Institute for Fiscal Studies (IFS) examined who benefited from the policy, and concluded that the top 10% of earners received the largest cash benefit. Rather than helping people to buy, it more likely helped the already fortunate to accumulate wealth quicker (by helping them buy earlier, or more expensive properties). Of course, this distorted the market: pushing prices up in some areas, and largely increasing competition rather than supply.

That its flagship housing policy accelerated housing and wealth inequalities during a time when the government insisted deep cuts to public finances were needed is not just shocking – it underlines how deep the Tory project of redistribution went. In the 12 years to 2022-23, net spending by councils on housing, per person, was cut by 35%, while spending on planning and development was cut by a third – but clearly there was some cash to go around.

This study adds to earlier ones that have shown why the scheme was no remedy for the structural issues that drive up housing costs. In 2022, the House of Lords built environment committee concluded that the scheme was not good at increasing supply and did not represent good value for money. Instead of making the scheme permanent in 2021, the report argued that giving local authorities and housing associations money to build would have been more effective.

The government looks to recoup and eventually make gains on the loans it gives out, but this was a lost opportunity cost. Help to buy tied up funding that could have gone towards local authority planning budgets, government building, or buying up housing stock – all of which contribute to lower rents and, eventually, more sustainable house prices.

Investment in social housing, rather than the Tories’ ruthless project of pushing people into the private rental sector, wouldn’t only have helped the poorest. The construction industry also benefits from government building: one study of the Austrian housing market showed how investment in social housing smooths out boom-and-bust cycles, keeping the construction industry going when buyers are hesitant. Meanwhile, the taxpayer now subsidises the rising number of people who have been pushed out of social housing and into expensive private rentals, in the form of housing benefit.

The version of help to buy that exists today is different from its predecessor. There is no longer an equity loan scheme (although there have been calls to bring that back), and the scheme is now limited to a buyer’s first home (perversely, about 20% used George Osborne’s original scheme to buy an additional property). But that it still has no upper income limit, and is now known to be a driver of inequality, are two reasons to reconsider whether the scheme should continue.

Of course, that would require some broader reflection on whether our current system is the right one. England saw a net loss of 260,000 social homes between 2013 and 2023. Meanwhile, the private rental sector began expanding rapidly in the early 2010s. While market appetites dictate higher rents, wages have not kept pace. The solution isn’t helping the wealthiest get on to the housing ladder quicker; it is making housing more accessible to everyone.

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