This week Rishi Sunak ruled out direct government intervention to protect homeowners from impending catastrophe. It’s a welcome development – bailing out mortgage debtors would be financially ruinous and grossly unfair on renters. But just a few days ago the Prime Minister was ordering banks to shield borrowers from surging rates, and the Treasury still insists that the chancellor wants banks to ‘live up to their responsibilities’ – the vagueness of which leaves a lot to be desired. There are reports of ministers working with banks to offer more indirect help, like payment holidays.
It’s unclear whether the Tories will buckle and end up subsidising mortgages anyway. This is a party, after all, which once dismissed the idea of a windfall tax before U-turning, blew £70 billion of taxpayer money on furlough, and pushed through the extortionate Energy Price Guarantee. Downing Street’s careful statement has also left open the door to indirect intervention – perhaps with the reintroduction of mortgage tax relief.
For 13 years, successive Conservative governments have made countless concessions when it comes to government intervention – to vested interests, lobby groups, charities, Nimbys, ‘the science’ – and each capitulation has pulled them away from their core principles of personal autonomy, individual responsibility and free(ish) markets.
In doing so they have prioritised short-term gains over policies that could have delivered rewards in the longer term. They have become addicted to never-ending interventionism, all to correct politically difficult headlines.
The government is even reportedly considering ‘voluntary’ price controls on supermarket essentials. It was the free-market economist Milton Friedman who once said ‘we economists don’t know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can’t sell tomatoes for more than two cents per pound.