Help to Buy is finally being scrapped. Here’s why it was a terrible idea

Oooh, a house. Image: Getty.

Buried in last autumn’s budget announcement was the news the the government’s Help to Buy (HtB) scheme would finally wind up in 2023. Which is long overdue considering it could finish tomorrow and that still wouldn’t be soon enough.

Introduced in 2013, the scheme was one of the flagship policies of the coalition government. It was meant to get a new generation of people onto the “housing ladder” – that semi-mythical place of milk and honey where your money works for you and everyone votes Tory. But what it’s actually done is passed huge profits to developers and screwed over the very people who bought into it.

Key to the scheme was the “Equity Loan”. As long as the buyer could stump up 5 per cent of the total cost of the property as a deposit, the government would provide a loan of 20 per cent. The final 75 per cent would be reached through a conventional mortgage. But there are requirements.

One of the requirements of the HtB Equity Loans is that the home being brought is newly built. Now this of course comes with advantages – often they have ten-year warranties, built with modern materials and to modern specs.

But there is a cost for those fresh-out-the-packet homes – what’s known as the “new-build premium”. Across England and Wales new-builds command a 16 per cent higher price than comparable properties in the area.

And just as a new car loses its value when it’s driven out the lot, once a new-build is lived in it starts to lose that premium. The average new-build loses around half its premium when it is sold for the first time. Suddenly the bottom rung of the ladder doesn’t seem so sturdy.


Another requirement of the scheme is that the property being bought is from “a registered Help to Buy builder”. This has the even more perverse effect of adding another premium onto the price that the first-time buyers are paying. A 2017 Morgan Stanley report found that builders could charge an extra 5 per cent for the properties sold through the scheme.

So between the new-build premium and the Help to Buy premium, the latter of which evaporates on purchase, people buying through HtB are paying 21 per cent over the odds.

Now if property were guaranteed to appreciate in value at those pre-2008 levels then it would still make sense. But that’s unlikely. Some assessments are predicting a 25-35 per cent fall in house prices in the case of a no-deal Brexit. Even if this on the cynical side, you know it’s not going to be pretty.

For developers, the scheme is brilliant. They no longer need to contribute any capital to support the sale of new-builds, so there is so much less risk involved. And this means they can rake it in. In a fairly excruciating video, the CEO of Persimmon Homes (a HtB builder) refused to answer questions from a BBC journalist about a £75m bonus.

Which makes the real winners of Help to Buy those whose bonuses are being propped up at the expense of those it is meant to help – and suddenly it’s easy to see why the scheme must be scrapped. But for the 400,000 first-time buyers who have already used it, it might just turn out to be a terrible deal.

 
 
 
 

The mountain in North Wales that tried to stop the UK’s blackout

Elidir Fawr, the mountain in question. Image: Jem Collins.

Last Friday, the UK’s National Grid turned to mush. Not the official term perhaps, but an accurate one after nearly one million people were left without power across the country, with hundreds more stranded at train stations – or even on trains (which isn’t nearly as fun as it might immediately sound). 

Traffic lights stopped working, back-up power failed in hospitals, and business secretary Andrea Leadsom launched an investigation into exactly what happened. So far though, the long and short of it is that a gas-fired power station in Bedfordshire failed just before 5 o’clock, followed just two minutes later by Hornsea offshore wind farm. 

However, amid the resulting chaos and inevitable search to find someone to blame for the outage, a set of mountains (yes, mountains) in North Wales were working extremely hard to keep the lights on.

From the outside, Elidir Fawr, doesn’t scream power generation. Sitting across from the slightly better known Mount Snowdon, it actually seems quite passive. After all, it is a mountain, and the last slate quarry in the area closed in 1969.

At a push, you’d probably guess the buildings at the base of the mountain were something to do with the area’s industrial past, mostly thanks to the blasting scars on its side, as I did when I first walked past last Saturday. 

But, buried deep into Elidir Fawr is the ability to generate an astounding 1,728 megawatts of electricity – enough to power 2.5 million homes, more than the entire population of the Liverpool region. And the plant is capable of running for five hours.

Dubbed by locals at the ‘Electric Mountain’, Dinorwig Power Station, is made up of 16km of underground tunnels (complete with their own traffic light system), in an excavation which could easily house St Paul’s Cathedral.

Instead, it’s home to six reversible pumps/turbines which are capable of reaching full capacity in just 16 seconds. Which is probably best, as Londoners would miss the view.

‘A Back-Up Facility for The National Grid’

And, just as it often is, the Electric Mountain was called into action on Friday. A spokesperson for First Hydro Company, which owns the generators at Dinorwig, and the slightly smaller Ffestiniog, both in Snowdonia, confirmed that last Friday they’d been asked to start generating by the National Grid.

But just how does a mountain help to ease the effects of a blackout? Or as it’s more regularly used, when there’s a surge in demand for electricity – most commonly when we all pop the kettle on at half-time during the World Cup, scientifically known as TV pick-up.

The answer lies in the lakes at both the top and bottom of Elidir Fawr. Marchlyn Mawr, at the top of the mountain, houses an incredible 7 million tonnes of water, which can be fed down through the mountain to the lake at the bottom, Llyn Peris, generating electricity as it goes.


“Pumped storage technology enables dynamic response electricity production – ofering a critical back-up facility during periods of mismatched supply and demand on the national grid system,” First Hydro Company explains.

The tech works essentially the same way as conventional hydro power – or if you want to be retro, a spruced up waterwheel. When the plant releases water from the upper reservoir, as well as having gravity on their side (the lakes are half a kilometre apart vertically) the water shafts become smaller and smaller, further ramping up the pressure. 

This, in turn, spins the turbines which are linked to the generators, with valves regulating the water flow. Unlike traditional UK power stations, which can take hours to get to full capacity, at Dinorwig it’s a matter of 16 seconds from a cold start, or as little as five if the plant is on standby.

And, designed with the UK’s 50hz frequency in mind, the generator is also built to shut off quickly and avoid overloading the network. Despite the immense water pressure, the valves are able to close off the supply within just 20 seconds. 

At night, the same thing simply happens in reverse, as low-cost, surplus energy from the grid is used to pump the water back up to where it came from, ready for another day of hectic TV scheduling. Or blackouts, take your pick.

Completed in 1984, the power station was the product of a decade of work, and the largest civil engineering project commissioned at the time – and it remains one of Europe’s largest manmade caverns. Not that you’d know it from the outside. And really, if we’ve learned anything from this, it’s that looks can be deceiving, and that mountains can actually be really damn good at making electricity. 

Jem Collins is a digital journalist and editor whose work focuses on human rights, rural stories and careers. She’s the founder and editor of Journo Resources, and you can also find her tweeting @Jem_Collins.