Nicole Gelinas: Osborne's “Help to Buy” violates every principle of economics – and of fiscal governance, too

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.  Follow Nicole on Twitter.

George Osborne wants to help young Britons – by using them to keep bailing out the pre-2008 economy.

For more than three years, Chancellor George Osborne has insisted that his austerity goal is to reduce the size of the British state – and to unleash private-sector prosperity. The centrepiece of his Budget 2013 speech on Wednesday – his “Help to Buy” scheme for would-be house-purchasers – could help to smash those goals.

If Help to Buy works as advertised, it will lure yet another generation of Britons into unsustainable debt. Help to Buy will make Britons dependent, too on yet another expensive government entitlement programme. And even people savvy enough to avoid this new debt trap will suffer.

Rather than admit that the Coalition’s policy of tax hikes and front-line service cuts hasn’t worked, Osborne has devised a big distraction. Citing stringent bank-lending standards that “have put home ownership beyond the great majority who cannot turn to their parents for a contribution,” he proposed in the speech to “put that right – and put it right in a dramatic way.”

Nicole Gelinas: Livingstone's promise on tube fares means higher costs – and more accidents – later

Nicole Gelinas is a Chartered Financial Analyst (CFA) charterholder and a contributing editor to the Manhattan Institute’s City Journal. She has analysed New York City’s public-transit finances for nearly a decade. Follow Nicole on Twitter.

Ken Livingstone unveiled a 100-page “Manifesto for London” last week. Yet one proposal had already captured attention: the Labour mayoral candidate’s promise to “cut fares by 7% this year and freeze them throughout 2013.” “Ken’s Fare Deal” plan for the Tube, buses, and rail shows that Livingstone doesn’t get Transport for London (TfL)’s financial situation – or that he hopes the voters don’t get it.

Livingstone says his plan is simple. He says he'll save the average person £1,000 over four years. But they’ll still be able to ride around soon enough on a newly built CrossRail, plus newer Underground cars and tracks.

How’s that? In the past couple of years, he says, Conservative Mayor Boris Johnson has gathered up a huge “fares cashpile” – having “bank[ed] £727m in operating surplus.” This surplus, Livingstone says, makes it “possible to both cut fares and increase investment from the network.”

Livingstone says he knows he can do this because he has done it: as mayor between 2000 and 2008, he boasts, he “kept fares down while delivering a massive investment programme.”

In last week's debate, Boris called Ken's plan “irresponsible” – and he's right.