According to the Government’s ‘housing strategy’ paper to be announced today, the Tories are about to build some houses. So far, so good, though quite a surprise since in this last year housing completions shrank to their lowest level since 1923. But let’s not look a gift horse in the mouth. According to Cameron, it will be ’as many as’ 450,000 by 2015 and ‘mainly’ affordable homes. That would work out at around 100,000 a year, about the level of this last disastrous year, so not much change there. But haven’t we heard this before? Gordon Brown promised in 2008 that he would build 240,000 new homes a year, a total of 3 million by 2020. The number declined sharply each year from 2008 to 2011. Will this latest, much more modest promise (only 40% of what Brown predicted) fare any better? Very likely not, for good reasons.
First, this is not about affordable homes to rent where the real need is – there are currently 1.8 million households on Council waiting lists. It’s about affordable homes to buy because this is a Government which intends to privatise everything except defence, internal security and central government, and the goal for housing is to push relentlessly towards the final objective of 100% home ownership with no concessions to tenants on the way. What is absurd about this approach is that, as was supposed to have been learnt from the Wall Street sub-prime crash, the lowest paid quarter of the population cannot, given their poor pay and intermittent unemployment, afford home ownership. But the neoliberal capitalists never learn, like the Bourbons. So the Tories are having yet another try.
This time they’ve got two new tricks up their sleeve, both very risky. One is they’re offering to indemnify the mortgage of first-time buyers, thus making lenders more willing to lend because Government would cover the risk of payment defaults. The problem with this, if the scheme is adopted on any significant scale, is that if the recession is prolonged and deepens still further, which looks likely, the Government could end up paying out huge sums as unemployment rises and mortgage defaults multiply. In that case, since this whole exercise is about trying to get growth going to cut the deficit, the deficit might hardly be cut at all and might even be increased.
The second wheeze is to allow borrowers to use their pension investments to boost deposits. Average housing deposits are currently £37,400, about 17% of the overall property value. But if such a large sum for people on low incomes were removed from money saved for their pension pots, their future pension pensions could well be drastically curtailed. Money for jam today at the expense of having lard tomorrow. Not a sensible way to fight a recession.