Economic expansion & jobs, NHS, housing must be Labour’s key themes

Everyone is saying that Labour now urgently needs two or three key themes which will resonate with the electorate and will be recognised by everyone as the party’s distinctive goals.

I believe those three key themes should be (i) reversing austerity by kickstarting the economy and putting a million or more unemployed back to work – which is also the most efficient way to cut the deficit, (ii) recreating a public NHS by repealing the Lansley bill and restoring the ethos of public service, and (iii) launching a major house-building programme to tackle the housing shortage scandal, generate jobs, offer genuinely affordable housing, and hold down house prices and rents. The last of these has received far too little attention, but all of them pinpoint drastic government failure.

Just like their policy on the economy and the NHS, the government’s housing programme has been a triumph of misjudgement. The number of houses built on average in each of the last 3 years has plummetted below 100,000 whilst the demand for housing has remained steady at about 240,000 a year. The Council house waiting list is stuck at 1.8 million, and to clear that shortfall whilst at the same time meeting the annual increment of demand would require a quadrupling of the current level of annual build.

But the government folly over housing is even worse. Osborne’s £130bn Help to Buy scheme is a sure-fire way of generating the next massive housing bubble – after the previous three bubbles collapsed in the 1980s, 1990s and 2000s – and this time the cost of the inevitable collapse when it comes will be wholly borne by the taxpayers.

This has an ominous echo of the colossal US Government bailout of the Fannie Mae State-backed mortgage provider. It is almost incredible that from next January almost a quarter of all UK mortgages will become government-backed. When the next housing crash occurs, as it inevitable must once a bubble has been inflated, the cost to the Exchequer/taxpayer will exceed even the RBS and Lloyds bailouts which totalled about £67bn.

The maladroitness of current housing policy is mind-boggling. The cap on housing benefit is dispersing up to 100,000 families across the country in an episode of social cleansing unprecedented in this country. A third of households, according to a recent survey, find themselves with shrinking real wages only one pay check away from homelessness.

The bedroom tax, apart from its gratuitous callousness, won’t even generate the alleged savings of £465m if tenants move because in the private sector a smaller home will actually cost more in housing benefit than the social housing the tenant has just left. And if the £130bn promised by Osborne to inflate house prices were used instead to build affordable homes, then at £180,000 a time no less than 720,000 could be constructed, equal to 7 times the entire supply last year.