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Why the Tories’ White Paper will do nothing to solve the housing crisis

Housing is a major sticking point for the Tories. They know it, we know it, and the public know it too. On their watch, first with their LibDem friends and now alone with a majority thinner than a major donor’s tax return, the bottom fell out of the house building figures. Cash strapped councils made poorer by a deliberate attempt to destroy local government services had no readies to produce social housing. The Tories curbed housing association building plans by announcing the extension of right to buy to their tenants (plans now quietly dropped). They left towns and cities across the Midlands and North scarred by cancelling Labour’s housing pathfinder renewal scheme while, perversely, stumping up the cash for demolitions of “undesirable” housing stock. And have sat by while buy-to-let and second home ownership took off for the fortunate few. Indeed, their Mayor of London encouraged international capital to park its cash in property with deleterious consequences for ordinary house buyers.

This paralysis can be put at the foot of a generous reading of Tory motives. Because they believe the private economic activity is always the preferred provider for any service, allowing the state to retreat would encourage the magic market pixies to step in and make available provision instead. It’s nonsense, of course. The state of the market discriminates in favour of those with piles of cash and/or easy access to equity. It responds to property investors over young people trying to get on the housing ladder, driving prices up. And this is ably assisted by limited supply. Why should developers try meeting market demand for housing when deliberate under-building ensures greater returns on investments? No, these economics are so obviously distorted and broken that the usual ideological idiocies about the market serve only to highlight the situation’s absurdity.

As with all things in politics, it’s the interests, stupid. Under Dave and Osborne nothing was done because the property developers, the landlords, the home owners whose assets inflated under galloping house prices were and remain key cohorts of Conservative voters. This layer of petit bourgeois owners shading into the big landlord chains benefited from low numbers of new builds and the restrictions on social housing. Likewise, under his Blessed Blairness, New Labour did bugger all to stymie the degeneration of the property market in the name of aspiration, of wanting to capture the Kirstys, the Phils, and the Sarah Beenys in the nice swing seats. Unfortunately for the Tories, this situation cannot continue. Locking millions permanently out of the housing market while core supporters carry on coining it stores up social and political problems. The party that, in the 1980s won over layers of working class people by giving them a leg up into property was in danger of becoming the party that denied their kids and grand kids similar help. How then to sort the problem without going ‘full communist’ by building 200,000 new homes a year, as per Ed Miliband, without causing average house prices to fall and hitting the investments and asset prices of its nearest and dearest supporters?

In their new white paper, Housing Minister Gavin Barwell has come up with an ingenious solution. Forget affordable housing, let’s have affordable renting. What Barwell proposes is a recasting of the rental market. In a move redolent of working towards the leader, he proposes the introduction of long-term tenancies that provide stability for renters and landlords alike. A system not unlike the lengthy lets that are par the course in Germany, in fact. It reiterates the guillotining of letting agents’ fees, but also hints at “government help” (i.e. bungs) for developers to build homes for “affordable” renting, something the House Builders’ Association have dived on with alacrity. On all the Sunday talkies, Barwell ritualistically reiterated the commitment to building a million new homes before 2020, but it was said with the kind of enthusiasm reserved for policies destined for disposal down the memory hole.

It goes without saying, but I’m going to say it anyway: this policy is a load of rubbish. It does little to address the housing problem. It does next to nothing to solve the shortage in social housing stock. But, then again, one shouldn’t be mean about young Gavin’s efforts: he can’t well be expected to solve a problem he didn’t set out to tackle. Secure tenancies certainly make for touchy-feely one nation vibes, but expanding the buy-to-let market – which is what the government are signalling – provides more opportunities for landlords and developers in such a way to stymie the numbers of new builds entering onto the open market for prospective owner-occupiers and first-time buyers. Prices therefore remain largely protected. As for the problem, well, it gives the Tories the appearance of doing something, except this something, as always, is about protecting the interests of their own.

6 Comments

  1. Richard MacKinnon says:

    Phil,
    Is there any subject you are not an expert on? You seem to know so much stuff about almost every subject. Every day you never cease to amaze me. You seem to come up with something else that the rest of us know nothing about and make sense of it. You put me in mind of a scout leader with a big torch. Is there nothing you don’t know?

    1. John Penney says:

      If you took the trouble to learn something about Labour’s poor record on housing for the last 30 years you might actually have the basis for a serious critique of Phil’ article, Richard.

      Unfortunately Labour continued all of Thatcher’s Right to Buy disasters , failed to empower Coouncils to build new council housing in bulk, and the Labour Housing Pathfinder Renewal Scheme was an utter disaster – destroying thousands of potentially refurbishable older housing stock, and leavng it to the private builders to rebuild the areas cleared of housing by the Pathfinder Scheme. Councils could have borrowed at low interest rates to build tens of thousands of council houses , but never got the powers to do so. The private sector left most of the cleared areas derelict for a decade or more. The market simpy failed to deliver affordable mass housing.

      Neoliberal Labour are just as complicit in causing the current housing crisis, and the rise of a new rapacious landlord class, as the Tories .

      See, Richard, knowing some facts, and not trying to be a smart arse could have actually given you a real critique.

      1. Richard MacKinnon says:

        John,
        If Labour has got such a poor record on social housing, and they have, I’m surprised you still vote for them.
        “Councils could have borrowed at low interest rates to build tens of thousands of council houses”. There you go again; what is it with you, always wanting to borrow money that isnt yours to borrow.
        I am going to explain to you, not tonight, too tired, tomorrow, why councils should be building thousands of houses without having to borrow a penny, Mr Penney.

        1. Richard MacKinnon says:

          This is what I would do if I was the housing regulator.
          I would make social landlords, that is housing associations and councils use the take from rent to build new houses. It would be part of their contract, to renew and build new.
          It makes you think what happens to all the rent they gather at present. Where does that go? I’ve done this sum before. Take a small housing association with 1000 units at a average monthly rent of £350. £4.2 million per annum.
          If social housing was run properly not only would new builds be going up but money would be going into local services.

          1. Mervyn Hyde says:

            Richard, the real Labour Party built hundreds of thousands of council homes after the war, when we hade trade imbalances at 250% of GDP, today that ratio stands at 89%.

            http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp

            Why do you think we should continue with the farce of building private sector houses, when in the 1960s people only spent one fifth of a single income on rent and rates?

            The policy was so popular that the Tories continued it until Thatcher branded people as scroungers for living in council accommodation. She called the private sector rented market as economic rents, the greatest misnomer ever invented by Tory spin doctors.

  2. Tim Pendry says:

    Excellent article and contribution – this is what we should be debating: housing alongside social care, healthcare, education, defence … and so forth … not how to get a Second Referendum or Trump’s visit or futile coalitional strategies with treacherous Liberal Democrats.

    Labour’s problem is that New Labour was complicit in so many of the problems that the May Government is now, weakly, trying to address because of the Brexit shock.

    Every time we go for the jugular, it is a five minute job to demonstrate the fact of that complicity – whether it is the effects of migration, lack of infrastructural investment, appalling economic strategy or the primacy of cultural politics over socio-economic development and redistribution of power and resources, let alone foreign wars and grandstanding.

    Putting, aggressively, a massive ocean of red water between what is required in Government in 2020 and what was done betwen 1997 and 2010 is part of what is required.

    But we have a problem … the debt-based consumer economy and the debt-fuelled government strategies of all Governments since the 1980s is a real issue that we cannot wish away. McDonnell clearly understands this. None of that nationalise the top 100 companies by tea time rubbish of the past.

    We are now locked into a global system. Every one of our signal reforms requires serious expenditure of funds – above all, the mass provision of decent quality housing whether for rent or ownership which the market cannot be expected to deliver. Such expenditures could create ‘market turmoil’ if not well handled which is one reason the Tories are running scared of serious change.

    Why, for example, are we not demanding the taxation of second homes to the limit where they reduce the stock for local people in attractive areas? Too many Islington-type big wigs with pals who have pads in the country?

    Why not say that the sort of massive housebuilding programmes (let alone social care) that are required demand a temporary suspension of free movement of labour and the diversion of funds from an expensive defence strategy that is not really required, from overseas development budgets, from the non-technology-based universities and from the arts budgets – and build confidence in the public that higher taxation is a legitimate strategy that is in their interest because the money will be used effectively and fairly during the total life cycle of the citizen.

    Radical thoughts but the ‘social forces’ inside the Left ultimately come down to a struggle over spending priorities in a globalised capitalist system which cannot be transformed overnight. Either people ‘get’ that we are one community in which the priority is fairness for all and basic requirements are met – the original Labour vision – or we dissipate scarce resources in keeping a rainbow alliance of special interests satisfied with an associated set of back door subsidies to the urban liberal graduate class.

    Housing is the touchstone of all this because Gavin Barwell really is the type of the decent Tory (yes, they exist) who really really tries to fiddle the market to get a better system for ‘ordinary folk’. We have to do better and nothing John Healey has said is ‘better’ because it still has not involved a decisive rejection of the legacy of his old masters or a plan that prioritises housing and social needs above State grandstanding and liberal cultural politics.

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