The government’s housing strategy has gone down like a bucket of cold sick and not just with the Left. Its most vociferous critics have come from the Right. James Dellingpole in the Telegraph and City Am’s Allister Heath are two examples.
The key thing to recognise in this housing strategy is that it isn’t a housing strategy. It’s a poor and desperate attempt at a housing stimulus to support a beleaguered economy.
The government has come round to extolling the economic benefits of housebuilding. We’re all Keynesians now. No wonder the Right don’t like it.
We’ve seen some U-turns previously: Labour’s Homebuy Direct providing equity loans to first-time buyers was a ‘very expensive flop’. The Coalition FirstBuy providing equity loans to first-time buyers is ‘supporting our construction industry to build more homes, create new jobs and increase the pace of economic growth.’
Now, we’re seeing a broader and more remarkable about-turn, overtly seeking to provide a housing stimulus to support economic activity and create jobs. Allister Heath even told the housing Minister on Newsnight, he was pursuing a ‘neo-Brownite’ economic policy. (Now there’s an endorsement to go on Grant’s CV).
But the government has tied its hands and the Keynesianism will stay in the rhetoric. The extremism of its deficit reduction plans (in the face of all the evidence of its impact) means they can’t commit real public money to a stimulus in housebuilding.
They dare not touch planning reform again, in case the political fall-out from their own voters does the same damage as their forest-sell off plans. This is despite the chaos of planning policies which resulted in a quarter of a million planned homes being stripped out of the economy, with the hundreds of thousands of jobs that went with them.
So what they’re left with is largely a package of re-announcements. What’s new are schemes designed specifically for (and by?) the large housebuilders to underwrite their risks so they’ll develop more. The government is underwriting mortgages for first-time buyers (for new build only), underwriting the risks of development by providing public land at no up-front cost, committing a fund of £400m to the industry and trying to get local authorities to strip out affordable housing requirements.
This has attracted plenty of criticism for helping simply to prop-up a dysfunctional system and keep house-prices too high. And neither will it work in its own terms. The fund of £400m is ‘small beer’ compared to the £4bn cut from the housing budgets, and will be subject to bidding on the basis of a prospectus to be issued at some point. Hardly the rapid economic impact we need. Public land is constantly cited as a solution, but how long will it be before the ‘buy now, pay later schemes’ will be on site and building homes? As for warming-up Right-to-Buy to generate capital for new homes, the impact will be small given the few social tenants who can afford and will be lent mortgages. That again is out for consultation first.
As unemployment rises ever upwards, the economy continues to flat-line and the government faces home-grown and international crises, they’ve realised they need to do something. But they don’t know what. The most striking thing about this housing strategy is the whiff of economic desperation.