Gaps and contradictions… and a challenge for Labour

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Steve and Tony’s excellent posts on the government’s housing ‘strategy’ have hit the nail on the head.  As Steve said, writing down lots of little policies in one place is not the same as writing a strategy.  Here are some more reflections on the gaps and contradictions, from someone who had the misfortune to spend Monday going through the 88 pages in detail.

First, it’s not quite true to say that the strategy does not assess the size of the task.  It notes early on that household numbers are projected to grow by 232,000 per year. True, it ignores the backlog of unmet need which was put at almost 2m households in a report slipped out by DCLG last November.  But having made a stab at saying how many houses are needed in future it effectively says that the worst way of getting that number built is to… say how many houses are needed in future.  It made me wonder whether, at Cameron’s no doubt sumptuous wedding to Samantha, he bothered to tell the hotel how many guests had been invited or whether he thought the best solution was for them to make an intelligent guess.

Second, as Steve said, the report belatedly recognises the importance of housing, encapsulated in that magic moment when (as Cameron said) the young couple turns the key in the door of their first flat.  Well the reader is entitled to ask whether, as a result of the strategy, a lot more Daves and Sams will be able to do this.  Frankly, we don’t know, but the size of the task is so huge that it is most unlikely.  As Steve Wilcox said in last year’s UK Housing Review, first-time buyers are being kept out of the market at the rate of a staggering 100,000 per year.  Yet what the strategy offers them is a mortgage indemnity – in a scheme yet to be established – providing they buy a new house.  How many of the 100,000 Daves and Sams will be able to do that?

Much more likely, of course, is that they will rent privately.  Here, the silence of government policy is deafening.  We have a sector that has grown from just over two million to nearly four million households in a decade. It houses one in six households and by 2020 may well house one in five.  All of this is the largely accidental result of buy to let mortgages followed by the credit crunch. But this surely raises some policy issues?  Despite recent progress it remains a sector with a lot of poor properties and poor landlords, to whom vulnerable households are going to have to turn much more than they did before.  At the other end of the market, will still have a situation where the Daves and Sams can be booted out at two months’ notice.  Yet as the recent LSE report Towards a Sustainable Private Rented Sector made clear, in other countries which make heavy use of private renting, more tenure security is common and seems not to deter investment.  Why not at least announce a review of the future of the sector, given it is now playing such a vital role?

Finally, in contrast to private renting, the social sector warrants a plethora of policies, although almost none of them are new.  Here the government’s confusion of purpose becomes more apparent by the hour.  The strategy aims to challenge the ‘complacent consensus’ about social housing, and ensure that it goes only to those in genuine need. Indeed, councils are to be told that houses are not to go to ‘people who don’t need them’.  Yet what are the government’s flagship policies? Its main one, the ‘affordable rent’ programme, aims new homes and relets of existing ones at people who can pay more, not the most needy.  Its welfare reforms will make it more difficult for low-wage tenants to keep their homes.  And now, the government plans to revive the right to buy, which will provide a massive subsidy for a select few better-off tenants to keep their homes in perpetuity.  This is not so much a strategy as an anti-strategy: setting aims for the sector, then choosing measures which will achieve precisely the opposite effect.

The best thing about this ‘strategy’ is that it raises the stakes for the government, puts housing higher on the agenda and provides a golden opportunity for Labour to make its mark.  As Tony said, it’s a feeble attempt at a Keynesian stimulus. There are plenty of aspirations in the 88 pages, even if there are few targets.  The challenge for Labour is to develop a real strategy that addresses the massive problems that are building up and – even more important – shows how they can start to be solved.  To do this it can’t avoid the most glaring gap of all – investment.

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2 Responses to Gaps and contradictions… and a challenge for Labour

  1. Anonymous says:

    We have a [PRS] sector that has grown from just over two million to nearly four million households in a decade. It houses one in six households and by 2020 may well house one in five. All of this is the largely accidental result of buy to let mortgages followed by the credit crunch.

    Your analysis is wrong about rapid expansion of the BTL sector. The rapid increase happened during an ECONOMIC BOOM. We are in a recession. I certainly don’t think the PRS will reach 20% of households. There are two reasons. Supply of tenants and Lack of cheap finance. Before NR (Northern Rock) it was easy to get a BTL mortgage. Now it is hard and the banks are slapping on high arrangement fees.

    Landlords who purchased between 2004 to 2007/8, will find they are in negative equity. The rental incomes are lousy, as most of the rent that comes in, goes straight out to the mortgage and maintenance upkeep of the property.

    You also mention lack of security of tenure. I don’t know why a sensible landlord, would get rid of a sitting tenant. As churn costs money. When the property is empty between tenants, the mortgage still has to be paid. Plus, lots of maintenance and a light to complete refurbishment may be needed to attract new tenants. But there are lots of myths, landlord keep increasing rent… but this is counter productive. I know of a number of landlords, who don’t increase rent as reward for staying on….

  2. efgd says:

    “It made me wonder whether, at Cameron’s no doubt sumptuous wedding to Samantha, he bothered to tell the hotel how many guests had been invited or whether he thought the best solution was for them to make an intelligent guess.” Steve Hilditch

    I think this sums up all Cameron’s activities as a PM!

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