If Labour wants to build 200,000 homes per year, it must invest

Labour’s conference this week needs to be about more than how to respond to the referendum result or whether to bail out the NHS. Important though they are, how to put flesh on the bones of Ed Miliband’s pledge to reach a target of 200,000 new homes per year in the next parliament is vital too, and as with the NHS he shouldn’t back away from committing resources to it.

The Lyons Review, due out shortly, should provide a detailed blueprint for how to deliver 200,000 homes and more. But the plan has to be backed by resources if it’s to have a chance of working, and this is where the two Eds come in. It simply can’t be assumed that the target can be met by relying on the private sector alone. A marker has been put down by Tom Copley, Nicky Gavron and a mixture of Labour councillors and parliamentary candidates in London, demanding that Lyons calls for changed borrowing rules for local authorities and that this is in the Labour manifesto. They make a point with which Lyons will surely agree, that historically councils made a massive contribution to total output and they need to do so again. While it’s true that housing associations now make the bigger input to new building, if we are really to achieve the near doubling in output that Ed Miliband wants, both parts of the social sector will have to make a step-change in delivery along with the private sector. Achieving the target through expansion of private output alone is simply unrealistic.

There are several key elements to this. First, the reform of council housing finance, begun by John Healey in the last parliament, needs to be completed by giving councils wider borrowing powers. Ideally, as Red Brick has long argued, borrowing rules would be changed. But if that is not an immediate prospect, then at least a mechanism is needed to allow councils whose borrowing headroom is too low to get more, especially those who have ambitious but thwarted new build plans.

Second, the issue of grant cannot be ignored. While many councils will build without grant, it’s obvious that associations and some councils need grant and that the current regime is not working. Simply continuing with the second Affordable Homes Programme due to start next April will not deliver the number of homes needed at properly affordable rents. The programme must be reappraised. At present it threatens to produce the worst of all worlds: too few homes, designed to be let at rents that are too high. The warning signs are there from the poor response to the Mayor’s section of the programme in London. Even if new resources can’t be found, at the very least the programme must be reconfigured, with the available funding for housing protected and very clearly targeted.

The third key issue is the balance between rents and benefits. The coalition’s policies have been grossly irresponsible, pushing up welfare costs in both the short and longer term and having no regard to the realities of many tenants being in low-paid, insecure and part-time work. Policy needs to be reframed to push back against higher rents and enforced benefit dependency. The worst outcome would be simply to continue the present policy drift.

Finally, local authorities need to be firmly on board as partners in driving towards the 200,000 target, using their strategic housing and planning powers. But again, the reality of how local government capacity has been shredded by the coalition needs to be faced. Housing and planning services have been hit by some of the biggest local government cuts. Together the services account for only around three per cent of local spending, so the problem is not unresolvable. But neither can it be ignored if councils are going to set the local strategies and deal with the planning applications that will be needed if housing supply is to be doubled.

None of the above are comfortable messages for the two Eds, but who said that building 200,000 homes per year would be easy? It won’t be enough to set a paper target, make some reforms to the planning system, and hope for the best. The Lyons report will surely both make that obvious and show what needs to be done if the ambitious target is to be delivered. And although Lyons can’t say it, the Labour Party also needs to ensure it’s the very highest priority and that the test of any shifts in budgets or further welfare changes will be whether they or not they help deliver it.

While Ed Miliband was in Scotland perhaps he had the opportunity to draw useful lessons that could be applied if Labour forms the next government in Westminster. For example, did anyone tell him that Scotland’s 32 councils build ten times as many council houses per head as their equivalents in England? If Scottish local authorities already enjoy the freedom to borrow sustainably from their rental income, perhaps ‘devo max’ can be used to apply the same rules south of the border.

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2 Responses to If Labour wants to build 200,000 homes per year, it must invest

  1. Pingback: The housing baton passes to Sir Michael Lyons | Red Brick

  2. Pingback: Ed Balls’ speech – the wrong balance between austerity and investment? | Red Brick

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