People of a certain age remember when housing was the most valued political currency.
Throughout the consensus ‘Butskellite’ politics of the 1950s and 60s, both main parties competed to build as many homes as possible in the shortest time. Harold Macmillan, as Conservative housing minister, managed more than 350,000 in 1954. Labour’s Hugh Gaitskell promised more. In the mid-1960s, when beginning my working life, I vividly recall a Conservative election ad promising that a Tory government would outbuild Labour in a public spending spree.
How times change. Now the very mention of new housing sets intruder alarms ringing in the shires, with some Tory backwoodsmen and women fearing that their rural idyll is about to be threatened by an invasion of concrete and brick.
But the party leadership knows differently. With house prices soaring, younger people in the key marginals of the Southeast cannot afford a first step on the housing ladder unless parents step in with a deposit — which explains this week’s move by shadow chancellor George Osborne to remove stamp duty for first-time buyers on homes worth £250,000 or less.
But the Cameron camp also knows that this is not enough. Last year the then housing spokesman, Michael Gove, challenged the party’s old guard by calling for more housing in greenfields to satisfy demand.
Now, after the Blair years, when housing barely figured on the Downing Street agenda, PM Gordon Brown has joined in, pledging to make affordable housing ‘one of the great causes of our time’ in his speech to Labour’s conference last week.
The urgency of the issue was underlined this week, with government figures showing that the number of young people able to afford a mortgage is dropping significantly, while those seeking privately rented accommodation is rising.
Housing minister Yvette Cooper was busier than most on the conference fringe circuit with calls for a national consensus on the need for new housing. Even if that is achieved, she knows there are problems. Ministers believe the building industry is not geared up to meet a target of
3 million more homes by 2020. That’s some goal — government figures in the summer showed that over the past 12 months housing ‘starts’ had dropped by 6% to 173,000.
While it is unfair to doubt the government’s commitment, in reality ministers have few of the levers available to previous administrations. The state, in thrall to the market, is no longer all-powerful. Much as Brown would like much more housing, his government is in no position to follow earlier postwar administrations by buying land at agricultural values — compulsorily if necessary — and giving Whitehall-funded development corporations the powers to let rip with a string of new towns.
Light-touch government, fearful of any intervention, has few instruments other than cajoling the big builders. But the Office of Fair Trading has begun investigating an industry now concentrated in even fewer hands after a series of mega-mergers. Some critics say the builders have morphed into land speculation companies by hoarding an estimated 14,000 acres with planning permission, enough for 225,000 homes.
So is the Brown government in danger of willing the end without the means? Perhaps. Certainly its commitment for an £8bn boost to affordable housing over three years, increasing building levels from around 40,000 annually to nearer 70,000, has been welcomed by housing associations, the charity Shelter and other organisations. But turning rhetoric into reality will be challenging.
Even if developers up the pace of building, it’s not clear how ministers can fund the necessary infrastructure for the ten new ‘eco towns’ and other planned communities in Southeast growth areas without a mechanism to claw back the huge windfall a landowner makes once planning permission is granted.
One idea was the planning gain supplement, raised by the 2004 Barker report on housing supply. But big business, led by the British Property Federation, is lobbying hard against this. Cooper says no decision has been taken in the run-up to the Queen’s Speech: ministers have instead asked for alternatives.
Now another problem is looming in the aftermath of the Northern Rock crisis. With two-year fixed-term rates for many mortgage holders due to end shortly, credit ratings agency Standard & Poor’s has warned many to expect one of the largest ‘payment shocks’ since the early 1990s, when repossessions reached an all-time high. Borrowers with poor credit ratings could face a 60% increase in loan costs.
Suddenly, rented housing could become a more attractive proposition. That’s why ministers are pressing housing associations to increase building and raise their borrowings further, above the current level of £32bn. The associations are certainly interested — provided they can raise rents faster and sell more homes on the open market. They just might prove the salvation for ministers.
