Tory Right-to-Buy plans ‘would damage public finances’

24 Apr 15

Conservative plans to extend the Right-to-Buy scheme to tenants in housing association properties would damage to the long-term health of the UK's public finances, the Institute for Fiscal Studies has warned.

In its analysis of the plan, which was announced by Prime Minister David Cameron earlier this month, the economic think-tank said the extension would cover 1.3 million housing association tenants in England.

The plan to extend the right, paid for by requiring local authorities to sell their most expensive properties as they become vacant, would represent a significant giveaway to housing association tenants, the IFS stated.

The sale of council houses, which was estimated to raise £4.5bn a year by the Conservatives, would be used to compensate housing associations for having to sell their assets below market value with Right-to-Buy discounts. It would also fund a commitment to replace properties sold and create a £1bn Brownfield Regeneration Fund.

However, the analysis by IFS researchers Daniel Chandler and Richard Disney said that sales of public assets such as council homes would ‘worsen the UK's underlying public finance position’.

They stated: ‘An increase in Right-to-Buy sales would amount to a substantial giveaway to a relatively small number of households.

‘While the up-front cost of the policy may be covered by sales of expensive local authority properties, by selling public assets to fund a giveaway the policy would ultimately represent a deterioration of the long-run state of the UK public finances.’

In addition, they concluded the plan could lead to a reduction in the social housing stock, despite the policy being designed to explicitly avoid this.

Sales of expensive council homes would reduce the availability of social housing in the most expensive areas, creating clearer divisions between areas where richer and poorer households are located.

There was also considerable uncertainty around the revenues that would be raised from the programme.

‘These reflect both genuine difficulties in predicting the effect of the policies and a lack of detail in the Conservative Party’s announcement,’ Chandler and Disney stated.

‘Given this uncertainty, and the coalition’s less-than-impressive record in delivering replacement social housing under the existing Right-to-Buy, there is a risk that these policies will lead to a further depletion of the social housing stock – something the proposal explicitly seeks to avoid.’

Responding to the report, Conservative housing minister Brandon Lewis said the Conservatives had 'reinvigorated' Right-to-Buy for council housing in 2012, helping 33,000 families into home ownership helping council house building to a 23-year high.

'Our plans to extend the Right-to-Buy to housing associations will similarly boost social housing construction and reduce housing waiting lists,' he added.

'In Scotland, Labour and the SNP voted to abolish the Right-to-Buy, and Labour now plan the same for Wales. Labour and the SNP are the enemies of aspiration and would kick hard-working people off the first rung of the housing ladder.’

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