As we enter a prolonged period of electoral promises from all of the political parties, what will we the electorate be promised about building homes?
To ensure we have enough affordable homes the nation needs a house building market that delivers high volumes at low margins; but unfortunately the supplier market is used to delivering low volumes at high margins.
The evidence of decades is that we require a more active state to ensure we build a higher volume of affordable homes because market economics alone do not deliver this.
Perhaps it should be easy, but as with many public policy issues it’s complicated.
Whilst building council housing is a numeric solution, and councils could do this if given the capital freedom to do so, policy makers of all parties privately worry about creating single tenure estates with low economic aspirations. This leads them toward private/public partnerships to create mixed tenure housing. But the means of delivering this on an industrial scale remains elusive because PFI didn’t always go well - and finance vehicles of this type are often seen as risky.
The Treasury worries that housing finance scores against public sector debt, and that it would have to persuade the ONS, even if it thought otherwise; whilst theaccountancy issues can be considerable when the development and delivery of schemes may take many years, and the issues of financing, impairment, depreciation, asset transfer and risk require studious handling.
Meanwhile tactical policies to promote or pilot this, that or any other fad come and go, whilst the nation’s shortage of homes steadily grows. For me it’s an expression of the UK’s inability sometimes to think beyond one parliament - and tackle the issues of large scale infrastructure - that can lie at the heart of unsuccessful policy. We need more homes for better health, better skills, better economic performance and better social cohesion, and transversely less intergenerational inequality and less market failure.
Public financial management must be about putting this right, by planning budgets for the medium term that cut across spending rounds, parliamentary cycles and yearly cash flows. Effective public financial management ensures that there is transparency about the big underlying issues so that policy makers can make well informed choices.
So my New Year resolution is to help the finance profession ensure that in the run up to next year’s election 'hard choices', 'value for money' and 'getting our finances in order' are discussed in terms of long term planning and not short term promises. No policy area demonstrates this more than housing.
