The transformation of councils into drivers of economic growth is set to be undermined by a housing policy which will deprive many prospective workers of suitable housing.
Last week we gained the clearest indication so far of George Osborne’s vision for local government. This will see unprecedented devolution built around clearly accountable mayors leading self-confident, ambitious combined authorities.
Councils will control business rates (well, all will get the ability to cut them as an incentive to encourage employers in their area, anyway) and most hope to oversee the skills training required to meet local employers’ needs. They will gain a new impetus to bring about infrastructure improvements including better rail and bus services. It’s their job to get in the employers, give them the workforce they require and then ensure the workers are able to get to the jobs.
It’s a vision built upon places competing for employers and workers being flexible to move to the best place, competing for opportunities. Amid a massive housing shortage, it falls upon councils to ensure the provision of the housing necessary to enable workers to move to their area. Successive governments have failed to meet targets for building homes and many younger (and not so young) people find house price inflation has eroded their ability to get on the housing ladder while supply shortages make private sector rental unaffordable.
The government believes councils have hindered developers with restrictive planning policies and by forcing them to build affordable homes for rent in planning agreements. The prime minister therefore last week announced the axing of the existing arrangement. Properties sold at a 20% discount to first-time buyers will now be deemed affordable.
While most would prefer to own than rent an affordable home, the new definition of ‘affordable’ will rankle with many. Planning powers will be watered down so councils can merely stipulate that developers provide homes costing up to £250,000 in most places and £450,000 in London. Such homes are way beyond the affordability of huge numbers of people.
David Cameron spoke about moving from “Generation Rent to Generation Buy”. In reality he may be bringing Generation Homeless and Generation Unable to Afford to Move to the Place of Opportunity. Local leaders may find bids to attract entrepreneurs come to nothing if people on lower income levels are priced out. Businesses will be deterred by the lack of cleaners to clean their premises and, for that matter, teachers to educate their children.
Freedom to provide genuinely affordable social housing alongside the more expensive housing would do most to help councils drive growth. Ministers’ preoccupation with increasing home ownership will prevent local leaders delivering the housing their community needs.