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‘Maverick’ May versus ‘Fiscal’ Phil on housing

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LGC’s essential daily briefing.

“It’s not the despair. I can stand the despair. It’s the hope I can’t stand!” John Cleese in 1980s comedy Clockwise.

As attention turns to the Budget next week, one policy area where the whole country will be hoping to see movement is housing.

Not since the late 1970s has the total number of homes built in a year reached anywhere near the 250,000 target this government is aiming for, let alone 300,000 as Sajid Javid suggested is needed during an interview with Andrew Marr last month (more on that later).

As the years have ticked by over the past four decades, the number of homes built each year has been in general decline – 147,930 homes were completed last year compared with 261,600 in 1977-78.

The amount built these days that is genuinely affordable housing is miniscule while, as LGC reported last week, the number of homes for social rent built last year dropped by a fifth.

Further LGC analysis suggests an increasing number of councils are doing all they can with their limited resources to buck this trend: of the approximately 100 councils that still own their own housing stock, 56 areas started 4,780 new council homes in 2016-17, up from 34 areas starting to build 950 homes in 2015-16.

That surge was largely driven by shire districts and unitary authorities as opposed to London boroughs and metropolitan councils – South Gloucestershire Council started the most (410) followed by Birmingham City Council and Bath & North East Somerset Council which each started 210.

But these numbers are small in the grand scheme of things. Writing for LGC today shadow housing minister Tony Lloyd has warned “the overwhelming majority (85%) of housing spending has shifted from building new homes to providing housing benefit” most of which is “lost” in the pockets of private landlords.

“Housing associations recycle surplus monies into new housebuilding but private landlords rarely do,” said Mr Lloyd.

Theresa May has talked the talk on housing but her government’s £2bn fund for social housing has been described as “insignificant”.

The prime minister is a long way from solving this crisis (let alone any of the others she’s contending with both inside and outside her own party) but all of the rumours and reports in recent weeks have pointed towards housing as the central theme of the Budget on 22 November.

Ms May chaired a housing summit at 10 Downing Street last month which David Montague, group chief executive of housing association L&Q, attended. Writing for LGC today, Mr Montague said the prime minister’s language is “perhaps more important” than announcements about various pots of funding especially as she has pledged “to take personal ownership of the housing crisis”.

What will be more important than her language is whether she gets her own way next Wednesday.

Even if her social housing fund fell flat, Ms May clearly recognises the need to invest more resources if the government is to help solve this issue. That is something her communities secretary also knows as Mr Javid, in his BBC interview last month, made a pitch for the government to borrow more to build more homes.

But chancellor Philip Hammond is far from keen on that idea, while the Financial Times reports today that “hopes of a revolutionary new housing policy in the Budget… look set to be dashed”.

“Ministers have failed to agree on proposals by communities secretary Sajid Javid for the government to borrow billions of pounds to finance a big new housing programme,” the report said.

It would appear Fiscal Phil is keeping close tabs on the numbers in his spreadsheet.

Former planning minister Nick Boles (2012-2014) has proposed the Treasury should issue a bond “in which savers are offered special tax incentives to invest money over the very long term” to fund the construction of “500,000 new affordable homes” over 10 years. It’s an interesting idea, even if he wants the Homes & Communities Agency to build the properties instead of councils. But even then, that’s 50,000 extra homes a year – a fifth of what is required.

It is just more tinkering around the edges, something LGC urged ministers to avoid in a previous briefing.

The housing crisis clearly will not solve itself and if things carry on the way they are, the Local Government Association has warned the Conservative party’s beloved right-to-buy policy is at risk as councils will have very few homes to sell in the not-too-distant future. 

But as Mr Montague mused in his column, “perhaps we would now be talking about a housing crisis in the past tense” had councils been given the same borrowing capabilities as housing associations.

Perhaps it is time for Ms May, perceived to be the most powerless prime minister in recent memory, to take a leaf out of some of her ministers’ books by being more maverick and riding roughshod over anyone who gets in her way.

If personality clashes and internal party politics prevent the housing crisis from being properly addressed in the Budget, it will be reminiscent of another of Mr Cleese’s creations: Fawlty Towers.

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