Housing Crises. build more Council homes yet more reasons to Vote People Before Profit.

Leader: Follow Macmillan and build, build, build

The UK needs a programme of mass housebuilding to stimulate growth, create employment and reduce welfare spending.

By New Statesman Published 01 May 2013

Photograph: Getty Images

As well as enduring the slowest economic recovery in more than 100 years, Britain is suffering from a severe housing crisis. Housebuilding is at its lowest level since the 1920s, with just 98,280 registered starts in 2012, down 11 per cent on the previous year and far short of the 230,000 new households that were formed. As a result of this mismatch between supply and demand home ownership is in decline for the first time in a century, even as the population continues to grow rapidly. After peaking at 70.9 per cent in 2003, the share of owner-occupiers has fallen to 65.3 per cent, the lowest level since 1987. The average age of a first-time buyer without parental assistance is now 37 and the figure is expected to reach 40 before the end of the decade. By expanding home ownership while failing to invest in new stock, the Thatcher government and its successors allowed the dream of a “propertyowning democracy” to wither.
The principal consequence has been to force millions into the unregulated private rental market, where spiralling housing costs make it even harder for the young to save for a deposit. Private rents have increased by 37 per cent in the past five years and are forecast to rise by a further 35 per cent over the next six years. As a result, as many as five million people rely on state aid to remain in their homes. The government spent £23.8bn on subsidising landlords through housing benefit last year, more than 20 times as much as it spent on housebuilding.
Conscious of the need to offer a political response, George Osborne made the new “Help to Buy” scheme, a deliberate echo of Margaret Thatcher’s “Right to Buy”, the centrepiece of his recent Budget. The policy offers equity loans of between 5 and 20 per cent of the value of properties worth less than £600,000 and taxpayer backing for up to £130bn of mortgage lending. However, while certain to inflate demand, the scheme does nothing to address the fundamental problem of supply. Despite the near absence of growth since 2010, house prices have returned almost to their pre-crash levels. Wages are not forecast to do so until 2020.
Mr Osborne’s intervention in the mortgage market is only likely to succeed in widening this disparity. As the Treasury select committee, chaired by the independent-minded Conservative Andrew Tyrie, witheringly observed on 20 April, “If the government’s priority was housing supply, its housing measures ought to have concentrated there.”
Yet the Chancellor is unwilling to concede the necessity for public investment to increase the number of homes. It is true that the lack of supply is partly attributable to Britain’s anachronistic planning laws, currently being energetically dismantled by the coalition, but this obstacle has been much exaggerated. Figures published by the Local Government Association show that there are 400,000 homes with planning permission that have not been built, while in London, where demand is highest, there are roughly 170,000. It is the lack of private capital and the pernicious practice of land banking by developers that is largely to blame.
As the 2011 annual report of Barratt Homes bluntly stated, “During the year we have focused on securing the best price for every sale. Across the group we have focused on maximising value rather than driving volumes.” The introduction of a land value tax would help to deter this practice by penalising profiteering but only state investment can ultimately narrow the gap between supply and demand.
With his recent call in the New Statesman for the government to borrow to invest, Vince Cable has recognised as much, as has the Labour Party, with its declaration that it would have used the proceeds from the 4G mobile spectrum auction to build 100,000 so-called affordable homes. The shadow work and pensions secretary, Liam Byrne, is rightly examining a proposal from the Institute for Public Policy Research to switch spending from housing benefit to affordable housing grants for councils. By demonstrating that it is prepared to address the deep, structural causes of the spike in the benefits bill, Labour can begin to counter the Conservative narrative that it is “the welfare party”. It is extortionate rents and substandard wages that are to blame for the inflated housing benefit budget, not work-shy “scroungers”.
A programme of mass housebuilding, of the kind pursued by Harold Macmillan as housing minister in the early 1950s, when 300,000 homes a year were built, would stimulate growth (it is estimated that for every £100 that is invested in housebuilding £350 is generated in return), create employment and reduce welfare spending.
In 1951, before his government’s housing scheme began, Winston Churchill told Macmillan: “It is a gamble – it will make or mar your political career but every humble home will bless your name if you succeed.”
The political rewards from a programme of similar ambition could be as great today. After conceding that Labour would increase borrowing in the short term, there is no better way for Ed Miliband to make the case for doing so than to pledge to build. If the party can persuade the electorate that it, and not the Conservatives, is best placed to revive the goal of a property-owning democracy, it could finally attract the popular enthusiasm that has so far eluded it.
People Before Profit also Call on More effrort to be put into reclaiming empty buildings for Homes, greater awareness and support for short life, Co op and self build housing, all key for low paid. we spend a staggering £27 Billion on Housing benefit, and most goes to private landlords, Buildinmg Council homes will reduce the bill and within 3 years produce an income for Copuncils from the rents paid, money that could be used for services. Agree with People Before profit? Then join us, stand as a PBP Candidate in your area, come and help in Lewisham.
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