Happy birthday welfare state

This Friday marks the 65th anniversary of one of the greatest moments in British history. With some justification, it has been called ‘our second Finest Hour’.

But as the welfare state and the National Health Service reach retirement age are both of them being pensioned off by a government intent on austerity and endless rounds of welfare and public sector ‘reform’?

Monday, July 5, 1948 was known as The Appointed Day. It marked not just the start of the NHS but also full implementation of the Beveridge plan for social security. A comprehensive system of national insurance now complemented earlier measures including family allowances and industrial injuries compensation.


The NHS launch leaflet, July 1948

Personal testimonies of the time range from the touching to the gruesome and the comical to the romantic. One young GP remembered going to see a family where he’d left medicine for a sick child. As he was leaving he heard coughing and asked the mother if she wanted him to go up. ‘I’m sorry, doctor, we can’t afford it,’ she said, explaining that it was another child who was ill. ‘Today, July 5th, it’ll cost you nothing, I was able to tell her,’ he said. ‘And I’ve never forgotten it.’

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Facing the future

So now we know: 10 years of certainty on rents, five years on grant and who knows how many more years of welfare ‘reform’.

The future has come into much clearer focus this week following the spending round on Wednesday and the investment announcement on Thursday. And, as luck would have it, all of this coincided with the biggest housing conference of the year.

Read the rest of my thoughts on the implications of the spending round for housing on Inside Edge, my blog for Inside Housing

Sold short

A stark warning of the consequences of market failure in the housing system comes from an independent commission today.

The broad-based group set up by the Royal Institution of Chartered Surveyors(RICS) is chaired by Michael Newey, RICS president elect and chief executive of Broadland Housing Group, and also includes Mark Clare of Barratt, Nick Jopling of Grainger, James Pargeter of Deloitte Real Estate, Paul Tennant of Orbit and Duncan Maclennan of University of St Andrews.

They argue that: ‘High house prices, complemented with high levels of housing unaffordability are the greatest signs of market failure. This in turn has an adverse effect on labour mobility, commuting, productivity and job creation. This commission recognises the negative impact that a poor housing system has on the wider economy and hopes to see it elevated still higher on government agendas.

In other words, what the commission argues are ‘clear signs of market failure’ include negative externalities that go far beyond housing and require a switch away from the ‘short-termism’ that has characterised policy for the last 50 years.

However, in an illustration of just how difficult it is to break away from a short-term approach, the commission seems to face both ways on current government policies.

Read the rest of this post on Inside Edge, my blog for Inside Housing

Own goal

As average asking prices pass £250,000 for the first time, two-thirds of the under-45s seem to have given up on the idea of ever owning a home.

Two surveys out today underline the point that what’s ‘good news’ for existing owners is exactly the opposite for people struggling to get on to the housing ladder.

Rightmove says that the market in the ‘under-priced’ (its word not mine) South East has ‘lifted off’ with asking prices rising by 14.8 per cent in the first six months of 2013 alone. However, the average increase across England and Wales is 10.4 per cent and the increase is even 5.8 per cent in the least buoyant region, the East Midlands.

If anything like that was repeated across the whole 12 months, 2013 would be appear to be set for a boom unlike anything seen since the credit crunch hit in 2007. True these are asking prices and prices actually achieved are still in the relative doldrums but they indicate that existing owners are reacting predictably to the start of Help to Buy by ramping up their demands.

Contrast that with another survey out today from the Halifax.

Read the rest of this post on Inside Edge, my blog for Inside Housing

The big switch

Ed Miliband has ended three decades of political consensus that it’s better to subsidise rents than new homes but changing course will not be easy.

The Labour leader’s speech in Newham this morning is significant in all kinds of ways: for the party’s positioning ahead of the next election; for the implied switch to contributory benefits and ‘something for something’; for tackling low pay; and for the careful use of ‘social security’ to avoid the loaded term ‘welfare’.

Even the setting – Newham Dockside – is significant since it looks very much like an endorsement of the more proactive but harsher approach to benefit claimants adopted by its mayor Sir Robin Wales.

All of those things could have major implications for housing but none so much as the plan to shift spending back from housing benefit to bricks and mortar – the end of ‘letting housing benefit take the strain’ and admitting the failure over decades to build enough homes.

Read the rest of this post on Inside Edge, my post for Inside Housing

Decline and fall

Coalition ministers rarely fail to taunt Labour with the fact that the number of affordable homes fell under the last government.

Conservative housing minister Mark Prisk and Lib Dem junior communities minister Don Foster deployed it yet again at DCLG questions yesterday.

Labour’s Jack Dromey attacked the government’s record on housebuilding and called for a rejection of the ‘economic illiteracy of austerity, which is pushing up the costs of failure through additional borrowing and soaring housing benefit bills’. He asked: ‘Does the housing minister agree that the time has come to invest in badly needed social and affordable homes to rent or buy, creating jobs and apprenticeships, bringing down the costs of failure and getting our economy moving?’

In response Foster was quick to deploy the favourite stat:

‘I think that the whole House will have been somewhat amused by the cheek of the hon. Gentleman, given that under his party’s administration we saw a reduction of 421,000 in the number of affordable homes. This government have introduced measures to reverse that trend, and we hope to announce further measures in the near future.’

 Read the rest of this post on Inside Edge, my blog for Inside Housing

Help to Build

So, George Osborne, what about some Help to Build to go with all that Help to Buy?

The chancellor’s multi-billion flagship housing policy is under fire from virtually everyone because they can see what the result will be of stoking up demand while doing nothing about supply.

Now the CIHNHF and g15 are all calling on Osborne to fund an expansion of affordable housing in the spending review for 2015/16 that will be published later this month. That is what they always do ahead of spending reviews of course, but they are deploying some powerful arguments.

Read the rest of this post on Inside Edge, my blog for Inside Housing