The B wordPosted: April 23, 2015 Filed under: Affordable housing, Economics Leave a comment
Here’s a number that should embolden whoever wins the election: 54% of voters support government borrowing to fund more affordable homes.
A MORI opinion poll for the Chartered Institute of Housing (CIH) found that just 21% would oppose borrowing to fund affordable housing for sale or rent and 24% neither support not oppose it. Support was unsurprisingly strongest among renters (60 per cent) and Londoners (66 per cent).
The results are in line with a series of other recent polls showing a significant shift in public attitudes to housebuilding. However, the election campaign seems so fixed that it’s difficult to imagine any of the major parties trying to win majority support by advocating a policy that actually has it. It would simply play into the Conservative narrative that it was not the banks but the last Labour government that caused the economic crisis by borrowing too much.
That’s why borrowing to produce more housing is one of the ‘three easy tests that all the British parties flunk’ identified by Chris Giles in the Financial Times today: ‘whether political parties have the courage to suggest borrowing money, using compulsory purchase orders to buy developable land and ensure the growth in the supply of housing rises to levels last seen in the 1970s’.
As Ben Marshall of Ipsos MORI points out the poll shows that a majority ‘instinctively back borrow-to-build, but we should appreciate the possibility that support could be conditional on its extent and implications’.
But it does show the opportunity that exists for whichever party or combination of parties wins on May 7. Labour and the Liberal Democrats may not shout about it but on this issue it’s easy to see the basis of agreement between them or with the SNP.
In line with the narrative above, the only mentions of borrowing in the Labour manifesto are negative ones: ‘no additional borrowing’ and ‘not a penny of extra borrowing’. It has ruled out any change in the borrowing cap on local authorities. However, its deficit reduction plan allows for borrowing for investment. There is no specific commitment but Labour says: ‘‘We will build more affordable homes by prioritising capital investment for housing and by reforming the council house financing system.’
The Lib Dem manifesto allows for borrowing for investment provided debt falls as a proportion of national income by 2017/18. But the party says: ‘In our Spending Review we will set out long-term plans for capital expenditure, and ensure that investment in infrastructure, including in housing and energy efficiency, continues to rise both in absolute terms and as a share of the economy.’ And it would give local authorities ‘more flexibility to borrow to build affordable housing, including traditional council housing’.
The SNP manifesto may be titled ‘Stronger for Scotland’ but it also looks to the rest of the UK with a pledge that: ‘We will back investment in an annual house building target across the UK of 100,000 affordable homes a year.
Borrowing to invest in more homes would produce an immediate payback through generating economic activity and jobs for people on and off site. In the longer term, building more social housing will bring down the housing benefit bill. Far better to have done it in the immediate aftermath of the financial crisis, and it’s only part of the solution to the housing crisis, but the arguments are almost as strong now.
But even as I’m typing this I’m listening to George Osborne on the Today programme repeat the Conservative argument that ‘we can’t borrow our way out of problems’ and what he hopes is the election-winning message about the chaos of a Labour government supported by the SNP.
After missing his 2010 pledge to eliminate the deficit by a huge margin, Osborne now promised to do the same by 2018, with £25 billion of unspecified cuts to come after the election. Yet he has also quietly been maxing out the off balance sheet credit card with grants, loans and guarantees for housebuilding that now total a staggering £33 billion.
And the big idea in the Conservative manifesto relies on the opposite of borrowing to invest. As I blogged yesterday, the extension of the right to buy does not stack up even when you look at it through Conservative eyes. The net result will be less social housing, less affordable housing and more housing benefit spending.
The Earl of Stockton called it ‘selling off the family silver’ in the 1980s. As Harold Macmillan in the 1950s he was the Conservative prime minister who knew all about the virtues of borrowing to invest in new homes instead.
Originally posted on Inside Edge 2, my blog for Inside Housing