Blue skies: Part twoPosted: May 27, 2015 Filed under: Affordable housing, Bedroom tax, Benefit cap, Garden cities, Help to Buy, Home ownership, Housebuilding, Housing benefit, Local government, Planning, Starter homes, Welfare reform | Tags: Conservatives Leave a comment
Is One Nation Conservatism anything more than PR puff? The conclusion of my blog sets out 12 tests of what it could and should mean in housing.
In the wake of the unexpected election result influential voices within the Conservative Party talked about the need for a new appeal to the aspirational working classes. Whether it’s called Blue Collar or One Nation Conservatism, the idea is to shake off the negativity of the nasty party, steal Labour’s clothes and lock in another majority for 2020.
Part one of this blog featured calls by people like Tim Montgomerie, David Green, Nick de Bois and Christian Guy not just for a radical new approach to housebuilding to spread the benefits of home ownership but also a new approach to housing to meet the needs of renters. Guy called housing ‘one of the social justice issues of our time’. There was more of this over the weekend, with Chris Walker of Policy Exchange calling housing ‘key to a Conservative vision for working people’.
But what does all this Tory philosophising amount to? The desire to appeal to aspirational workers (and for power in 2020) is certainly genuine enough but is the party really ready for its implications? The suspicion remains that this is as much about redefining the meaning of ‘One Nation’ as it is about changing course: one nation for those able to Work Hard and Do the Right Thing that looks the other way when it comes to those who cannot and ignores the fact that many of them will still not be able to pay their rent.
In terms of housing, the obstacles in the way of a system that works for everyone are huge. Policies since the crash have delivered huge benefits for existing home owners and landlords but despite all the talk home ownership is shrinking not growing. For private renters and social housing tenants things look very different. Housing haves can look forward to a handy cut in inheritance tax on their housing wealth while the have-nots wait for those £12 billion unspecified cuts in welfare spending to be spelt out.
So can the Conservatives do anything to bring these two housing nations back together? The Queen’s Speech on Wednesday, the Budget on June 8 and the Spending Review to follow will set the tone for this parliament. Here are 12 tests on housing for One Nation Conservatism:
1) Go further on planning. The Conservative manifesto pledged to protect the Green Belt so there seems little chance of movement there despite the views of free market Tories (David Green of Civitas speaks for many of them when he argues that ‘we will have to build on the green belt in areas of high demand’). However, there are other think-tank ideas out there that might help such as the Pink Zones proposed by the Centre for Policy Studies and any number of ideas like this from Policy Exchange. While we’re at it, the government might want to consider the impact of cuts in local government on planning and delivery. If even housebuilders are calling for more resources for planners you know there’s a problem.
2) Challenge housebuilders to do more. The coalition made a series of concessions worth billions to the big housebuilders without asking for any quid pro quo on delivery. Last week’s figures on starts and completionswere encouraging but how about asking them to guarantee they will build more homes as well as their profit margins?
3) Introduce a moratorium on demand side subsidies. OK, with Help to Buy ISAs in the manifesto, the chances of this are slim but One Nation has to be about more than initiatives that inflate house prices while doing nothing about supply.
4) Rethink the starter homes initiative. In line with the last two points,the government could think again about its plan to allow housebuilders to substitute starter homes for affordable housing in section 106 agreements. The original policy of building homes for first-time buyers on sites not already reserved for housing had some practical problems but it also had the potential to deliver additional homes. The new one plucks numbers from the air and simply allows homes at a dubious 20 per cent discount to first-time buyers to displace desperately needed rented homes.
5) Get serious about garden cities. So far the government has played lip service to the idea by backing schemes that already have local support at Ebbsfleet and Bicester. A long-term plan to boost housing supply has to look at doing more. There are plenty of ideas around on garden cities and urban extensions from, among others, Policy Exchange and finalists in the prize run by Tory peer Lord Wolfson. They will all take time to get going but if the groundwork is done in this parliamentary term, the pay-off will come in the 2020s. How about some One Nation vision?
6) Introduce a target of zero house price growth. We already have an inflation target so why not charge the Bank of England with keeping house price inflation to the same level? Grant Shapps was right when he said in 2010 that we needed ‘a period of house price stability’. It’s not exactly ‘One Nation’ for landlords and well-housed home owners to benefit from house price inflation at the expense of everyone else. However, the target may be more than the Bank can handle on its own. The mansion tax was a bad policy but the current system of taxation of housing encourages speculative investment. A One Nation party would reform it in the interests of everyone.
7) Reform renting. The government could go beyond the tentative moves since 2010 to give private renters more protection and security. There are nine million votes in it after all.
8) Fund affordable housing and set councils free. Harold Macmillan is the first name that springs to mind when you think of housing and One Nation Conservatism. He was the housing minister that achieved 300,000 homes a year in the 1950s through a combination of private homes for sale and council houses. A confident One Nation party now would heed the call by Campbell Robb of Shelter to ring fence and boost the Affordable Housing Programme and go much further in allowing councils to borrow and build. Tory local government wants this but will Tory central government agree?
9) Guarantee replacements for homes sold under the right to buy. Extending the right to buy to housing association tenants may be the policy that everyone in housing hates but it was also a manifesto commitment. The Conservatives may well have assumed it would be blocked by a coalition partner but now it’s in the Queen’s Speech finding a way to make it work will be a lot trickier than the back of an envelope sums briefed during the campaign. A divisive, free market Conservative Party would see the inevitable loss of yet more social housing as a good thing. A One Nation Party would see genuine replacement as so essential that it would guarantee more grant funding for replacement homes if and when sales proceeds prove insufficient. It’s also worth noting that the manifesto only pledged to extend right to buy to housing association tenants. It did not say anything about how this was to be achieved or what the level of the discount should be. This could create room for compromise in the House of Lords.
10) Amend the bedroom tax. Surely nothing would signal One Nationism more than a change to the most hated Tory policy of all? Sadly the chances of concessions seem slim to zero after Cameron decided to keep IDS as work and pensions secretary. However, as Isabel Hardman puts it in The Independent: ‘Privately every Conservative minister now admits it is a bad policy.’ Her point is that ministers should remember their mistake when it comes to the £12 billion of cuts in welfare that are to come. We know from the Danny Alexander leak during the election campaign that one option considered was an increase in the bedroom tax.
11) Recognise the damage that will be caused by the benefit cap. Yes this is a very popular policy and it is the one that is at the heart of the Work Hard and Do the Right Thing Nation. But has the government really thought through the consequences of reducing it still further? The forceful case made by Joe Halewood about the dire impact in the social rented sector may not make them think again but how about this warning from Dan Davies about the timebomb that is ticking under buy to let? What’s One Nation about a policy that will exclude people on benefit from whole swathes of that nation?
12) Think about bricks and benefits. How about a way to cut spending on housing benefit without causing more misery to tenants? It was intriguing to see Nick Faith of the new Westminster Policy Institute making an argument that normally comes from the Left in The Observer a couple of weeks ago: ‘You can bring down the housing benefit bill, which is about £20 billion a year, by simply building more houses.’ You can, but only in the long term, and only if you change course radically now.
Originally posted on Inside Edge 2, my blog for Inside Housing