Housing in the Conservative manifesto

Originally posted on May 18 on my blog for Inside Housing. 

This is a Conservative manifesto with only two firm targets on housing but lots of interesting hints about future direction and some intriguing omissions.

The first target is to halve rough sleeping by 2022 and eliminate it completely by 2027 by implementing the Homelessness Reduction Act and piloting a Housing First approach.

The 2022 target may seem bold but it would mean that rough sleeping would still be significantly higher than it was in 2010 when the coalition came to power.

The one for 2027 is incredibly ambitious and would mean matching Finland’s incredible record on homelessness within ten years.

Sajid Javid obviously returned fired up from his visit to Helsinki but you wonder if he took on board just how comprehensive and well-funded the Finnish version of Housing First needed to be to work.

The second target is ‘meet our 2015 commitment to deliver a million homes by the end of 2020 and we will deliver half a million more by the end of 2022’.

The first bit is unambitious and should be achievable, especially as the end point has been shifted from May 2020 (the original end of the parliament) to December 2020.

As the National Audit Office pointed out in January, that would actually mean that fewer new homes will be built over the next three years than were achieved last year. This is on the basis of the net additional supply of homes rather than just housebuilding completions.

The second bit is a different matter. A quick look at the net supply figures shows that there have only been three years in the last 25 when we have exceeded 200,000.

All three were at the peak of the last housing market boom before the Global Financial Crisis hit in 2008. The highest total achieved was 223,530 in 2007/08.

The net supply figures only go back to 1991/92. Before that you have to look at the stats on housebuilding completions, which are lower and not as comprehensive, but you have to go back to 1988 (the peak of the previous boom) to find the last year when they exceeded 200,000.

All that tells you not just that half a million homes in two years will take some doing but also that all bets are off if there is a recession in the meantime.

The commitment to increased quantity comes with a clear warning to developers that numbers alone will not be good enough:

‘More homes will not mean poor quality homes. For too long, careless developers, high land costs and poor planning have conspired to produce housing developments that do not enhance the lives of those living there. We have not provided the infrastructure, parks, quality of space and design that turns housing into community and makes communities prosperous and sustainable. The result is felt by many ordinary, working families. Too often, those renting or buying a home on a modest income have to tolerate substandard developments – some only a few years old -and are denied a decent place in which to live, where they can put down roots and raise children. For a country boasting the finest architects and planners in the world, this is unacceptable.’

That’s strong stuff and it’s interesting that the Conservatives do not match Labour’s pledge to extend the Help to Buy scheme until 2027. That does not mean it will necessarily end in 2020 but it signals that housebuilders will be expected to raise their game.

However, in line with the rest of the manifesto, there is a clear recognition that the market alone cannot fix the problem:

‘We will never achieve the numbers of new houses we require without the active participation of social and municipal housing providers.’

This is stating the obvious – you have to go back to the 1970s to find the last period when we were consistently completing more than 200,000 homes a year and that was when we were building 100,000 new council houses a year – but it is still a huge contrast with Tory manifestos of the recent past and that language about ‘municipal housing providers’ reaches even further back.

But local authorities are also warned that:

‘Councils have been amongst the worst offenders in failing to build sustainable, integrated communities. In some instances, they have built for political gain rather than for social purpose.’

This is the context for a section explaining Theresa May’s social housing plans that were released over the weekend:

‘So we will help councils to build, but only those councils who will build high-quality, sustainable and integrated communities. We will enter into new Council Housing Deals with ambitious, pro-development, local authorities to help them build more social housing.’

That sounds promising and Terrie Alafat argues that it can help to unlock extra council borrowing capacity.

But the manifesto also makes it explicit that ‘social housing’ in this context means homes that will be available for a limited time before being sold off:

‘In doing so, we will build new fixed-term social houses, which will be sold privately after ten to fifteen years with an automatic Right to Buy for tenants, the proceeds of which will be recycled into further homes.’

Housing associations are promised ‘greater flexibility…to increase their housing stock, building on their considerable track record in recent years’.

However, in contrast to the 2015 manifesto, there is no explicit reference to extending the Right to Buy to housing association tenants or funding it via forced sales of council houses.

Instead there is a vague commitment that ‘we will continue to support those struggling to buy or rent a home, including those living in a home owned by a housing association’.

I’ll resist reading too much into this, and the scheme was last seen apparently headed for a pilot in the West Midlands, but that hardly sounds like a ringing endorsement of the idea and forced sales would directly undermine the ‘municipal housing providers’ who are now back in fashion.

The manifesto has little to say about another major issue that is limiting output by social landlords. Relief that ‘we have no plans for further radical welfare reform in this parliament’ will be tempered by a realisation that this does not rule out more cuts and grim acceptance that the Conservatives ‘will continue the roll-out of Universal Credit’.

The manifesto confirms the other bit of the weekend announcement on reform of compulsory purchase orders ‘to make them easier and less expensive for councils to use and to make it easier to determine the true market value of sites’.

And there is also an intriguing section about land value capture across the board:

‘We will work with private and public sector house builders to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing, making it both easier and more certain that public sector landowners, and communities themselves, benefit from the increase in land value from urban regeneration and development.’

This is routine elsewhere in Europe but potentially pretty groundbreaking in a UK context and it hardens up what only seemed a vague hint in the White Paper.

Looking at the manifesto as a whole, every party at every election since I can remember has promised ‘homes for all’ and then failed to deliver them. This one pledges:

‘We will fix the dysfunctional housing market so that housing is more affordable and people have the security they need to plan for the future. The key to this is to build enough homes to meet demand. That will slow the rise in housing costs so more ordinary, working families can afford to buy a home and bring the cost of renting down. And it will ensure that more private capital is invested in more productive investment, helping the economy to grow faster and more securely in future years.’

The last bit is a welcome recognition of the distorting effect our housing system has on the rest of the economy. But ‘slowing the rise in housing costs’ does not exactly sound ambitious and the Conservatives have little to offer the private renters who are stuck in the most dysfunctional part of the market.

This Tory manifesto could hardly be a bigger contrast with the home ownership-obsessed 2015 edition. But fine words butter no parsnips and they don’t pay the rent either.