Housing in the Tory leadership contest

Originally posted as a blog for Inside Housing on June 19 – updated June 21. 

Beneath the surface of a Conservative leadership battle dominated by Brexit and Boris Johnson there is a battle of ideas about the future direction of Conservative housing policy.

Put at its simplest, the battle is about whether to continue in the pragmatic direction signalled by Theresa May since 2016 or go back to the more ideological one taken by David Cameron before then.

But scratch a little deeper there are more fundamental debates going on about how far to go in fixing a housing market that most Tories agree has turned into an electoral liability for them.

Key questions such as how far the government should go in borrowing to invest in new homes and intervening in the private rented sector and the land market are back on the Conservative agenda.

Tuesday’s ballot of MPs saw the elimination of Dominic Raab, the one candidate explicitly calling for the clock to be turned back.

His call for the Right to Buy to be extended to housing association tenants did not come with a method of paying for the discounts but it was a reminder that the higher-value sales levy is still on the statute books and has not yet been repealed as promised in the social housing green paper.

Jeremy Hunt, Michael Gove and Rory Stewart all indicated a willingness to consider more borrowing for investment in new homes while Sajid Javid supported a similar idea when he was housing secretary. None of them offered much detail about their plans.

Taking them in order, the man MPs chose to challenge Boris Johnson wants an additional 1.5m homes over the next 10 years. It’s not clear whether that means ‘additional’ to the government’s already challenging target existing target of 300,000 (taking the total to 450,000). However, even if he means additional to current output of 222,000 a year a total of 372,000 would be higher than the post-war peak of 352,000 in 1969.

So where would his extra homes come from? It seems unlikely that he means council housing (200,000 of those 1969 homes) or social housing more generally unless he’s been sharing a hookah with the other candidates.

Free market reform of Green Belt rules also seems unlikely from a Surrey MP, so that leaves new towns, a big rent to buy programme or maybe even the revival of another of Cameron’s failed ideas, starter homes.

Gove, who fell at the last hurdle on Thursday, indicated a willingness to consider social housing in the 2016 leadership election and this time called for a National Housing Fund to buy land funded by selling Brexit bonds.

And Rory Stewart made housing an exception to his cautious fiscal stance with an eye-catching pledge that: ‘Iwould borrow to build 2 million more houses. But I would only borrow against marketable assets like houses – which the government can then rent out or sell.’

Eliminated from the race on Wednesday, Stewart said he would build the homes in just five years in a new generation of new towns and ‘lineal cities’ along the Thames. He would ‘follow the Milton Keynes model, with a mix of homes to sell or rent’ financed through bonds raised against them.

Sajid Javid did not say much about housing before being eliminated on Thursday but he did call for an economic stimulus in an emergency no-deal Budget and pushed a £50 billion rent to buy plan when he was housing secretary.

Boris Johnson, the overwhelming favourite in the final ballot of Tory members, has not yet pronounced on housing in this campaign (at least that I can find) beyond making questionable claims about his record as London mayor.

The best clues as to what he really thinks about housing came in a speech to a fringe meeting at last year’s Conservative conference.

On the same day as Theresa May was announcing the end of the borrowing cap, he was presenting council housing as the cause of poor housing conditions and the Right to Buy as the cure.

Beyond that, his priority of an expensive cut in the top rate of income tax will mean less room for manoeuvre for whoever becomes his chancellor.

That’s a reminder that a new prime minister could mean a complete change in the key people making decisions, with new ministers at the Treasury, Ministry of Housing Communities and Local Government and Department for Work and Pensions.

None of the candidates said anything about the welfare ‘reforms’ of the last nine years or the prospects of ending the benefit freeze next year.

There will be also be sweeping changes in Downing Street too as key advisors to May, including her chief of staff and former housing minister Gavin Barwell, leave with her.

Johnson has hinted at re-assembling the team that helped him in London and his deputy mayors included housing minister Kit Malthouse, Homes England chair Sir Edward Lister and Homes England non-executive director and Policy Exchange adviser Richard Blakeway.

Among his many supporters in the parliamentary party are housing secretary James Brokenshire and former housing minister Alok Sharma.

Another familiar face, Grant Shapps, is part of Johnson’s campaign team and credited with coming up with the spreadsheet that has accurately predicted voting by MPs.

With scope for little more than Brexit until October 31, it could take some time for the real shape of the new government to emerge.

However, looking further beneath the surface, the future direction of housing policy is also being debated in the Tory think tanks.

Policy Exchange, the source of so many of the year zero ideas on social housing up to 2016, took a very different line in a report published last week advocating new towns, beautiful design and support for first-time buyers. The report was endorsed by both Boris Johnson and Michael Gove.

Meanwhile, Onward, Create Streets and Civitas all contributed chapters to a new collection of essays on land reform published by Shelter.

The case for a greater share of the land value created by planning permission to go to affordable housing and infrastructure rather than landowners and housebuilders has attracted support from across the political spectrum and made it on to the government’s agenda via the Lewtin review.

Those are just two examples of how the ideological climate has changed for housing since 2016 whoever becomes the new prime minister.

The biggest is, of course, the response to Grenfell. Fire safety and the cladding scandal will continue to be at the top of the housing agenda but amid painfully slow progress campaigners are accusing the government of not keeping its promises.

Big decisions are also due on the response to the social housing green paper and ending Section 21 and a new team will be in charge for a Budget that was meant to herald the end of austerity.

Meanwhile, even as the leadership contenders call for new homes to fix the housing market, they will be battling for the votes of Tory members who tend to be opposed to new housebuilding plans in their constituencies.

If we ever emerge from the fog of Brexit, which way will the new government jump?

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