Building a better future or surrendering to the past?
Posted: January 10, 2023 Filed under: Housebuilding, Planning Leave a commentOriginally written as a column for Inside Housing.
So now we know what the ‘people’s priorities’ are – and housing is not one of them.
The fact that housing did not feature in the speech from Rishi Sunak setting out his agenda for the new year is not a surprise in itself – his five pledges all covered issues with far greater political saliency.
But it is still surprising that in a speech on ‘building a better future’ he did not mention housing at all and that, apart from a boast about stabilising mortgage rates, the speech steered clear of traditional Tory territory on home ownership.
He did talk about community (‘a better future also means reinforcing people’s pride in the places they call home’) and making places better (‘I love my local community and it’s not right that too many for far too long have not felt that same sense of meaning and belonging’).
But he is talking here about people who already have places they can call home and avoids any mention of those who do not have a home or need a new or more affordable one.
And that is no coincidence because he was speaking in the wake of the government’s surrender late last year to its own backbenchers on planning and housebuilding.
Read the rest of this entry »The levelling up of housing targets
Posted: December 6, 2022 Filed under: Housebuilding, Planning | Tags: Michael Gove, Theresa Villiers Leave a commentOriginally published as a column for Inside Housing.
There is no chance of the government achieving its target of 300,000 new homes by the mid-2020s so why has the drama ramped up within the Conservative Party?
The answer is, of course, politics but it is coming from two different directions and there is a long history that lies behind it.
The inclusion of the target in the 2019 manifesto was all about having something to say to younger voters excluded from homeownership.
Note that the commitment is actually to a more weasly ‘progress towards’ 300,000, alongside a promise of ‘at least a million homes’ in this parliament, although both are important in focusing minds within government.
The latter target – effectively 200,000 a year – should be comfortably achieved, not least because it already happened in the last parliament.
Figures published last month showed that 232,820 net additional homes were delivered in 2021-22, a 10% increase on COVID-affected 2020-21 and not far off the pre-pandemic peak.
House builder after house builder has reported falling sales recently, so the total should fall this year regardless of anything MPs decide about planning.
Which is where the other direction comes in: the politics of appealing to well-housed, mostly older voters in affluent Conservative constituencies in the South East from MPs who fear a multiple repeat of the Tory defeat in the Chesham and Amersham by-election at the next general election.
Read the rest of this entry »Taxing questions
Posted: November 10, 2022 Filed under: Home ownership, Land, Stamp duty, Tax Leave a commentOriginally written as a column for Inside Housing.
Around £50 billion worth of austerity looks inevitable in next week’s Autumn Statement but it remains to be seen how chancellor Jeremy Hunt will strike the balance between spending cuts and tax rises.
Even if recent reports that suggest he will increase benefits and pensions in line with prices prove to be correct, there are still big questions over local housing allowance (still frozen despite rising rents) and the benefit cap (which will catch thousands more tenants if the thresholds stay frozen) and housing budgets already eroded by inflation look vulnerable to cuts in capital spending.
On tax, the stamp duty cut was one of the few measures proposed in the mini-Budget in September that has survived the demise of Liz Truss and Kwasi Kwarteng. So far at least.
But there has been very little debate about where the tax burden should really fall, and in particular about the balance between taxes on income and taxes on wealth.
Read the rest of this entry »The state of the (housing) nation
Posted: November 1, 2022 Filed under: Bed and breakfast, Decarbonisation, Homelessness, Housing market, Levelling up, Private renting, Social housing Leave a commentOriginally written as a column for Inside Housing.
The UK Housing Review Autumn Briefing Paper is published this week and as usual provides an invaluable guide to the state of the housing nation. Here are five graphs that illustrate key points about five different parts of the housing system:
Shifting rules on rents
What everyone wants to know, of course, is what will come in place of that purple line on the right but the graph is a reminder that so-called long-term deals on social housing rents can quickly disappear. The four-year rent reduction at the end of the 2020s that ended the previous one is now set to be succeeded by an annual increase significantly below the 11.1 per cent implied by the CPI plus 1 formula.
The decision is finely balanced between cost of living considerations and housing investment, with the existence of housing benefit making it much more complex than it was in the famous case of Clay Cross 50 years ago.
The Briefing Paper quotes estimates by Savills that a 5 per cent cap on rents in England (the government’s favoured option) would cost councils £500 million and housing associations up to £1 billion. One association says that even a 7 per cent cap would mean a 21 per cent reduction in new build and there are also major concerns about the impact on investment in existing stock and on supported housing.
A cap would help tenants not on housing benefit but the major beneficiary would be the Department for Work and Pensions unless its savings are reinvested in housing.
That point was really brought home to me when I interviewed the Welsh housing minister recently. She was only too aware that the more she restricts next year’s rent increase, as might be her instinct, the more savings will go straight back to Westminster, with zero chance of them coming back to Wales.
Read the rest of this entry »The decline and fall of Trussonomics
Posted: October 18, 2022 Filed under: Affordable housing, Economics, Levelling up, Planning, Section 21 Leave a commentOriginally written on Tuesday October 18 (before the resignation of Liz Truss) as a column for Inside Housing.
Growth, growth, growth? Little survives of Trussonomics after a series of astonishing u-turns but in housing at least is still seems to be half-steam ahead.
Just two of the tax cuts announced by former chancellor Kwasi Kwarteng in his statement last month and only because the legislation for them had already gone through parliament.
The scrapping of the health and social care levy obviously begs big questions about funding for both but the increase in stamp duty thresholds now looks even more of a spare part than it did at the time.
While stamp duty is fundamentally a bad tax because it inhibits transactions, cutting it without wider reform of property taxation benefits sellers more than buyers as savings are capitalised into higher prices.
Cutting it permanently now rules out what has always been the first lever the Treasury pulls in a housing market downturn: a stamp duty holiday.
Even on the Treasury’s own figures, it will only generate an extra 29,000 house moves a year. But the limited growth in the wider property sector this generates will come at a cost to the taxpayer of £7 billion over the next five years.
New chancellor Jeremy Hunt has signalled that ‘eye-watering decisions’ about spending cuts and tax rises are on the way, mortgage costs have soared since the not a Budget and the energy price guarantee is now only guaranteed until April.
With even the pensions triple lock not guaranteed, the battle that was already looming over the uprating of benefits next year will now be even more intense.
Further freezes in the benefit cap and – despite rising rents – local housing allowance look more likely with devastating consequences for poverty and homelessness.
All this will be the acid test of Hunt’s promised return to ‘core compassionate Conservative values’.
The implication of the fiscal position for the Department of Levelling Up, Housing and Communities must be that any budget that is not already nailed down is up for grabs.
Read the rest of this entry »A tale of two Conservative parties
Posted: October 10, 2022 Filed under: Housebuilding, Planning | Tags: Conservatives Leave a commentOriginally written as a column for Inside Housing.
If the Liz Truss government is serious about delivering growth and getting Britain moving then it has to be serious about housebuilding and planning reform.
The superficial signs are that it is: the promised programme of investment zones; promises of further reforms to boost housebuilding and home ownership in the Autumn; prime ministerial support for growth, growth and growth.
The underlying ideology shouts that it is: take a quick look at this briefing paper on housing from the Free Market Forum, an offshoot of the Institute of Economic Affairs whose parliamentary backers include Truss, chancellor Kwasi Kwarteng, housing secretary Simon Clarke and housing and planning minister Lee Rowley.
But history still suggests a need for caution: exactly the same thing could have been said in 1983/84, 1988/89, 2010/11 and 2020/21, when Conservative ministers proposing planning liberalisation were thwarted by more cautious colleagues or rebellious backbenchers or both.
Because there are two poles of Conservatism: the libertarian, economic liberal one that is currently in the ascendancy and a social conservative one that sees green belts and planning regulations as a good way to conserve things.
Between those two poles, more pragmatic Tories recognise that they have to take account of both if they are to deliver more homes – and that their political success or failure in future could depend on that delivery.
Read the rest of this entry »The legacy of the Clay Cross rebellion
Posted: September 30, 2022 Filed under: Cost of living, Council housing Leave a commentOriginally written as a column for Inside Housing.
This Saturday marks the 50th anniversary of legislation that triggered one of the most famous rebellions in the history of housing – and it is a story with a contemporary twist.
October 1, 1972 was the date that ‘fair’ rents were imposed on council housing by Edward Heath’s Conservative government. Under the Housing Finance Act 1972 all local authorities were forced to increase their rents by £1 a week (around 50 per cent).
Many in England, Wales and Scotland resisted interference by central government in their right to set their own rents but, threatened with the appointment of a Housing Commissioner, all but one eventually complied.
Clay Cross Urban District Council in Derbyshire refused point blank to increase rents that were the lowest in the country at around £1.65 a week.
The Labour-controlled council had a long track record of going its own way and finding loopholes in legislation it did not like: there were rebellions not just over rents but also over free school milk and pay for council staff.
Led by Dennis Skinner until he became the MP for nearby Bolsover, Clay Cross saw housing as one its top priorities as it replaced slums that had been built by the mine owners before nationalisation with new council houses at low rents.
As one councillor put it: ‘On this council we like to think of ourselves as basic socialists. We regard housing here as a social service, not as something the private sector can profit from.’
Read the rest of this entry »
Jules Birch 