Housing in the Labour manifesto

Originally posted on May 16 on my blog for Inside Housing. 

Anyone caught up in the narrative about Labour’s radical manifesto will be left disappointed and a little bit puzzled by the party’s proposals on housing.

They will not be surprised given last week’s leak of the draft but they will find a sensible and pragmatic set of policies that move closer to what is desperately needed to tackle the housing crisis and are actually open to criticism for being too timid.

To give one example, the 2017 manifesto is routinely compared in the media to 1983’s ‘longest suicide note in history’.

But where Michael Foot’s Labour proposed a publicly-owned housebuilder and nationalisation of key parts of the building materials industry, Jeremy Corbyn’s party wants to extend Help to Buy for another seven years.

The equity loan part of the scheme is currently due to end in 2020 but Labour would guarantee funding until 2027 ‘to give long-term certainty to both first-time buyers and the housebuilding industry’.

That goes well beyond necessary action to avoid a cliff edge and abrupt fall in output after 2020.

It should be cause for celebration in the boardrooms of the big housebuilders because Help to Buy would continue to underpin their completions, profit margins, dividends and share options.

Or at least it might be if housebuilder executives were not also going to be hit personally by tax increases on higher earners and corporately by an excessive pay levy on employees paid over £500,000 a year.

But it’s still a surprising move from Labour. As Theresa May found out yesterday, Help to Buy is by no means universally popular and critics argue that too many of the benefits go to the big firms, their shareholders and people who can afford to buy anyway.

Whether you agree or disagree with it, extending Help to Buy until 2027 is evidence that on housing Labour’s approach would be pragmatic rather than ideological.

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No surprises from Labour

If you’re looking for anything new on housing in the Labour manifesto you’re going to have to search very hard for it.

The party’s priorities were clearly elsewhere in the document launched this morning and the housing sections are largely rehashes of Labour’s response to the Lyons Review and of previous statements on social security.

Housing gets a mention in the introduction but only in relation to housebuilding and home ownership:

‘We are not building the homes we need. Our sons and daughters have been shut out of the housing market and too often they are forced to leave the communities where they were brought up.’

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Taking the pledge

The weekend’s big speech by Ed Balls looks like significant news for housing under a future Labour government – and not just for the obvious reasons.

The national headlines from the shadow chancellor’s speech to the Fabian conference were taken by his pledge to restore the 50p rate of tax and subsequent accusations that Labour is therefore anti-business. The undoubtedly good news for housing was that it will be ‘a central priority’ if Labour wins power in 2015.

But it was Balls’s message about ‘fiscal discipline’ that was more interesting to me:

‘We won’t be able to reverse all the spending cuts and tax rises that the Tories have pushed through. We will have to govern with less money, which means the next Labour government will have to make cuts too. No responsible Opposition can make detailed commitments and difficult judgments about what will happen in two or three years time without knowing the state of the economy and public finances that we will inherit.

‘But we know we will face difficult choices. The government’s day-to-day spending totals for 2015/16 will be our starting point. There will be no more borrowing for day-to-day spending. Any changes to the current spending plans for that year will be fully-funded and set out in advance in our manifesto.’

Read the rest of this post on Inside Edge, my blog for Inside Housing