In the midst of a homes’ crisis Duncan Bowie reviews Labour manifesto finding it particularly lacking on social housing and radical vision
The manifesto had no surprises in relation to housing policy, given there had been enough leaks to give an idea of Labour’s thinking. While many of the ideas seem attractive, there are a range of problems, mainly related to the fact that Labour’s commitment not to raise taxes means that there will be no capacity to fund significant housing investment. The manifesto refers to more effective use of existing resources, so no new money for an increased social housing programme.
Labour has chosen to reinstate the abandoned Conservative target of 300,000 new homes a year. This target is too low to meet the backlog in housing need and the increased demand arising from a large increase in the population, due mainly to significant legal immigration, Government has little influence over the output of the housebuilding sector, never mind the price of new homes and how or whether they are actually occupied. Sources in the housebuilding sector are clear that we do not have the skilled workforce to build more homes, nor is it necessarily profitable for developers to increase output.
Much more important is the building of new social rented homes. There is however no target in the manifesto- 90,000 a year has been mentioned – but it is unclear how affordable these will be. However, this cannot be funded from cross-subsidy from private developers (known as planning gain). Most councils are out of money and housing associations are generally pulling back on their will not happen. Labour has plans to reform compulsory purchase rules to make it easier and cheaper for councils to buy land. While this is welcome, no details have been given, so it is difficult to tell how much this will cut housing development costs, and there will be lots of legal challenges.
Labour has focused on helping marginal home owners. The proposed “freedom to buy” however is just an extension of the existing Government mortgage guarantee scheme. Helping a few young would-be home owners in the short term (80,000 has been mentioned, though I doubt that they will be all that young) just increases house-prices in the long term as it increases effective demand without actually increasing supply – and helping marginal homeowners with no savings to take out expensive mortgages will leave some in financial difficulty, with the state having to bail them out. Not surprisingly building societies and housebuilders may like this but it is a poor use of public money. The Conservatives have already gone a step further by announcing reductions in stamp duty for first time buyers – very popular but also increases house-prices in the longer term while losing the government much needed revenue, and Labour is best not to try to rival this offer.
On the private rented sector, Labour promises to bring back the lapsed Renters Reform bill to abolish no fault evictions, known as section 21 evictions. This is long overdue, but Labour ‘s promise of more security of tenure and proposals to limit rent increases do not introduce any cap on initial rents. So this does not deal with the possibility that many landlords will get out of the sector, thus reducing the supply of rented homes, nor ensuring a significant increase in socially rented homes to which formerly private rented tenants can move. What Labour lacks is a clear plan to bring a substantial part of the private rented sector into some form of social ownership or management. This of course requires both significant funds and radical new powers for local authorities.
Then there is Labour policy on Right to Buy. As the party of homeownership and working-class aspirations (a la Thatcher) Labour will not follow Scotland and Wales to abolish council house sales in England. Instead, Labour will reduce discounts (not abolish them altogether which they should do) and possibly change the eligibility criteria in an attempt to reduce the number of properties lost to the public sector (and lost to future generations of low-income households), though the manifesto only mentions the first point. This is just not good enough. There are statements about radical reforms to the planning system, though I doubt Labour will have the courage to override local authorities who oppose new housebuilding (not all Conservative or LibDem controlled) or to impose new town developments or developments in the “grey belt” which will be widely opposed, often on spurious “environmental” grounds.