There is no doubt some soul searching going on at the moment, in part as a consequence of the poor result at the Inverclyde by-election. I’m sure the leadership will seek to dismiss poor election results at this stage in the electoral cycle as to be expected when you’re “in government”. But that can hardly carry much weight, given the Tories aren’t doing anywhere near as badly. It seems to me that rather deeper reflection is needed. Is it clear any more what the Liberal Democrats stand for? Why would someone – beyond the most unwaveringly committed – vote for the Party?
Let’s pick one policy area – housing – to focus on. I choose it simply because it’s the one I’m most familiar with.
Plenty of media column inches have been generated by the evaporation of mortgage finance and the problems of accessibility and affordability facing “Generation Rent”. Almost everyone involved in the housing sector agrees that lack of supply is a problem that has bedevilled the British system for many years. Yet, there are significant concerns that Mr Pickles’ version of localism is a NIMBY charter. House building has collapsed to low levels not seen in generations.
There has been a heated debate about changes to social rented tenancies and rent levels and the reform of local housing allowances in the private rented sector. There are concerns about changes to the homelessness obligations of local authorities and major concerns about the quality of provision at the bottom end of the private rented market. The latter concerns will be stoked further by an imminent Dispatches programme (trailed by Jon Snow on his blog). There are concerns that taken together current policies signal increased poverty, more homelessness, deepening benefit and poverty traps, and increasing spatial segregation. These concerns exist even within the blue contingent of the Government.
Would the public know where the Liberal Democrats stand on these issues? Would Liberal Democrats know?
If we go back to the period before May 2010 the Conservatives were assuring us they wouldn’t tamper with social housing rights. That position was broadly in accord with the Liberal Democrat position. The Tories reneged on this commitment and proposed radical changes to the rights associated with a social tenancy. They said this would only affect new tenants. There was muted concern from Liberal Democrat quarters, but things move forward.
More recently Tories again apparently ignored their own earlier assurances that change would only affect new tenants by proposing that households living in social housing with total household income over a certain level could be evicted to make way for “more deserving” cases. As is this Government’s way, statistics were presented partially and simplistically in support of the case. Bob Crow and Frank Dobson have been constructed as folk devils.
In the private rented sector, the Housing Minister announced on arrival in office that there would be no new regulation, which represented a significant change from late period Labour policy. Last week at the Chartered Institute of Housing Conference he appeared to be changing his mind again. Regulation is to be extended, but details are yet to be forthcoming (as reported here).
There are, of course, some elements of policy that most people in the housing policy world have welcomed and see as long overdue, such as the modest initiatives to bring empty properties back into use.
Apart from the fact that policy development in this field can and should be thoroughly critiqued for being chaotic and incoherent, what do we think of the substance?
The most forceful Liberal Democrat views on these topics I’ve encountered recently – online in particular – would appear to have embraced the Tories’ position. Social housing should be residualised, social rents should rise, tenants should be stripped of rights, housing allowances should be restricted, enforced mobility is unproblematic, vulnerable and homeless households seeking assistance should expect less. The previous Government sought to revalorise social housing through broadening its social base. The current Government wants to ensure it is reserved for the poor. And that’s just fine.
The Government is changing the parameters of housing policy and housing policy debate in radical ways. And the changes are primarily directed at reducing the assistance the state is going to offer. An overriding narrative of austerity, short term “efficiency” in public spending, and “fairness” to the taxpayer justifies this.
So is the Party in accord with the Tories on this one? The answer is significant. The housing agenda currently being pursued is more market-focused – and shows less understanding of the challenges facing poor people in securing appropriate accommodation – than anything the Thatcher or Major governments attempted.
If the Party favours this approach then is this for distinctively liberal reasons, rather than simply aping the Tories’ entrenched dislike of non-market provision and regulatory intervention that stands in the way of making money? Do we feel that the route down which policy is careering strikes the right balance between liberty, equality and community?
And if the party isn’t in accord with the Tories on these issues then for what reasons? If we don’t like what’s happening then what does an alternative perspective look like? How is it rooted in a distinctively liberal philosophy?
And does anyone beyond the Party know about this thinking? Because if not then it’s hardly surprising if people aren’t sure what’s distinctive about its position.
Alex Marsh blogs at alexsarchives.wordpress.com.
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41 Comments
Well I certainly don’t know what the party position is – and I keep more abreast of things than most.
I think Alex’s analysis is spot-on. We’ve sleep-walked into supporting a very fundamental restructuring and re-purposing of social housing without any debate in the wider party.
To a certain extent, it’s our own fault for not having a comprehensive housing policy of our own to table. Pre-election, we’d focussed almost exclusively on empty properties, and while they’ve certainly got a role to play (and the wins we’ve had are v.welcome) it doesn’t amount to a vision.
“Plenty of media column inches have been generated by the evaporation of mortgage finance and the problems of accessibility and affordability facing “Generation Rent”. Almost everyone involved in the housing sector agrees that lack of supply is a problem that has bedevilled the British system for many years. Yet, there are significant concerns that Mr Pickles’ version of localism is a NIMBY charter. House building has collapsed to low levels not seen in generations.”
The column inches in the newspapers devoted to mortgage provision have absolutely nothing to do with sympathy for first-time buyers. The newspapers are instead motivated by a desitre to keep house prices at their current unsustainable and uneconomic levels by forcing cheap and easy credit on the younger generations. Quite bizarre, when we’re in a global economic and financial mess caused by cheap and easy credit forcing house prices up, well beyond anything sustainable.
The reason people in the sector talk about a lack of supply is because of a desire, by those with vested interests, to persuade people to spend as much as they can on buying a house. Overwhelming evidence points to the fact that the vast majority of house price inflation over the last decade was caused by the credit bubble and not because of a shortage of supply of houses. There may well be a bit of a shortage in the South-East but, even there, the price inflation was mostly due to demand in the form of credit.
If you’re serious about wanting more first-time buyers in the market then the best way to do it is increase the costs for landlords through any form of taxation (preferably on the land-value), regulation, raising interest rates, etc. Landlords can’t pass those costs on to the tenants, so for yields to recover house prices would have to fall, enabling first-time buyers to compete against buy-to-letters for the same houses. When prices have fallen to a more sustainable level then the banks will be able to relax their deposit criteria – a win-win situation for those wishing to buy a house to live in.
Building lots of council houses would be a very good idea as well. Something like 90% of the land in the UK is ‘undeveloped’. If 1% of the land was released for development then it would be very beneficial to the economy as well as being good for the environment. The biodiversity found in areas of residential housing is far greater than that of the monoculture of much of our countryside.
quote – “And if the party isn’t in accord with the Tories on these issues then for what reasons? If we don’t like what’s happening then what does an alternative perspective look like? How is it rooted in a distinctively liberal philosophy?”
This implies that if someone came up with a solution that bore considerable resemblance to, say, an Old Labour policy, you would reject on the basis that it does not have a distinctively Liberal flavour. Non-market-based solutions that work should be our aim, rather than pre-selecting for doctrinal purity.
Oh, the irony – I’ve just blogged on exactly this, then find this went up while I was typing it…http://aviewfromhamcommon.blogspot.com/2011/07/squatting-homelessness-empty-homes-and.html
A distinctive position is a worthy objective, in the meantime you should probably ask your ministers why they’ve covered up the horrific projections of homelessness as a result of benefit changes…
http://www.guardian.co.uk/politics/2011/jul/03/mps-misled-welfare-changes-homelessness
Thanks for your comments so far.
@mike cobley – I don’t think that is quite what I mean. If we were to start from a understanding of social liberalism that led to a conclusion that the best solution to the problems of market failure, inequality of arms, access and affordability was a strong social rented sector, for example, I wouldn’t have a problem with that. My feeling is that that is not the sort of direction in which the discussion is heading, which is one of the reasons why I raise the issue.
The same policy solution may be favoured by different parties for different reasons. In fact, that is often when you are most likely to get policy change. But if the LibDems are to be distinctive then the thinking behind the policy, as much as the policy itself, should set us apart.
@Richard Morris
Thanks for the link, but the idea is completely insane, unjust and will further the divide between those owning land and those wishing to own it. It is economically illiterate, as Andrew Duffield’s comment from the LDV article in January stated:
“Andrew Duffield
Posted 11th January 2011 at 9:25 am | Permalink
More public money for private landlords as a reward for leaving their assets unused! This kind of economic illiteracy would be funny if it weren’t so bloody tragic.
How much more sane and sustainable to incentivise idle landlords by levying a tax on the value of their unused sites – along with all commercial sites (since that’s what letting premises are) – as per existing Lib Dem policy for business rates. Such an approach would achieve the same ends, raise revenue for the exchequer instead of depleting it and reduce rents to make housing more affordable as an automatic consequence.
But hey – why go for an economic no-brainer that that, when you can line landlords’ pockets from the public purse?”
Alex – thanks for asking this vital question. Brian Robson gets it exactly right – we said diddly squat on housing pre-election, bar worthy noises empty properties. As i pointed out at the time to the party’s housing spokes’ office, most empty properties do not lie in areas of great housing need, and any programme to bring them into use would rely on local authority discretion, and thus could not be relied upon to get us the number of new homes we need, especially since so much legal bureaucracy needs to be gone through to bring each individual home back into use,making it expensive and time consuming.
What is libdem housing policy? Who knows. I think Stephen Gilbert, who chairs the appg on housing, should be invited to set out first thoughts on LDV, and to invite a discussion in the party to get a policy going. We can’t leave it all to Andrew Stunnell, our man in DCLG, as he appears to have been entirely captured by (no-)Grant Shapps’ agenda of abolishing council housing for new tenants and letting it wither on the vine for existing ones. Sadly Mr Stunnell is damaged goods on this one. So let’s get our MPs and peers to generate a housing policy, and one that starts with the mantra of our two more sensible prospective mayoral candidiates – we need more, better and cheaper homes. this in practice means a government that is committed to funding and building a new programme of social housing where it is needed – London and the South-east. it also means carrying on with the ‘Kickstart’ programme of the HCA in recent years, which the Coalition stopped, but which was also responsible for about a half of the total number of affordable homes the coalition will no doubt take credit for in 2015, despite not actually backing it.
Almost everyone involved in the housing sector agrees that lack of supply is a problem that has bedevilled the British system for many years.
No. The problem is more making more efficient use of the stock we have. The free market extremists lie behind this idea that the only problem with housing is “supply”, supposing (naively, and that’s to give them credit, because if they are not naive and so genuinely believing it, there are worse words one could use for them). The problem is that we can all “demand” a city flat and a country mansion set in an acre or so of grounds, but the free market cannot deliver a supply to this demand – acres of land cannot be produced as a “supply” to meet “demand”. If we carry on pouring more and more concrete in our countryside to try and meet it, we never will. The lack of understanding of this issue comes from the USA being the driving force in this extreme free market ideology. They do have a lot more land in the USA, and a mentality still based on the idea that land is unlimited. There was once a “western frontier” so anyone squeezed out of ownership could cross it and grab land. In this country, all the land was parcelled out following 1066, so we know full well it is not in unlimited supply.
What I can see in the places I have lived in is all the little pieces of land being filled in with houses, so I just cannot agree that “more supply” is an easy-peasy answer to the problem – where is it to be built? I’m not saying we should not build more, but I am saying that’s not the full answer.
The biggest problem with housing in this country is that we have come to regard it as a money-machine. It is just naturally assumed that if you own housing you will make money from it. There are howls of anguish at any suggestion that some of this money should be taxed in the way money earned from work is taxed. The fact that this is so, and there are few countering howls of anguish from those squeezed out and exploited and most of all denied freedom through lack of secure housing, shows why, unfashionable though it might be, we DO have to be able to talk about wealth division in this country instead of closing down anyone who mentions it on the grounds “we’re liberals, and we don’t like talking about that sort of thing”. Political commentary in this country IS largely from the very rich and those who speak in the interest of the very rich, and this is so much demonstrated by the way housing is discussed.
To me, the only real solution is to make housing a less attractive investment, and so to discourage people holding onto more of it than meets their needs. If we won’t do that, new building to meet “demand” will simply meet the demand of the already well-housed to be even better houses, rather than the demand of the unhoused to have housing at all. The result will be an ever nastier and more divided society. The rich will be locked up in their gated communities, bringing in just that human labour from outside that is necessary to meet their whims. Outside will be hell on earth.
Yes, Lib Dem housing policy is far too weak. Some (rather unorganised) points I would make:
1. This is predominantly a South of England problem. Many parts of the South have chronic housing shortages; but in the North the problem is far less common. As well as being far too low, house building in the last decade was also too uniform – as many houses were built in the North as in the South, but it was the South that saw housing pressure really intensify. Housing policy needs to reflect the local situation.
2. There is a significant difference between building housing and building affordable housing. If developers are let loose, they will supply the former rather than the latter, i.e. they will maximise their profits by building the type of housing most in demand. Those new houses may well be unaffordable to the asset-poor on low to middle incomes. But housing supply will be increased. The better provision of housing for the top will mean their current houses become the houses for the middle, and the middle’s current housing become the houses for the bottom.
The alternative is forcing developers to build affordable houses, but these aren’t the houses that developers will really profit from, so this needs government subsidy to get them built. At a time of deficit reduction and austerity measures, this isn’t on the cards unless we raise taxes to pay for it. That ought to mean taxing the wealth locked up in house prices to build affordable housing. Homeowners are a powerful body, and as we found with our mansion tax flop, this is easier said than done.
3. Councillors understandably have the interests of their current constituents at heart, but existing residents never support development on their doorstep, so councillors do tend to end up opposing specific developments, even if they agree with the general need for more housing. There needs to be a big incentive for councils to develop, or for residents to allow development. The idea of handing out subsidies to existing homeowners who have benefited enormously from the house price boom over the last 15 years makes me queasy, but it may need to happen to get construction kick-started.
I am disappointed not to have heard more (so far) from the Lib Dems on the 40,000 families which may be made homeless by the HB cap, as forecast by the DCLG (referenced in this article merely as a sign of ‘blue’ worries about housing).
I am a LD voter in the last two general elections, plus london mayoral and a number of others. I always thought that creating 40,000 more homeless families (with children) would be something that the LDs would always be unequivocally, invariably against. I have stuck with the LDs in coalition as I think they are basically good people trying to do a good job, and because they are tempering tory excesses. But unless steps are taken to mitigate this problem I will never be able to consider voting for them again.
40,000 more homeless families is not only economically counter-productive; more importantly, it is fundamentally immoral. The principle of the benefit cap not exceeding average wage can be retained if necessary, but exceptions must be allowed, particularly in London in the first, transitional years of the policy. Otherwise the Lib Dems will have helped to put 1000s of children on the streets.
Matthew, much of what you have written I strongly disagree with you about, but I must pull you up on two things:
You describe people who acknowledge the forces of supply and demand as “free market extremists”. This is patently ridiculous. Indeed the extremism comes from those who deny the existence of a link between supply and demand. Maybe tone down the rhetoric, eh?
You say it’s bad that “new building to meet “demand” will simply meet the demand of the already well-housed to be even better houses”. First of all, it’s completely natural for anyone from any economic background to improve their lot. So the already well-housed want to get themselves an even better house, as liberals I can’t see how we can be critical of that. But the house they leave then becomes available to those of medium means, and that house becomes available to those of lower means. I realise this is ‘trickle down’ economics, and you won’t like it, but please don’t deny it. The already well-housed are the only people with the means to kick-start the provision of affordable housing. They either need taxing or they need supplying with better houses. We need to find a way of making one, the other or a combination of both a political reality.
Alex M, I totally agree that the housing benefit bill can’t be cut whilst housing costs are so high, at least without increasing homelessness. The housing benefit costs have got so high because house prices have got so high. Deflate house prices and you deflate housing costs, thus deflating housing benefit costs.
Duncan- fine, but can that be achieved before the effects of the cap kick in? I have to say I doubt it. Therefore I believe transitional exemptions are required to mitigate the effects of the cap in the short term, and I strongly hope to see Liberal Democrat ministers making this point more forcefully than they have so far.
I have voted Lib Dem in the belief that they wanted to stick up for the poorest and most vulnerable in society, and I see this issue as a test of that commitment
“The housing benefit costs have got so high because house prices have got so high. ”
What have housing benefits got to do with house prices? Housing benefit go towards paying the rent, yet rents are have remained more or less stagnant in real terms for the last three decades across most of the Country. Where I am in Leicester, rents are the same as they were a decade ago. During the same period, house prices rose by 175% by the 2007 peak. That inflation had nothing to do with rents rising (and hence had nothing to do with a shortage of housing) – it was caused by the banks lending more and more money to people. The
“Deflate house prices and you deflate housing costs”
If (when, more likely) house prices deflate, it will have almost no effect on rents. Lower house prices means cheaper prices to those buying, not renting. There is overwhelming evidence over the last few decades in the UK that house prices go up and down whilst rents stay the same – in 2007, the yield on rental property reached record lows. What has prevented house prices from deflating too far (for the moment) since 2007 is the drop in interest rates, which has lowered the costs for landlords, thus increasing their net yields (or more likely reducing their losses, which they then subsidise through their own wages)
If you want cheaper house prices:
(a) Increase the costs for landlords – tax increases, interest rate rises
(b) Increase the costs for leaving properties empty – e.g. remove the council tax subsidy for empty houses, introduce LVT, etc.
If you want higher house prices and hence make our historically small proportion of first-time buyers even smaller then:
(a) Give money to people with empty houses (paid for with the taxes of those that don’t own, as suggested above)
(b) Keep interest rates low.
(c) Introduce more shared-equity schemes, etc
But TPTB can’t buck the market forever. All the subsidies and tax-breaks in the world can’t keep house prices high forever. The entire economy is grinding to a halt because of the hoarding of land. I live 10 yards from a building site that received planning permission three years ago when the developers bought the land. So far, they have completed the foundations and show no sign of starting building anything higher – why? – because they bought the land at an overinflated price and can’t afford to build (and pay the contractors) until house prices (in reality the land component of the price) ‘recovers’. Their business model, like most developers, was built on buying land and speculating that the price would go up by the time they’d built the houses – taking profit from economic rent rather than the product they were building. However, house prices won’t recover, thankfully, so they will go bust eventually. LVT would make them go bust sooner – this would have the advantage of the land being sold off at a lower, more economic, level and the rent-seeking bank and the rent-seeking developer would take a hair-cut and learn the error of their ways. The new developer would then be able to employ contractors to build the houses and get the economy moving again. Our economy’s gong to be stuffed for years to come because we bailed out the idiot banks/developers/but-to-letters that caused the mess.
LVT is the answer.
If your basic assumption is correct, Duncan, that all of us always want something bigger and better than we already have, we are as a society, quite frankly b……d. We all know resources have never been unlimited, and at present, with 6.5 billion people in the world, and environmental constraints kicking in all over the place, they are even more limited. Surely we should be thinking as Lib Dems of how we best respond to these constraints, not encouraging others to believe it is OK always to think of bigger / better / newer?
And where more appropriate to start this process than housing, a basic human right for all of us.
Tim13, sure, but let’s stick to housing. We’re nowhere near running out of land – only 10% of the UK’s land is urbanised. The tabloids whine about the country being overcrowded, but the reality is very different. The government has placed artificial restraints on the use of land. The constraint stopping bigger and better homes in the UK is not environmental, it’s political. Without planning regulations there would be no housing shortage (but there no doubt would be different problems). What we need is the right balance of regulations, and at the moment the balance is tipped against development, which has created housing shortages.
“First of all, it’s completely natural for anyone from any economic background to improve their lot. So the already well-housed want to get themselves an even better house, as liberals I can’t see how we can be critical of that. But the house they leave then becomes available to those of medium means, and that house becomes available to those of lower means. I realise this is ‘trickle down’ economics, and you won’t like it, but please don’t deny it.”
So what’s really needed is for more mansions and palaces to be built. Now why wasn’t that obvious to the rest of us?
@Duncan Stott
The 10% land argument is bogus. There are many parts of Britain where you simply cannot build houses for geographical regions, most of Scotland north of the central belt for example, or ecological sites/farming regions. Nevertheless, many cities can sustain larger populations than they do, the problems of overcrowding in the south are mirrored in the rows of empty houses in more northern parts, Scotland especially (which is desperate for immigrants). Because of overcrowding in the south, and necessary controls on building in green belts, property prices are elevated, even ‘affordable’ new builds would be unaffordable for people on the median salary or less. Either the government needs to encourage immigration, following jobs and investment naturally, out of the south, or state backed housing projects – impossible under a tory government.
A leaf could also be taken out of the French approach, where cities have very strict planning regulations and tend to grow upwards, not outwards. Building tower blocks with parking underneath (as does happen in some places in the UK) would allow population densities to increase and house prices to stabilise without expanding cities.
g,
the 10% developed figure is for the South East. See this map. The South East just isn’t full.
You don’t say why green belts are a ‘necessary control’. I think you mean desirable. I disagree. Green belts just encourage development in the small towns and villages outside of the zone. That puts huge pressures on the transport infrastructure as the routes through the green belt become commuter bottlenecks. It would be far better to allow growing cities to physically grow. Yes we could go upwards instead of outwards, but in a thriving city articially restricted by a graan belt, this means replacing existing in-use buildings rather than building new ones.
As for encouraging South to North migration, speaking as a North to South migrant, I think this is wishful thinking. Businesses naturally set themselves up in localities that are best for their success. Take high tech companies. They are most likely to be around the M4 corridor or Cambridgeshire because there is an existing resource of engineers around there. That in turn means new engineers move to these areas, and it becomes a self-reinforcing system. This effect replicates itself across the whole economy. There could be preferential tax rates in poorer areas to attract less location-sensitive businesses to an area. Or we could just go whole hog and bring in a Land Value Tax. (Someone had to say it eventually!)
Duncan Stott, thanks for the explanation of 10%. Regardless of the merits of greenebelts, I think the arguments are more compelling for the upward growth of cities. It reduces commuting time, environmental impact and brings in efficiencies in distributing resources – water, power, food, etc. Encouraging car free cities, as much as possible, will reap dividends in the future too.
And yes there is an element of wishful thinking in south–>north migration, however there is no reason why there can’t be industrial centres elsewhere, Dundee has biotech, pharma and computer gaming industries, as does Edinburgh. Aberdeen has huge amounts of oil and off shore engineering industry (albeit under threat from Osborne’s tax disasters), and so on….
Duncan – you lay the blame for the lack of housing supply on planning regs. This is a bogus argument. Planning law requires local authorities to have a five year supply of land for housing identified in their LDFs. Most local authorities are quite seized of the need for new housing, which broadens their economic base and boosts local economies. But if applications do not come forward, there is little to say ‘yes’ to. Why aren’t they coming forward? Often, developers don’t want to, or can’t afford to, build. London’s boroughs have collectively granted planning permission for 170,000 homes that have not been built, because of reasons accessing finance from the banks, or, sometimes because developers ‘bank’ those permissions in the hope fo rising land and property values.
Don’t buy Cameron’s argument that the planing system is sclerotic, or his offensive comment that planners are ‘enemies of enterprise’. If you look at the drop in housebuilding in the last four years, you’ll see that it is the banks who are the ‘enemies of enerprise’ when it comes to housebuilding.
@LondonLiberal
“If you look at the drop in housebuilding in the last four years, you’ll see that it is the banks who are the ‘enemies of enerprise’ when it comes to housebuilding.”
It is the developers that are the enemies of development by seeking to make profits from land-price speculation rather than development. The banks are right not to lend so much to developers to buy land when land is still deflating from bubble prices (However, the banks were wrong to lend so much in the first place, without which land prices wouldn’t have bubbled as much.).
It’s great to see such a good debate on this.
From my POV as a northerner who moved south and then came back, the symptoms may be worse in London and the south (they always were), but it’s a national problem. House price to income ratios rose in every single region over the last 10-15 years.
Looking forward, every single region is going to experience double digit % growth in households over the next 20 years. Yorkshire and Humber will have the second highest growth of any region (after the East) – so it’s not just the south where these problems are going to worsen – we need new housing everywhere.
Even if population was to fall (which it isn’t projected to in any region), there’ll still be a growth in households due to the changes in household formation. Like pensions, there are long term trends at work that we need to get to grips with.
Brian – you’re absolutely right. It is household formation, which has outstripped new home supply for the last twenty years, which is the problem (not helped by a decade-long bubble caused by loose lending). Planning regs are NOT the cause, as Matthew Huntbach and Duncan Stott suggest. For what it’s worth, I must disagree with Matthew when he says that we need to have a more efficient use of supply to solve the problem. While he is right in simple numerical terms, the problem is that the housing that is cheap or empty is generally in less economic locations, whereas the actual need for housing is in quite different areas. You can’t just get everyone to move to cheaper homes if there are no jobs/communities to support them! It’s not so much efficient use of homes as efficient supply of homes that is needed. And that means denser and higher in London, with building financed or part financed by the state.
Remember, 50p in every £1 spent on housing comes back to the Treasury through the multiplier effect, and once you add in the social savings of having children being able to do homework in homes that aren’t overcrowded or riddled with damp, or people being able to move to care for elderly relatives, or simply not having to pay huge amounts of disposable income on rent/mortgages, you make life better for everyone. simples!
Housing will be a massive electoral issue at the next GE due to supply problems and the lack of social housing. Once again the Lib Dems are simply propping up extreme right wing policies which favour the few over the many. Private landlords are the big winners while social housing becomes the preserve of the very poor as opposed to a general provision for all of society. This makes poor areas even poorer and traps people for ever without mobility. It is no wonder that the so many have turned away from the party, just look at the recent poll in the Western Morning News which has the Lib Dems being wiped out and left with just 2 seats, this to add to polling in Scotland that shows them losing every Westminster seat. The debate on housing has little to do with the deficit but more on what sort of society we want to live in and most people will judge the issue on those terms.
We have had net migration of at least 1.5 millions people in the last 10 years. That must have had something to do with increases in prices.
“We have had net migration of at least 1.5 millions people in the last 10 years. That must have had something to do with increases in prices.”
So a 2% increase in the population is responsible for a 175% rise in house prices? Yeah, right.
Obviously a land value tax is the only serious way you can deal with this as it addresses many of the wider issues like helping to create a local economy around housing. I think we should really push for it in the party, but I doubt we would be able to enact it unless we were in government on our own.
What I would say is that whatever we do it is worth investing in good housing. Poor built environments just become hell holes that foster crime, poor education attainment etc which later on costs money to try to deal with. If we invested in good quality housing that didn’t make people feel like they were the lowest on the low then we may find it costs less later on if it helps to create a positive living environment.
Clegg’s announcement that councils will regain control of business rates and can loan against future income to build housing should help a bit.
There is an issue with the planning system. The definition of local housing need is very restrictive, so that even if you meet defined need, prices may rise sharply as you are not required to take into account all sorts of housing demand. In any case, lots of places do not have 5 years worth of housing land identified, but instead rely on windfall sites. Community Land Auctions would give local people a real incentive to support development, rather than oppose it. As people have said, there is plenty of land in all relevant areas. (Only 1% of England is domestic buildings – Source, CLGs director of housing, this week). So the question is how to persuade communities to support more building on it.
Some credit is due to the govt – Shapps has come out in favour of zero nominal house price growth, Clark’s presumption in favour of sustainable development may alter the planning system, and a pilot of CLAs was announced in the budget. (This is not to deny the negatives, about which I have written elsewhere)
“This is predominantly a South of England problem”
Dear me. If you really do believe a lack of affordable housing is predominantly a south of England problem your recent hammering in Northern England is only a small taster of what is to come for your party .Virtually every Council area has a waiting list of several thousand for social housing. Housing, like very every other major issue , has become a Tory driven agenda with the Lib Dems mere back seat passengers . Unless the Lib Dems start reigning in the Tories you are finished as a national party.
No credit is due to the government on housing, especially Shapps.
Shapps held a first time buyers summit, to which no first-time buyers were invited, just industry vested interests – see the following excellent article:
http://www.guardian.co.uk/money/blog/2011/feb/15/first-time-buyer-summit
Shapps has kicked the can down the road with the FSA’s mortgage market review; a review which, if implemented, would protect against a future financial collapse in addition to improving affordability for first-time-buyers. How on earth can anyone comp[lain about the last government’s lack of regulation, when we currently have a housing minister deliberately lobbying against regulation:
http://www.mortgagesolutions.co.uk/mortgage-solutions/news/1930955/shapps-piles-pressure-fsa-mmr
It gets worse. Today, he is calling for lenders to provide mates’ mortgages, whereby people can club together to buy an overpriced hovel (it’s quite clear from reading the comments at the bottom that even Mail readers aren’t as ill-informed as Shapps):
http://www.dailymail.co.uk/news/article-2011237/Grant-Shapps-Banks-offer-mates-mortgages.html
What’s the point of house prices remaining stagnant at today’s nokminal level when wage inflation is much less than CPI/RPI? Current mortgage holders are feeling the squeeze because of other rising costs – i.e. the opposite of debt being inflated away. In addition, new entrants to the market are seeing afforability squeezed because of those rising costs. Nominal house price stagnation is useful to nobody (and isn’t happening – prices are falling).
Shapps has just continued everything that was awful about the last government’s stance on housing, although one can appreciate why politicians are afraid from speaking the truth – that prices need to fall and will fall.
Duncan Stott
So the already well-housed want to get themselves an even better house, as liberals I can’t see how we can be critical of that. But the house they leave then becomes available to those of medium means, and that house becomes available to those of lower means.
That was the theory. In practice, they carry on owning the house, and let it out, those who need it but cannot afford to buy pay even more than they would to buy it in rent, and the taxpayer shoulders the bill in housing benefit. Madness.
It is unfortunate that in the current debate about benefits, no-one is willing really to talk about this madness, because it strikes at the heart of what has been Tory policy since Margaret Thatcher’s government, and actually since the Tory Party was started as the party of the landed aristocracy. The housing benefit bill would be hugely smaller if there were still plenty of council housing available. Not only smaller because fewer people would be paying sky high private rents, but also because the private landlords would not be able to charge such sky high rents if those forced to pay them could instead get council housing at more modest rents.
The debate about this is put as if the tenants receive the money paid in housing benefit. Why do we hear so much about this, but the missing word in all the discussion on the benefit caps and those who might be made homes through them is “landlords”? It is because if we were to talk about the REAL beneficiaries of housing benefit, that would go against what is most fundamental to the Tory Party – the idea of making money through owning things rather than through working. In the days of Lloyd George, our party could be loud and clear about such things, now we are silent.
To continue with explaining why the “build to meet demand” idea won’t work as well as the simplistic free marketeers suppose, at the limit if housing is the most productive investment in terms of long-term cash, people will buy housing just for that. You could keep on building, and people with money would buy what is built, keeping it empty, as an “investment”, because it’s a better form of investment for them than buying share certificates or whatever. You need a way to ensure housing goes to those who need it more than those who have the most money – and there’s your contradiction. If anything, there is an inverse correlation between need and money to buy – younger people and those with large families having more need and less money.
Matthew Huntbach – the housing benefit bill might go down but wouldn’t the council housing bill just shoot up instead? I’m assuming that the taxpayer will pay for council houses to be built and will subsidise people to live in them.
@Sam
“I’m assuming that the taxpayer will pay for council houses to be built and will subsidise people to live in them.”
If the land’s purchased at agricultural prices then there’s no need to subsidise anything – the council will make a profitable yield on the investment from the rents they receive.
@ Matthew Huntbach: “You could keep on building, and people with money would buy what is built, keeping it empty, as an “investment”, because it’s a better form of investment for them than buying share certificates or whatever.”
But if you built sufficient numbers then housing inflation wouldn’t rise as it has done in t he past, and we could enjoy the sort of price inflation they have in gernmany, for example (other credit control measures would be needed for this, too). So numbers are still part of the solution. And remember, it isn’t just saying build infinitely becase demand is infinite, i’m sayin we should build homes that meet the size of household formation, estimated by Barker to be c223k p/a. Surely you can accept that we should build enough homes to meet the number of households?
@Sam – the people living in council homes and paying rent for them will over time pay off the cost of building and maintaining those homes (indeed, they already have paid off huge amounts of the costs incurred). Unless they get housing benefit they are not being subsidised. even if they are getting HB then it’s still at a lower rent than is charged by private landlords, and the money still goes back to the state (since it is ultimately the landlord), so we taxpayers do not lose anywhere near as much as we would if we didn’t have more council housing.
There are lots of interesting and important points here, which illustrate both the complexities of the issues and the difficulty of engaging with them in the format of a blog plus comments.
In my original post I said that almost everyone in the housing sector thinks that lack of supply is part of the problem. That is a statement of fact. Whether they are right to think that is a different matter. @Matthew Huntbach thinks not. But there is a long way between saying we need to build more housing (of the right sort) and conceding that we need to keep building without end to meet whatever demand might exist. Scrutiny of second home ownership would certainly be appropriate.
Personally I think there is much to be said for trying to make structural changes to the housing market and the housing finance market so that housing investment is not driven by price appreciation or status concerns (as I blogged about here: http://alexsarchives.wordpress.com/2011/01/27/housing-demand-%E2%80%93-a-role-for-status-concerns/ ). It would be good if people bought properties to live in rather than as a vehicle for making money. It would be better for the UK economy generally if those with spare capital invested it productively rather than unproductively.
Tim Leunig is right that Grant Shapps made some positive noises about trying to deal with house price volatility back at the start of the year (which I also blogged about: http://alexsarchives.wordpress.com/2011/01/02/one-and-a-half-cheers-at-least-for-mr-shapps/ ) but we haven’t seen anything very concrete to back it up.
I do think that the emphasis upon the failures of the planning system is to look for the solution in the wrong place. The supply of new housing collapsed after 2008 (and before the Localism bill) even though the planning system did not change. So even if there are faults with the planning system (and there no doubt are) it cannot be painted as the source of all our problems in the way that some commentators try to.
I saw last night’s Dispatches and very shocking it was. It left me with two thoughts.
Firstly, why isn’t the government on top of this? For it was apparent that they’re not and secondly, there is no shortage of regulations (apparently there are hundreds of existing ones). The problem is that local authorities are simply not enforcing them even when the abuse is blatent and continued. Quite why they don’t wasn’t explained but my guess is that they don’t have the reasources to enforce and that if they did, then much of the problem would land in their lap and they can afford that even less.
So what is to be done? I have a suggestion.
If a house is unfit the make the landlord fully responsible for bringing it up to scratch including the temporary rehousing of the family until the work is done and also for all the council’s legal costs. If the landlord still doesn’t comply or if he is a repeat offender then fine him double all the costs involved. Under the present system it’s much more profitable to be a bad landlord than a good one; that must change.
“It seems to me that rather deeper reflection is needed. Is it clear any more what the Liberal Democrats stand for? Why would someone – beyond the most unwaveringly committed – vote for the Party?
Let’s pick one policy area – housing – to focus on. I choose it simply because it’s the one I’m most familiar with.”
If you want to find a distinctive issue with which to rally people to the Liberal Democrat flag, I think it would be wise to look for those issues about which the Tories care little, and where they can meet the Liberals half-way at relatively little cost to themselves. I am honestly not sure which issues would best fit this description, but I do know that to have distinctive positions on many issues is to risk civil war in the heart of government. And also to risk getting the blame for the resulting mess.