Friday, 26 May 2017

Labour's plans represent a consensus

From: Inside Edge 2

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.

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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 house builder 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 is pretty much what you would expect from Labour regardless of who was leader.”

It should be cause for celebration in the board rooms of the big house builders 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 more than £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.

The same is true of the rest of the programme. In speeches over the past year or so Mr Corbyn had seemed to call for a million homes in the next five years and for half of them to be council or social rented. The first bit seemed unambitious, while the second seemed unachievable and to imply that private sector output would fall from current levels.

By contrast the manifesto pledges (with my emphasis added) that: “Labour will invest to build over a million new homes. By the end of the next parliament we will be building at least 100,000 council and housing association homes a year for genuinely affordable rent or sale.”

As Monimbó points out on Red Brick, 100,000 by the end of the parliament is a considerable stretch on Labour’s peak output of 61,000 in 2010/11. It would also mean a 50% increase on the coalition’s highest of 67,000 in 2014/15, most of which were not genuinely affordable.

However, work by John Healey has already shown how this would be perfectly feasible if councils and housing associations are allowed to build to their potential and developer contributions are maximised.

The manifesto says Labour would “remove government restrictions that stop councils building homes and begin the biggest council building programme for at least 30 years”.

Labour would also “start work on a new generation of New Towns”, again recognising the desperate need for more homes and the time it will take to get there.

“Housing does not get much of a mention in the costings document.”

A new “Department of Housing”, presumably headed by a secretary of state who would be a full member of the cabinet, would help to ensure that a Labour government would be focused on “improving the number, standards and affordability of homes”.

On the private rented sector, Labour would make three-year tenancies the norm, with an inflation cap on rent rises, and would also look at giving the London mayor additional powers to give renters more security.

The first bit was also in the 2015 manifesto, although it proposed a “ceiling on excessive rent rises” rather than an inflation cap.

On council housing, Labour would scrap the Conservatives’ ban on long-term tenancies and “give council tenants security in their home”. That contrasts with the Tory plan for fixed-term social housing to be sold off after 10-15 years.

On homelessness, Labour would pledge to “end rough sleeping within the nextpParliament, starting by making available 4,000 additional homes reserved for people with a history of rough sleeping”.

And it would safeguard “homeless hostels and other supported housing from crude Conservative cuts to housing benefit”.

Where Mr Foot’s Labour pledged to end the Right to Buy, Mr Corbyn’s party wants to suspend it except where councils can prove that one-for-one replacements are possible.

The same themes are evident on the bits of social security that affect housing. As in 2015, Labour pledges to scrap the bedroom tax, but this time around it also pledges to reinstate housing benefit for the under-21s and to reform and redesign Universal Credit, including ending the six-week wait to be paid and reviewing cuts to work allowances.

However, there is no mention in the manifesto of the overall benefit cap, or the freeze until 2020 in most working-age benefits, including Local Housing Allowance rates. Both would presumably continue under Labour.

In the Q&A that followed the launch, Mr Corbyn seemed to imply that Labour would not continue with the freeze but the party now seems to have rowed back on this.

“There is no mention in the manifesto of the overall benefit cap or the freeze until 2020 in most working-age benefits.”

What seems clear is that Labour is only committed to reversing the most contentious Tory cuts in benefits. Those with devastating but less noticeable effects are being left untouched.

Housing does not get much of a mention in the costings document that accompanies the manifesto, beyond confirming the social security changes and revealing a plan to raise £1.6bn a year from an offshore property levy on trusts based in tax havens that buy residential property in the UK.

The increased affordable housing programme would presumably be financed by borrowing, which is allowed under Labour’s fiscal credibility rule because it is for investment rather than day-to-day spending.

Put all this together and you have a housing policy that is ambitious in places, pragmatic in others, and yet is still open to criticism for not going far enough. In other words, it is pretty much what you would expect from Labour regardless of who was leader.

Sadly there seems no chance of the party putting any of this into effect after 8 June and all eyes will be on the Conservative manifesto to be launched on Thursday.

However, if you look back to 2015, the Labour manifesto then was a much more accurate predictor of housing policy now than an unworkable Conservative manifesto which featured much that has already been abandoned and more that may be scrapped in future.

Labour’s plans represent an evolving consensus about the need for action on housing across all tenures and there is still a chance that its agenda will have an influence that goes beyond the number of MPs it has in the new parliament.

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