Thinking clearly

Posted by: Jules Birch

30/01/2009

Somewhere in a dusty corridor in Whitehall sits a grey-faced civil servant whose job is to seek out heresy and ensure that dangerous ideas do not take hold.

The existence of some sort of inquisitor general, probably in the Treasury, is the only reason I can think of as to why advocates of two of the most blindingly obvious policies in housing repeatedly bash their heads against a brick wall.

Policy one is allowing local authorities to build homes. Housing starts are plummeting, housing associations are struggling with business plans reliant on cross-subsidy from home ownership, waiting lists are rising. So let councils borrow against their existing stock and make a contribution too.

Policy two is reducing the rate of VAT on refurbishment and renovations. As Inside Housing’s new campaign argues today, it could help bring thousands of empty homes back into use. But it would also create jobs in the building sector, help combat the black economy and give homeowners an incentive to tackle the biggest contributor to carbon emissions - their existing homes.

For as long as I can remember, those two ideas have made it as far as the dusty office in Whitehall and come back marked rejected. Naturally, the government would love to help, but the local authority finance system (council houses) and European law (VAT) mean our hands are tied. 

Both arguments are of course nonsense. There are any number of ways to reform local authority finance and the public sector borrowing rules that suit other European countries perfectly well and if cutting VAT is so difficult for the UK, why did our government allow the Isle of Man to do precisely that?

On council housing the message is, finally, getting through. Tentative moves by Margaret Beckett were backed in a speech by Gordon Brown [download word doc here] to the Local Government Network yesterday. 

‘In the past we have placed restrictions on local authorities delivering social housing,’ he admitted. ‘Of course investment in social housing must be aligned with reform so that for example social housing providers working with local authorities and Jobcentre Plus address the high levels of worklessness that can be concentrated in parts of this sector.’

‘But,’ he went on, ‘let me today be clear, if local authorities can convince us that they can deliver quickly and cost effectively more of the housing that Britain needs, and if local authorities can build social housing in sustainable communities that meets the aspirations of the British people for the 21st century, then we will be prepared to give you our full backing and put aside any of the barriers that stand in the way of this happening.  We will not allow old arguments and old ideologies to stop us getting on with the job together when there are families who need homes, when there are bricklayers, carpenters and electricians ready and willing to work, when there are construction companies that are ready to build houses.’

Given the experience of the last 25 years, campaigners are unsurprisingly cautious about the details. Will the government really change the rules so that, crucially, local authorities can borrow against their existing stock as well as new homes? Do they have the skills and the capacity to deliver? Will the government’s apparent obsession with security of tenure get in the way?

However, with the review of the housing revenue account, the speech marks the most hopeful sign that things may at last be about to change. In that spirit, why not change the rules to allow local authorities to start offering competitive mortgages again too - or even to guarantee loans for local residents?

And if the government can tolerate heresy in one area, why not elsewhere too? If it will not allow old arguments to get in the way of producing homes for families who need them, then cut VAT on repairs and maintenance now. Backed by grants to social landlords to buy and repair empty homes and better guidance to local authorities to use their powers, it could help bring thousands of empty homes back into use.

It may have taken the prospect of the worst recession to the 1930s to do it, but that civil servant could finally be out of a job.