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The housing sector’s fate in our new political environment hangs on two key issues
In our turbulent political environment the fate of affordable housing hangs on two key issues. These are the steps the sector should take to influence how the future unfolds, writes Matthew Bailes
I have no greater insight into Boris Johnson’s Brexit strategy than anyone else. However, the prospects of Theresa May’s deal being brought back wearing fancy dress and sunglasses appear to be diminishing fast.
Leaving the EU without a deal against the wishes of parliament would be an extraordinary gamble, and anyway may not be achievable. That makes an election in September look pretty likely.
This would also give Mr Johnson the chance to establish his own mandate, enlarge his wafer-thin majority, and exploit the weakness of the Labour Party.
If I am close to being right most of the pre-conditions are in place for a period of frenetic policymaking right across the political spectrum.
We have what is in effect a new government, with new people at the centre and new ministers in the Ministry of Housing, Communities and Local Government (MHCLG), all of whom will wish to make their mark.
We have the process of creating election manifestos in which parties will wish to set out an appealing and distinctive domestic agenda, notwithstanding the relentless focus on Brexit. And we are on the brink of crisis in just about any foreseeable scenario – an economic crisis in the event of a no-deal Brexit, a political crisis if Brexit is averted or put back to the people, or a slow drip crisis if a divorce deal is agreed but a long-term trade deal is not.
It is not easy to work out what this might mean for housing.
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The only thing I am reasonably certain of is that housing is unlikely to slip too far down the agenda. The problems are simply too big, and affect too many voters, for them to be left too long, and housing would almost certainly feature as a fiscal stimulus package should one prove necessary.
I think the sector’s fate in this environment will depend on the two key issues that have consistently shaped policymaking on social housing – namely the government’s views on new supply, and the competence (and motivations) of the people in and around the decision-making process.
“Supply is important because it drives the government’s approach to just about everything else”
Supply is important because it drives the government’s approach to just about everything else. More supply implies index-linked rents, increased grant, a degree of stability on welfare and strong economic regulation – and when necessary supporting the sector via some combination of the above in the event of a downturn.
Conversely, if the government doesn’t much care about new affordable homes, a wide range of choices open up, many of which would not be to the sector’s taste – precisely what happened under the Cameron government.
It is therefore essential that the sector makes the case on new supply.
In broad terms, there are two key arguments. The first and most obvious is that affordable housing is much-needed and inherently a good thing. For parties on the left this is pretty axiomatic. The question is not whether but how.
However, as the Cameron era demonstrated, this doesn’t always work with the Conservatives.
The second argument is therefore much more important. Put simply, it is that the structure of the housing market is such that the government will never achieve its supply ambitions unless affordable housing plays a substantial role, largely owing to the absorption rate problem outlined by Oliver Letwin, among many others.
This argument becomes even more cogent in a difficult market, because as prices drop the margins of for-profit developers evaporate, and they down tools.
Even if the case for new supply is made, we are not quite out of the woods.
The combination of new and inexperienced ministers, advisers currying favour, the political imperative to come up with ‘eye-catching’ initiatives for manifestos, and the distractions of Brexit all point to a disorderly policymaking process in which ill-considered ideas somehow become government announcements or manifesto commitments.
“The structure of the housing market is such that the government will never achieve its supply ambitions unless affordable housing plays a substantial role”
The run-up to the 2015 election – including the policy on the Right to Buy that led to the re-classification of the sector and the wild-eyed Starter Homes initiative that was quietly shelved by the May government – exemplifies the problem.
There is no easy answer to this. I can remember one senior Mandarin saying that new ministers would not believe electricity was dangerous until they stuck their fingers in a socket, and he had a point.
However, we must try. That means getting as close to the politicians as possible, making a strong public case, and arming those people in an around government with the facts and arguments they need to divert the flow of bad ideas and promote the good ones.
This is a significant early test for the new leaders of our representative bodies, and they will need our support.
Matthew Bailes, chief executive, Paradigm
