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We must channel the spirit of Lord Beveridge to help us shape a post-coronavirus world
The Beveridge Report shaped the settlement between individuals and the state to this day – and that was published three years before the end of the Second World War. Similar forward planning is vital for a post-coronavirus environment, writes Matthew Bailes
New issues come thick and fast in a crisis, so there is a real risk that future planning gets pushed out by the here and now.
Clearly that is the wrong approach, particularly at leadership level. Failure to look round corners inevitably means that you are ill prepared for future risks and potential opportunities.
The government’s response to coronavirus illustrates the point. We’d all be better off if politicians had spent January preparing the country for the pandemic, rather than arguing about ‘making Big Ben bong’.
Planning ahead is not just about managing the crisis, as important as that is. It is also about what the post-pandemic future looks like.
For example, the Beveridge Report paved the way for post-war reforms that continue to shape the settlement between individuals and the state to this day. It was published three years before the end of Second World War.
By way of contrast, woefully inadequate planning meant that the West snatched calamity from the jaws of victory in the aftermath of the 2003 Iraq war.
So how might we go about thinking about a post-coronavirus environment? It is certainly not easy, given the level of uncertainty about the science, economics and much else.
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However, here are four assumptions that are pretty uncontroversial:
- The world economy will shrink, and governments will need to find a way of stimulating activity if we are to avoid a prolonged recession
- The cost of the crisis will lead to levels of public debt that cannot be sustained in the long term
- It will take a long time to repair the economy, so the young are likely to bear most of the cost
- Key workers – nurses, care workers, delivery drivers, supermarket staff – will rightly be acclaimed as the heroes of this ‘war’
If we accept that these statements are likely to be true, we get some important clues about what might be on the table in terms of housing policy:
- The need for economic growth and jobs will drive thinking on new supply. Nervousness in the market and the lack of wriggle room on interest rates will mean that there will be an increased reliance on building homes for rent. Investment in infrastructure could also be prioritised, for similar reasons.
- The level of public debt should force the government to consider radical changes to the tax system. Since taxing income and profits will militate against economic growth and employment, and taxing consumption (VAT) is deeply regressive, there should be a renewed focus on taxing assets. Since the UK’s housing stock is worth £7.4tn – and the current tax regime incentivises just about all the wrong behaviours – it would be surprising and disappointing if this wasn’t a key area for review.
- The young people who will end up footing much of the bill are all too often living in insecure, expensive and/or poor housing, and are still weighed down by the bills incurred in the last crisis (eg student loans). Against this backdrop, asking them to pay more income tax – while effectively excluding most of them from homeownership and social housing – will be politically challenging.
- Many of the heroes of the crisis will also be among those least well housed – too poor to afford homeownership but not vulnerable enough to be allocated social housing. Housing should feature heavily in a debate about the ‘deal’ for these groups.
Put another way, if before the pandemic someone had asked me to name the top four ingredients for solving the housing crisis, I would have listed: a step change in the supply of social housing; tax reform; releasing more land alongside investment in infrastructure; and the political will to tackle all of the above (along with the underlying questions about the social contract between old and young, and rich and poor).
This crisis should put all of these issues firmly on the table.
Sadly, however, reform of our housing system is far from inevitable.
David Cameron’s government had the political cover of a crisis to implement deep reforms, but chose instead to salami slice the state, thereby compounding pre-existing flaws. Something similar could happen this time.
So, when the debate on the ‘peace settlement’ starts, we will be in a world of great opportunity and significant risk. We must be as prepared as we possibly can be, by autumn at the latest.
Hard as it may be, some of us need to work on a plan for the future, even as we fight today’s battles.
Matthew Bailes, chief executive, Paradigm
