Help To Build…Voter Support by 2015

1^st August 2014

ResPublica's Lorena Papamanci responds to Labour's new housing strategy, delivered by Shadow Housing Minister Emma Reynolds

The shortage of homes, in particular affordable housing, will be one of the key issues deciding the next General Election. Labour has already taken the initiative; Shadow Housing Minister Emma Reynolds’s speech in Nottingham yesterday reaffirmed Labour’s commitment to house-building. With the Government’s flagship policy, Help to Buy, failing to increase homeownership past the levels of the 1980s. The Conservatives need to step up their game lest they lose their own home… at No.10.

It should come as no surprise that we are going through a housing crisis in the UK. The extent of it, however, sometimes seems to escape policy-makers. Not Shadow Housing Minister Emma Reynolds though. She has estimated the housing shortfall to reach 1.3million homes by 2020, which is the equivalent of Birmingham, Britain’s second largest city. Moreover, the average price for a house would be 13 times the average income of British workers, currently £26,500.

The Shadow Minister’s speech shifts the housing debate to a much-needed discussion about supply, as “[t]he only way to ensure more people can buy their own home is to build many more homes. It’s economic madness that 95 pence in every pound of Government spending on housing goes on benefits and only 5 pence goes on building homes”.

“Today I am revealing new figures which show that Labour councils are building on average 300 more homes a year than Tory councils”, Reynolds told the audience in Nottingham, establishing Labour as the party taking the lead in house building. According to Inside Housing, Labour councils are committed to building 862 homes a year, Conservative councils are committed to building 508, and Liberal Democrats just 393.

And this is most clearly reflected in LondonHouse prices have gone up over 18 per cent in the last year, yet councillors are largely divided in prioritising housing in their respective locality. According to a study from last October, while four in five Labour councillors ranked housing as their top priority, two thirds of Tory local representatives disagreed and placed delivering more homes fourth on their list, behind improving the borough’s environment, creating school places and improving public health.

With a lack of interest from councillors, the Government’s New Homes Bonus scheme does little in delivering affordable housing for those in need. And if London local elections are any indication of voter sentiment, Labour’s victory should raise some points of concern inside the Tory Party strategy team. Central Government is not performing any better, with the recent Cabinet Reshuffle having brought the fourth Housing Minister in just as many years.

British voters, however, are less undecided and have increasingly named housing as the top concern deciding their vote for 2015. As a matter of fact, housing is at the highest level of voter concern in five years, according to a recent Ipsos MORI survey. Th is is unsurprising as British families renting their home spend on average 40 per cent of their income on housing costs and those owning spend around 20 per cent.

As a result, Labour has committed to getting 200,000 homes built a year by 2020 and later this year the Party’s housing commission, chaired by Sir Michael Lyons, will set out a detailed roadmap to deliver on that goal. The main points for action are affordability (both for ownership and renting), supply of publicly owned land, and encouraging smaller builders to regain their market share from the late 1980s, when they were responsible for two thirds of new homes, through the Help to Build scheme.

ResPublica welcomes this change of focus on supply and housebuilding, and addressed these issues with Emma Reynolds several months ago in the organisation’s Housing Policy Forum. Our housing team also submitted evidence to the Lyons Housing Review earlier this spring suggesting innovative policy solutions for unlocking public land.

In our submission, we made the case for the introduction of a tax on the value of land and the further promotion of community-led planning. We believe that a tax on the value of land will unlock the land necessary to build the homes our country needs. This additional tax, integrated into current property taxes, would take the form of an annual tax on the rental value of a site’s optimal permitted use and could release enough surplus and vacant land from the public sector alone to solve the housing crisis. With regards to planning, we believe that taking a more community-led approach would foster genuine and meaningful partnerships between all those that have a stake in the community. We also recommended the Commission investigates the introduction of a ‘Community Infrastructure Bond’ to encourage investment in infrastructure and housing developments.