Progress | Centre-left Labour politics

Blind faith in a broken market

No wonder the Tories are failing to fix the housing crisis – Philip Hammond is trying to fix the wrong problem, explains Emma Burnell

To understand why the Tories are incapable of solving the housing crisis, you have to understand that its roots come from Tory dogma older than most of  the unfortunate ‘generation rent’. It is a creed they refuse to resist, and a doctrine that blinds them to the increasingly perilous consequences.

It is exemplified by ‘right to buy’, one of Margaret Thatcher’s most politically potent and significant policies. Incredibly popular at the time, it is probably responsible for some measure of the older generation’s electoral loyalty to the Tories. But the electoral bribe it represented was time limited – unlike its consequences.

Previously the consensus had been that a mix of tenures best served the national interest. But Thatcher’s vision of a ‘property-owning democracy’ meant that not only did her government sell off public assets at knock down prices, they also made it all but impossible to replace stock in the public realm. This was a short-termist concerted effort to reduce people’s links to the state and increase the number of people with a personal stake in capitalism. And for about a decade, it worked like a charm. That it then stopped working and the damage it caused (and causes to this day) is something that Tories remain absolutely unable to recognise. Like trickle-down economics, blind faith in a broken market remains the rightwing order of the day.

And so, once again, the emphasis was on first time buyers and once again the proposals set out (in this case abolishing stamp duty for first time buyers for properties under £250,000 and discounts for under £500,000) are – according to the Office of Budget Responsibility – likely to increase property prices not to calm our vastly overheated market. Much as with previous unsuccessful policy Help to Buy, this is a discount for those who least need it. It is not stamp duty stopping first time buyers, it is the inability to raise a deposit because rents remain so stubbornly high and wages so stubbornly low.

Tories are stuck because they genuinely want to increase access to ownership but at the same time are utterly wedded to their need to increase house prices. That these two are impossible to achieve together doesn’t really occur to them. But the fact these policies are completely irrelevant to the huge majority of those stuck in poor rented accommodation, fobbed off with a pie in the sky promise of the government to ‘look at’ longer term tenancies, is invisible to them.

Other measures announced are equally disappointing.

Three pilot schemes to look at rough sleeping is hardly the concerted effort needed to end this national shame. A pledge to only halve it by 2022 shows how dismally low a priority this is – especially as it has gone up fourfold since 2010.

Lifting borrowing caps on some councils is a good start, but why not actually take the plunge and abolish these altogether? Let councils borrow, let councils build. A 100 per cent council tax on empty homes may sound impressive, but genuine council tax reform that would make a difference (like re-evaluating bands set 25 years ago) was nowhere to be seen.

And once again Tories have capitulated completely to the green belt lobby. When we actually have a smaller area built upon than is revealed when the tide goes out at the same time as a vast increase in homelessness and people in housing need, our priority should be looking more imaginatively at where and how we build to increase much needed supply.

Despite a lot of big ‘economicky’ words (and some hideously bad jokes), Philip Hammond sat down today having done not even close to enough to start to address the housing crisis. It is this ongoing Tory failure to even acknowledge what is needed that leads to failure to deliver little more than words.

You will not increase access to the housing ladder until you sort out supply, house prices and rents and commit to a massive increase across all tenancies. This kind of tinkering will not do that. But it will help those who were already going to be able to buy to do so earlier. Once again, it is the wrong solution to the wrong problem, arrived at because of adherence to decades old dogma.


Emma Burnell is co-editor of Open Labour and director of . She tweets at @EmmaBurnell_

Photo: © UK Parliament/Jessica Taylor

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Emma Burnell

is a political blogger and campaigner

1 comment

  • Emma: The thing is that there is not a market in houses in the first place. Theories of markets are based on consumption: buy some Coke and consume it. Houses are not consumed in this way. They don’t even deteriorate necessarily: the next owner of your house may acquire it in a better state than you found it.

    So the ‘housing market’ has been broken as long as it has been seen as a market. In fact, houses have some characteristics like a ‘public good’.

    I’m no economist, but I think it is better to see houses as constituting a ‘mixed economy’ that the Tories have managed appallingly.

    Labour cannot afford to have blind faith ourselves in a market that doesn’t exist. We need to manage houses properly with a housing policy that has the goal of ensuring that all the population has a home worthy of the name. This means that only using market levers will fail to achieve that goal.

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