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Budget 2013: will George Osborne fix England's deepening housing crisis? Budget 2013: will George Osborne fix England's deepening housing crisis?
(6 months later)
Another budget and another string of measures unveiled to get Britain building, even before the chancellor arrives at the despatch box today. In three years this Conservative-led government has unveiled at least five initiatives ostensibly to revive housing delivery.Another budget and another string of measures unveiled to get Britain building, even before the chancellor arrives at the despatch box today. In three years this Conservative-led government has unveiled at least five initiatives ostensibly to revive housing delivery.
Recent statistics from the Department for Communities and Local Government secretary Eric Pickles – the very man who scrapped housing targets because such "top-down' strategies had apparently failed – show that housing "starts" in England fell 11% last year to a miserable 98,000. This contrasts vividly with the most recent high point, in pre-credit crunch 2006, when work began on 178,000 homes. England's housing crisis simply gets deeper.Recent statistics from the Department for Communities and Local Government secretary Eric Pickles – the very man who scrapped housing targets because such "top-down' strategies had apparently failed – show that housing "starts" in England fell 11% last year to a miserable 98,000. This contrasts vividly with the most recent high point, in pre-credit crunch 2006, when work began on 178,000 homes. England's housing crisis simply gets deeper.
How to revive building? This is the challenge: an emergency building programme to kickstart some growth in the domestic market, fuelling a largely UK-based supply chain in the process, and moving towards matching supply with demand from 232,000 households forming annually. Thousands of construction workers remain idle, while apprenticeships for younger people searching for a trade have all but dried up.How to revive building? This is the challenge: an emergency building programme to kickstart some growth in the domestic market, fuelling a largely UK-based supply chain in the process, and moving towards matching supply with demand from 232,000 households forming annually. Thousands of construction workers remain idle, while apprenticeships for younger people searching for a trade have all but dried up.
On top of this, 1.8 million families languish on social housing waiting lists; thousands face being uprooted through the "bedroom tax", searching in vain for elusive smaller properties that exist only in the mythology of ministers in self-denial; 48,000 families are reckoned to be homeless, and countless middle-income earners are now turning in desperation to unregulated private renting, the fastest-growing sector of a dysfunctional housing market.On top of this, 1.8 million families languish on social housing waiting lists; thousands face being uprooted through the "bedroom tax", searching in vain for elusive smaller properties that exist only in the mythology of ministers in self-denial; 48,000 families are reckoned to be homeless, and countless middle-income earners are now turning in desperation to unregulated private renting, the fastest-growing sector of a dysfunctional housing market.
Put aside the issue of capital investment in housing being cut by 63% in this government's first budget with little wonder that sites were abandoned as building ground to a halt. Consider instead the ambition of councils, and their housing offshoots, to borrow responsibly. We are talking about smaller, more attractive developments already taking root, from Dagenham, in east London, to Newcastle upon Tyne. Council-inspired housing is again becoming a progressive force, rather than a pejorative term. But it's small-scale.Put aside the issue of capital investment in housing being cut by 63% in this government's first budget with little wonder that sites were abandoned as building ground to a halt. Consider instead the ambition of councils, and their housing offshoots, to borrow responsibly. We are talking about smaller, more attractive developments already taking root, from Dagenham, in east London, to Newcastle upon Tyne. Council-inspired housing is again becoming a progressive force, rather than a pejorative term. But it's small-scale.
To the government's credit, a year ago, responsibility for council housing was localised after a lengthy period when the government called the shots by pooling all rents nationally, then redistributing them to town halls. Councils directly running housing or, more likely, letting 51 separate arm's-length management organisations control the stock, became self-financing. With over 700,000 houses, their first-class credit-worthiness gives them immense financial clout to borrow and build on the back of considerable assets and guaranteed rental income streams. Yet they are being needlessly shackled.To the government's credit, a year ago, responsibility for council housing was localised after a lengthy period when the government called the shots by pooling all rents nationally, then redistributing them to town halls. Councils directly running housing or, more likely, letting 51 separate arm's-length management organisations control the stock, became self-financing. With over 700,000 houses, their first-class credit-worthiness gives them immense financial clout to borrow and build on the back of considerable assets and guaranteed rental income streams. Yet they are being needlessly shackled.
Last week in the Lords, Liberal Democrat peer Lord Shipley, former leader of Newcastle city council, failed to persuade ministers to remove an arbitrary £2.8bn "cap" on borrowing for new housing. Town halls with housing stock would like to raise this to £7bn over five years. They say this could deliver 60,000 new homes.Last week in the Lords, Liberal Democrat peer Lord Shipley, former leader of Newcastle city council, failed to persuade ministers to remove an arbitrary £2.8bn "cap" on borrowing for new housing. Town halls with housing stock would like to raise this to £7bn over five years. They say this could deliver 60,000 new homes.
Against all international evidence, the government refuses to budge, on the grounds that raising this debt ceiling would count as "national" borrowing. Not so, say councils; in other EU countries it is seen as a "trading" activity, which does not figure as government debt.Against all international evidence, the government refuses to budge, on the grounds that raising this debt ceiling would count as "national" borrowing. Not so, say councils; in other EU countries it is seen as a "trading" activity, which does not figure as government debt.
You might have thought that ministers, desperate to ramp up building, would jump at the chance of liberating organisations with a record of delivery. Cynics might say another agenda is at play in a government that deeply mistrusts councils and, frankly, doesn't want to give them any credit for delivering bricks and mortar. Or is the fiscal conservatism of the Treasury trumping common sense?You might have thought that ministers, desperate to ramp up building, would jump at the chance of liberating organisations with a record of delivery. Cynics might say another agenda is at play in a government that deeply mistrusts councils and, frankly, doesn't want to give them any credit for delivering bricks and mortar. Or is the fiscal conservatism of the Treasury trumping common sense?
That is one problem. Another is the wider issue of letting councils tap alternative sources of borrowing for both housing and infrastructure projects. In last year's budget, the chancellor, George Osborne (pictured below), promised to work with authorities in an emerging national local government agency, which would issue joint bonds on behalf of English town halls. The Local Government Association thinks it vital that ministers back the move to give the agency greater clout. The Treasury seems against the idea. So much for Osborne's promise.That is one problem. Another is the wider issue of letting councils tap alternative sources of borrowing for both housing and infrastructure projects. In last year's budget, the chancellor, George Osborne (pictured below), promised to work with authorities in an emerging national local government agency, which would issue joint bonds on behalf of English town halls. The Local Government Association thinks it vital that ministers back the move to give the agency greater clout. The Treasury seems against the idea. So much for Osborne's promise.
Result? Others are jumping in.Local authority bond agencies from Scandanavia – where such a system has taken root – have been marketing their bonds to pension funds in London. New Zealand recently agreed to launch a bond agency and Australia might follow suit.Result? Others are jumping in.Local authority bond agencies from Scandanavia – where such a system has taken root – have been marketing their bonds to pension funds in London. New Zealand recently agreed to launch a bond agency and Australia might follow suit.
The issue? As one senior local government figure said, in Europe an adult relationship generally exists between governments and councils. "But over here it's an adult-child relationship."The issue? As one senior local government figure said, in Europe an adult relationship generally exists between governments and councils. "But over here it's an adult-child relationship."
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