Housing, the long term and the 2015 UK election

by Ken Gibb

I suspect this will not be my last word on the UK General Election in May 2015. Different sectional interests will make their cases for inclusion in manifestos and government programmes that will divert resources into their chosen area. Sometimes they will provide evidence of the benefits of so doing, and of the costs of not doing so. I doubt however that many will give time over in their prospectuses to who should lose out as a result of their additional funding, or conduct an opportunity cost assessment of having less to spend in other areas.

The political parties are increasingly good at identifying marginal savings, additional tax revenue or indeed clever devices to fund chosen priorities – but leaving the existing trajectory of spending and revenues otherwise maintained. These approaches tend to be finite in terms of their time horizon and accede to the inherited fiscal position associated with the previous government. One thing I can guarantee is that, in the context of this incumbency bias about programmes, party manifestos will be modest in terms of the additional priorities they offer relative to the size of the overall cake.

The austerity narrative, the opposition fear of scaring the horses and the inability to propose and implement strategic long term policies that can actually make a difference (because many of our social and economic problems are stubborn and complex and need careful long term responses) – serve to constrain the kind of debate we will have. And the advent of right of centre populism and the distinctive Scottish dimension make it all the more murky in terms of outcomes and implications after the election.

So, in this uncertain election context, sectional interests (in the best sense of the word) will pitch up to persuade about inclusion in manifestos, try to influence debates and ultimately shape government policy direction. The housing lobby, policy and practice will be and already are involved in this process. More positively, this is a time when the different parts of the sector come together to generate, develop and revise good ideas from behind a combined front. And we all know that there are strong arguments and wider social and economic benefits for greater investment in housing. In a world of seemingly scarce public resources stretching long into the future, it should be perfectly possible to place the housing case quite high in the hierarchy social policy ‘claims’.

And yet…. Other areas have done better at making a preventative case rather than a symptomatic case for extra spending (even if the jury is often still out on the actual savings generated by preventative spending in areas like health care). I think there is a strong case to study what prevention spending and policy look like for housing (I hope to work on this in a small way in the coming year). Also, the case made for more integration and partnership across policy areas is readily made when we consider spatial or place-based policies – isn’t housing an obvious candidate to lead and share financial and human resources to achieve whole place policies?

As I have written before, the long term nature of the housing problem requires long term solutions, policies that stretch over more than one parliament. Tory and Labour Governments did it with mortgage interest tax relief. New Labour tried it with rent restructuring. The Scottish Executive achieved it with homelessness reform. But these are rare exceptions to the rule. Housing remains an exceptionally good candidate to be a political football – a large capital budget item that is typically front of the queue for spending cuts and often receives programme injections that last less than a Parliament and certainly do not make the long term consistent commitment that is required to step change, for instance, housing supply. This is not to say of course that policy innovations are not in some cases welcome, if designed and implemented properly; it is just that too often they are not allowed to evolve and be sustained. While there is no necessary reason for government not to make better housing policy in the future – the current political situation and our institutional structures seem to predispose us to short termism and frequent costly policy reversal.

What to do? First, we need to be clear about what we think the problem is and what we therefore want to achieve? If our focus is on housing supply we quickly get into target-setting, available resources and alternative mechanisms to achieve the proposed growth in supply. As the Barker Review recognised in those halcyon pre-2008 days, what is required is a permanent uplift in housing supply, a long term increase in the elasticity of housing supply and within it a long term programme injection of sustained levels of non market housing supply. However, in the absence of a radical reversal in public funding for social housing supply, relaxing difficult funding and market conditions, or easing planning constraints and local political resistance to development – we should recognise this just may not be possible to deliver.

Instead, might it not be better to pursue a series of policies, capable of building long term consensus, that seeks to make real progress towards critical enduring policies? This will be much less exciting than eye-catching initiatives and funding packages but might actually make a real difference. I am thinking in particular of pursuing underlying housing market stability through using housing taxation like asset taxes more creatively, mortgage lending regulation to manage mortgage credit, support for small and medium sized builders, reform of council tax and investigating more market friendly sensitive indicators to support local housing development.

Kate Barker’s recent book ‘Housing: what’s the plan?’ builds on several of these ideas. But it seems to me that we need to create a big tent consensus, building a programme of complementary policies that seek to inter alia stabilise real house prices, support more housing supply, promote more non-market housing and high quality market rental housing as well. This would seek to build a commitment to a programme over two parliaments and ring-fence an affordable level of public funds incentivised by careful monitoring and accountability (with the threat of resource withdrawal in the light of non-delivery).

Is it a non-starter to try to construct consensual policymaking in such a contested area? Perhaps: but it is preferable to yet more rounds of housing policy failure, inadequate and short term measures that will subsequently probably be reversed. We know it can be done. It has been done. People need to be persuaded of the importance of putting in place the tools with which over time to normalise the housing system and make the UK housing market both much less exciting and less damaging.

I have said much of this before (and will probably do so again). Let me reiterate that we should of course support win-win policies regardless. But the principal distinctive feature would be to set in train a process that makes housing a national priority precisely because it is such a wicked problem, a priority that requires a long term policy concordat that emerges from an all party, all expert programme of work aimed at setting a course that will in time increase supply, improve affordability (and be affordable) and reduce market volatility. And this might get us (a little) beyond the incumbency bias problem mentioned earlier and the zero sum game battle over scarce public resources. It might also make for better policy and more progressive outcomes.