Investing in council housing was just one of the new policies that Theresa May pinched from Labour in her disastrous speech. Tackling student debt, mental health, energy prices and even organ donations all figured in the list of stolen policies she launched at the Tory conference. But there was another one that was uniquely Tory: putting an extra £10 billion into Help to Buy loans, which means the scheme will make over £22 billion worth of loans in total, all to help those already well up the income ladder.
How much difference will the £2 billion for social housing over five years actually make? First the positives. It raises the total allocated to ‘affordable’ housing investment to £9 billion over the next few years, or to £10 billion if other bits and pieces are taken into account. But as Red Brick pointed out recently, this compares with over £30 billion in support for the private market, and this was before the Tories added the extra £10 billion for Help to Buy. So the split between affordable and private market investment has just got worse – but at least there is more cash in the ‘affordable’ pot.
Second, it recognises that grant has to be higher if rents are to be kept down. An average grant of £80,000 (based on £2 billion generating 25,000 new homes) is higher than that being paid by Sadiq Khan for ‘London Affordable Rent’ units in the capital and probably quite a bit higher than is needed to build social rented homes elsewhere. Even if the grant level comes down, possibly leading to higher output, it should be enough to deliver a significant number of homes at genuinely affordable rents.
Third, the announcement is coupled with a new policy on rents to kick in in 2020. There are a number of caveats about this too, but at least there is recognition that higher grant alone won’t lead to more investment: stability of rental income is also important.
Now the downsides. First, if it produces 25,000 social rented units, that’s a drop in the bucket compared with the 122,000 already lost (through right to buy, and conversion to higher ‘affordable’ rent) since 2011. If output reaches 5,000 per year, it will only restore social rent building to the level of a couple of years ago and will be well below the peak years of Labour’s National Affordable Housing Programme when social rent output alone reached nearly 40,000 units.
Second, we don’t yet know the mix – will all these be new homes for social rent? Why not also improve the mix of the existing programme, to deliver more social rent (not permitted until this week’s announcement) alongside the other ‘products’? If the government is serious, it needs to re-evaluate its whole programme, not merely tag on a bit of new money.
Third, while this is billed as extra council housing, in practice housing associations are going to be much better placed to use the new money. Relations been them and local councils, already under strain, might be made worse. Why are they better placed? Because with the extra certainty of rising rents after 2020, and their already much greater development capacity, they can bid very competitively for the new cash. Just when collaboration between the two parts of the sector is most needed, it might only happen if the GLA and HCA specifically prioritise bids that give councils a role.
Finally, councils continue to be hamstrung by constraints over which they have little control unless the government steps in and makes additional changes. Right to buy sales continue, with heavy restrictions on the use of receipts (including a prohibition on combining them with grant aid). Borrowing caps are still in place, and councils have suffered more than associations have from the recent curbs on rent increases. Despite the government remaining silent on the promised right to buy for housing association tenants, the threat to force councils to sell their higher value stock hasn’t been removed: this has already made councils cautious about building more houses that might simply have to be sold off. And as well, councils have been hit more than associations by the need to invest in tower blocks following the Grenfell Tower fire, with no promise of government help.
Despite these reservations, the new money is better than a poke in the eye with a bent stick. Even if May’s stated ambition of a ‘new generation of council houses’ is hardly likely to result, it’s much better than the Cameron-Osborne attitude that council housing was obsolete and only served to create more Labour voters. The fact that Labour already has a plan to build much more council housing (and housing at social rents built by associations) is given added credibility by the Tory proposals, inadequate though they are. If the Tories are convinced that a Corbyn government will turn Britain into a ‘failed socialist state’ as Phillip Hammond suggested, why are they so keen to borrow the policy ideas that (according to them) will achieve exactly this outcome?