We normally look in vain for more housing investment in a Tory Budget, and this one had no surprises. Hammond ignored housing and in so doing merely confirmed what we already knew: he’d already made an almost imperceptible shift away from subsidising the private market towards more ‘affordable’ housing in his Autumn Statement last year. That was enough. Housing’s got what it’s going to get for the next four years, in addition to putting up with further, deeply damaging welfare cuts and reductions in rental income.
Along with the Budget, this week saw publication of the UK Housing Review, celebrating 25 years since it was first created as the Housing Finance Review by the Joseph Rowntree Foundation, and edited by Steve Wilcox ever since. One of its many virtues is that it painstakingly documents what the government spends on housing and enables us to get some perspective on what is currently happening.
This is a task made much more difficult since George Osborne was chancellor, as he bequeathed a bewildering array of initiatives, almost all to bolster the private market, and many spearheaded by the Treasury rather than DCLG. The new edition of the UK Housing Review has a necessarily huge table which is the only place where you can see these in full (go to the Review’s website, and look for the 2017 commentary chapters, table 2.4.1).
Comparison is not straightforward as different initiatives span different timescales, but the broad picture is that 84% of the money that the government is spending in this parliament on grants, loans or guarantees will prop up the private market via infrastructure, cheap loans to builders, support for first-time buyers, starter homes and other measures. The remainder consists of the conventional programmes aimed at affordable housing, but even these include substantial amounts for shared ownership and rent to buy, while leaving nothing for new building to let at social rents. Hammond’s earlier Autumn Statement did indeed shift the proportion going to affordable housing, from a measly 14% to a hardly more impressive 16%. But that still leaves a colossal £43 billion to be spent on schemes such as Help to Buy, ISAs for first-time buyers, starter homes and all the rest.
Even this doesn’t cover all the government’s incentives for home ownership, as it only takes in capital investment. To this we have to add right to buy discounts, what remains of the home renovation grant programme, income support for mortgage interest, and a range of tax incentives also documented in the Review. Despite this, as we saw in last week’s latest English Housing Survey, the proportion of households who are owner-occupiers is stubbornly resistant to government incentives to increase it.
And as we also saw last week, when the government has spare cash, affordable housing investment has a lower priority than making very modest contributions to reducing national debt. John Healey’s PQ showed that over £800 million of the receipts received via right to buy since it was ‘reinvigorated’ in April 2012 have gone to the Treasury. He calculates that this could have financed over 12,500 homes if councils had been allowed to keep the cash. I calculate that its contribution to reducing the national debt is roughly 0.05%.
This picture not only stands in contrast to Labour government housing investment programmes, but even to the coalition government at the time when it published its equivalent to the housing white paper in 2011. Laying the Foundations may have been lacking as the strategic document it claimed to be, but at least at that time government spending was more balanced. The coalition was still spending the bulk of Labour’s National Affordable Housing Programme, which together with the coalition’s first Affordable Homes Programme totalled some £4.7 billion. Initiatives to promote home ownership and stimulate the market, such as FirstBuy, came to a modest £2.7 billion. This means that, before Help to Buy and a load of other expensive stimulants to the private sector, almost two-thirds of government investment was going towards affordable housing, including of course still quite a significant proportion of homes for social rent. If Hammond had switched priorities in his Budget to those that applied just six years ago, he would have unleashed a bonanza of £32 billion of affordable housing investment, without spending an extra penny. Dream on.