Red Brick

The tough choices of joined up government…
As we reported, Grant Shapps made the case earlier this week that a stagnant housing market with prices remaining flat or decreasing in real terms would be a good thing for first-time buyers and achieve a more stable housing market in the future.
 At the end of this week, David Cameron argued that the housing market “has become very stuck and we’ve got to get it moving again”.
He rightly points out that mortgages are now hard to get even for those who are able to pay them and are likely to be able to in the future:

“If you are a single person, you are earning a decent salary. You go to the bank or building society, you are actually quite a good risk – they won’t give you 80 per cent of the value, they won’t give you four times your salary.”

Here’s the problem however – as soon as you start opening up mortgage lending again, to exactly the people David Cameron describes above, then house prices will start rising again, exactly what Grant Shapps doesn’t want.
As I said, in my last post the brake on house price increases is mortgage availability. The price of homes in Britain rises to the amount of available credit in the economy. Increase the credit, increase the prices.
It’s one of the tough problems you face in government. They can try to help Britain to develop a more stable and secure housing market. The result of that is locking first-time buyers out of the market in the meantime. Take your pick.
Without some really radical reforms (that some of our previous commenters have flagged) the government has pretty limited powers over shaping the housing market. They’re going to find it really hard to force the banks to free up their lending, not least because they also want to banks to build their reserves back up so they can pay back the public’s money.
In contrast, if/when banks in the future begin to lend more freely and the housing market gets motoring again, they’re going to have to take some pretty tough steps to stop prices spiralling again. Grant Shapps hasn’t said what steps he would take or what levers government really has in these circumstances, but it would take quite a lot of political steel to intervene.

I was thinking about more party reforms that Ed Miliband could pursue, and especially what kind of people we want to be Labour MPs.
There are well known barriers to becoming an MP for some groups and Labour has taken the most steps to address under-representation – most obviously through all women shortlists, which have resulted in Labour having more women MPs than all the other parties put together.

The Tories have tried, but with less success with their derided A-list of bright young things, who ‘get’ the Cameron project.
To become an MP requires in most instances years of steady hard work, dedicated campaigning, attempts at an unwinnable seat or two, a lot of time, supportive friends and family and much more. It’s unsurprising really that given these demands politics is becoming more professionalised.

People who already work in politics-related jobs are most likely to understand the processes and are likely to have employers sympathetic to their ambitions and give them the time they need.

So do we need more people in Parliament who have done different things in life and perhaps have had a career in business, local government, the health service, housing associations and charities, before entering parliament?

The truth is if you have a serious job in any of these fields, you’re going to find it hard to put in the time to devote yourself professionally to winning a seat. Some do, and great credit to them.

So could we have a Labour A-list that supports experienced people onto the Labour benches? People who know how to run things and led serious organisations and have not made professional party politics their lives.
Potentially this would add gravitas to the PLP, probably make for more independent-minded MPs, provide a greater pool of people who would make good ministers (they’ve run things) and widen the pool of talent and expertise from which we draw.

Not directly housing related I know – but I got started on this thinking about the people I know in the housing world. Many in local government, housing associations and housing charities were politically engaged on the left at some point, but chose to pursue their politics through a public service route, to the exclusion of elected politics. It would be good if it were easier for them to bring their skills and experience back into politics later in their careers, rather than being forced to make one choice at an early stage.

I know, I know, we’re not supposed to say this here. But by advocating the need for real terms fall in house prices he is right. Grant was twisting and turning trying to avoid using the term ‘falls in house prices’ on R4 just now, but that’s what his house price stability means. His example is house prices rising by 2% while earnings increase by 4%.
No bad thing – so spit it out next time Grant.
More remarkably, Grant says to Sky News that ‘A house is a home not an investment’ – exactly the stance he attacked Labour for just a year ago. 
It would be bad for the economy to have any sudden drops in house prices, so the aim of gradual reductions I’d say is about right.
Interestingly, Grant wants a housing market that is more ‘rational’ than it currently is. I thought Conservatives were supposed to believe that free markets are necessarily ‘rational’ and it’s state interference which makes them work in ‘irrational’ ways?
It’s good to see a Conservative minister coming round to a left-wing way of thinking.
This aim requires considerable intervention in the housing market by the government. What do the right-wingers in his party think about this? Interfering seriously in a private market and pushing down the value of people’s homes?
Labour could look to make cheap political capital out of arguing that this is an attack on homeowners and homeownership, as Grant did in opposition.
Or Labour could welcome this. I argued here that one of Labour’s future principles should be intervention in the housing market to prevent further excessive house price increases. We should take Grant at his word and challenge him to tell us how he will intervene in the mortgage and housing markets to make this a reality.
He’ll still find that pretty tough to answer.

I remember reading this a few months ago and thinking that as a plan for housing it was fairly anodyne, but largely harmless. The only really interesting measure being the tentative promise to examine council borrowing for housing:
Better and more affordable homes
 In a fair society, everyone should have the right to a decent home, but this is not the reality of Britain today. There should be quality social and private rented housing available for those who need or choose it. And it should be easy to keep your home warm without harming the environment; British houses are frequently poorly insulated, wasting money and contributing to global warming. 
We will:

• Make sure that repossession is always the last resort by changing the powers of the courts. 
• Bring 250,000 empty homes back into use with cheap loans and grants as part of our job creation plan. 
• Begin a national programme to insulate more homes paid for by the savings from lower energy bills.
• Make sure every new home is fully energy efficient by improving building regulations.
• Investigate reforming public sector borrowing requirements to free councils to borrow money against their assets in order to build a new generation of council homes, and allow them to keep all the revenue from these new homes. Over time, we will seek to provide a greater degree of subsidy as resources allow to increase the number of new sustainable homes being built. 
• Scrap burdensome Home Information Packs, retaining the requirement for homes to have an energy performance certificate.

Clearly what I missed in these words were were the seeds of the most right-wing attack on the principle that the state should provide good quality housing for its citizens, above all for those that cannot afford it themselves.
It is, of course, an extract from the Lib Dem Manifesto for 2010. I’m sure they must have said somewhere that they would accept cutting housing investment by 75%, forcing ever more people on to housing benefit at the point where you’re slashing it to below poverty levels – as they admit themselves.

A lot of this blog has been dedicated to the effects of the government’s reforms to housing, local government and regeneration. We’ve built up a fair picture of the impacts of these reforms on communities and especially those on low incomes or in need.
But have we neglected something obvious: these rapid and dramatic reforms might just not work. I don’t mean that they may have consequences the government hasn’t foreseen but rather they may entirely unoperational for the various bodies that are supposed to enact them. Or interact in such a way that the (affordable) housing system just fails.
I have been vaguely thinking this but Vince Cable’s latest indiscretions, brought it to the fore. He’s quite clear of the possible impacts of the speed and extent of change:

There is a kind of Maoist revolution happening in a lot of areas like the Health Service, local government, reform, all this kind of stuff, which is in danger of getting out of… We are trying to do too many things, actually. Some of them are Lib Dem inspired, but a lot of it is Tory inspired. Actually, the problem is not that they are Tory-inspired, but that they haven’t thought them through. We should be putting a brake on it.

So what might a systematic failure in the housing system look like. A few initial thoughts:
1. Housing associations going bust, potentially caused by a combination of:

• Housing associations over extending themselves (again), either through their own folly or the HCA/government trying to force too many new units out of the ‘investment agreement’ process.
• Higher 80% rents which aren’t covered by housing benefit/universal credit creating spiralling bad debt, especially as councils maintain allocations policies of putting the poorest and neediest first (the irresponsible bureaucrats that they are) and housing associations not having the stomach or the ability to evict those that can’t pay.
• Unstable and increasing borrowing costs and especially changes to the  existing loans that housing associations have – ramping up their existing debts, not even future ones.

2. Housing associations being reclassified as public bodies.
It may seem smart now for ministers to pontificate on CE pay or demand public sector-levels of transparency. It won’t look so smart if the ONS decide housing associations are public bodies and stick their debt on the public balance sheet. the Treasury I guess would stop all borrowing at once to protect the deficit reduction plan and a swift and full privatisation would likely follow. Who knows what mess would fall out of that.
3. A botched HRA reform:
You may have picked up that I’m broadly supportive of the HRA reform as it stands, but I wouldn’t put it past this government to engage in some last minute political meddling – a level of debt councils can’t support or an attempt to skew the debt to help Tory areas, as we saw in the local government finance settlement. This could see House Revenue Accounts going into the red, needing to be topped up from already diminishing council coffers and/or spending on maintenance and management stopping.
4. Planning reform that stops anything being built
This could be because either the policy impact of the Localism Bill does this or because the change and upheaval stops everything dead for a while. Housing, affordable and otherwise, completely grinds to a halt for years to come.
Update: It just occurs to me that of course in a lot of ways the housing system is already systematically failing. Perhaps I mean a failure in such magnitude or of such speed that requires immediate emergency action – such as the action which was taken during the crash to keep the existing system (and its flaws) going.