Yes, there is an election coming – and I don’t mean the European one on 22 May. It has been suggested for some months now that the general election on 7 May 2015 (almost a year to the day!) will be fought on housing as at no time since the 1950s. While I would like to believe housing will be up there with the economy, education, health and immigration in the heat of the political battle, I suspect this will not prove the case. However, two news items in the past two days suggest housing will play a significant supporting role.
First, the announcement on Thursday by Labour leader Ed Miliband that a Labour government would cap rent rises and introduce minimum three-year tenancies in the private rented sector. This approach continues to mine the same interventionist seam that proved so profitable for Mr Miliband on energy policy last September. As with the pledge to freeze energy prices for 20 months if elected, Mr Miliband’s PRS plan has generated plenty of controversy – and no little vitriol from the right-leaning press and a variety of housing trade bodies.
But, like the energy policy plan, will the proposed intervention in the PRS prove popular with the people who matter: the voting public?
As @colinwiles and @BenM_IM pointed out on Twitter, only 55 per cent of PRS tenants voted in the election in 2010. Yet there are 4 million private renters, half of whom are under 35 and, as this report from Ben’s company Ipsos Mori shows, this demographic swung from Labour to the Conservatives in 2010. Mr Miliband wants to win them back.
Second, although Labour’s shadow business secretary, Chuka Umunna admitted this week that he did not expect Labour to win the business vote over the Conservatives, a report ‘Let’s House Britain’ published today by Legal & General might be a pleasant surprise.
In it the insurance giant concludes average UK house prices, at more than five times average earnings, are ‘severely unaffordable’. It reiterates that it is one of six insurers committed to spend a combined total of £25 billion on UK infrastructure by 2018 and is surprisingly outspoken in the variety of measures it calls for to help achieve this. These include: a ‘massive expansion of housebuilding…to a minimum of 250,000 homes a year’; a rebalancing of spending priorities so that the majority of the £100 billion that will be spent on housing in the life of the current parliament is, in future, spent on house building, not rent subsidies through housing benefit; a ‘larger and more diverse’ range of housing providers to help supply meet demand; a cut in stamp duty for the 4 million elderly people downsizing and unlocking £400 billion of housing wealth; ‘consolidate’ and ‘professionalise’ the private rented sector to improve returns and hence attract more institutional investors, as in the established PRS markets in the US and elsewhere in Europe.
Although I think I detect the hand of charity Shelter in helping compile this report, nonetheless, it is on the face of it all L&G’s work – its foreword is by is chief executive, Nigel Wilson. It represents a clear shot across the coalition government’s bows as having failed to do enough to stimulate investment in housing supply. Indeed, it would also not be a surprise to find many of the above measures, or similar, in Labour’s manifesto.
So what to expect from the Conservatives on housing? With Grant Shapps as housing minister, like him or loathe him, housing was an area in which the government sought to make a quick impression and set the tone for its no-nonsense approach to other areas of public policy. Although housing starts in England have begun to recover from the nadir of 2008/9 when just 88,000 homes were begun, to 101,000 in the most recent annual figures for 2012/13, starts are still lower than when the coalition took office. In 2010/11 111,000 homes were started in England.
Despite this, it is difficult to see a Conservative government doing an about turn and ploughing substantial sums back into building homes. The housing box is largely ticked as far as the Conservatives are concerned. The Chancellor, George Osborne, has already announced the demand-side Help to Buy policy will run until 2020. It therefore seems clear the Conservatives will continue to place their faith in the market to respond to demand signals and boost house building accordingly.
The main housing-related area in which it is likely the Conservatives will seek to make electoral hay is the £24 billion annual housing benefit bill. The party has already sent up several fairly large kites on cutting housing benefit for under 25s and a demand of social landlords that they do more for the subsidy they receive through housing benefit cannot be far behind. The Homes and Communities Agency £1.7 billion development round for 2015/18 closed this week and bidders were required to demonstrate how they were ‘sweating’ their existing assets in order to justify further development grant. Savvy housing providers will expect more of the same should the Conservatives form the next government.
The Labour party might well be tempted down similar lines if it wins, but it won’t say this beforehand. Another look at those Ipsos Mori figures shows a 55% turnout among the 3.7 million social households. Although this turnout figure is identical to that for private tenants in 2010, the similarity ends there. Social tenants backed Labour by 47 per cent to 24 per cent. Although Labour might like to demonstrate it can be tough on the housing benefit bill, it would be a gamble as two-thirds of social renters receive housing benefit support to pay their rent. Half of these are in work – the very ‘hard-working families’ all politicians claim to support.