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When asked if the Conservatives had failed to build enough homes on Monday’s Today programme, Sajid Javid, the Secretary of State for Communities and Local Government, argued that no government in the last 40 years had done a sufficient amount to ensure adequate supply. On this we agree. Four decades since the election of Margaret Thatcher the political ideology that her government embedded in British society, neoliberalism, lies at the heart of the housing crisis we now face.
The Secretary of State was talking in advance of the prime minister’s speech on tackling the housing crisis. This speech was billed as an opportunity for the PM to return to her domestic policy program, much derailed by Brexit complexities, and her aim to put social justice at the heart of her premiership. Widening access to housing, Theresa May argued, is central to delivering greater social mobility and social justice.
There is much truth to this. High housing costs cause stress, poverty, insecurity and overcrowding. At a local level, high housing costs prevent people accessing employment, or mean that they have to commute long distances to work at often great cost, and can displace households from the places they call home. Moreover, the void between those who own property and those that don’t has fueled the rise in inequality seen in recent decades.
However, Monday’s announcements, as many commentators have noted, are destined to fall short in addressing the scale of the challenge in providing enough homes to meet demand, rectifying the affordability crisis or providing the security renters require.
Theresa May argued that “the root cause of the crisis is simple. For decades this country has failed to build enough of the right homes in the right places.” This is wrong, the housing crisis is not just about building enough homes, although this will play a key role. Only solutions which pay heed to the political choices which have been made and acknowledge and address the financialised housing market they have created are going to have any meaningful impact.
As the UN’s Commission on Human Rights has noted, housing is increasingly treated “as a commodity, a means of accumulating wealth and often as security for financial instruments that are traded and sold on global markets.” Years of political choices have led to this situation. As Laurie Macfarlane, co-author of ‘Rethinking the Economics of Land and Housing’ has said that the repealing of taxes on land, the liberalisation of mortgage lending and the prioritisation of the of the private provision of housing have all interacted to create surges in house prices and a failure to deliver enough homes.
Ultimately, this has allowed institutional investors, overseas buyers and buy-to-let landlords to channel huge amounts of capital into property, fuelling huge house price growth. Land is now the most valuable non-financial asset in the UK economy, representing £5 trillion or 51% of the total net worth in the UK.
Addressing this then will require efforts to address the underlying structure of the housing market. Reform to the land market is essential, alongside efforts to limit speculation on housing. So will be addressing the prioritisation of the private over the social.
Successive governments have explicitly relied on private developers who, despite increasing profits, are routinely failing to build the affordable housing that they are (all too loosely) required to. Research we have conducted at IPPR shows that in 92% of local authorities, insufficient affordable housing is being built.
Little is being done to do ensure these developers provide their fair share of below market housing. Shelter research has found that 79% of homes that affordable homes that developers should be building are being lost through planning loophole. In Manchester, of 15,000 homes built in the last couple of years – none were affordable. What is more, councils are prevented from borrowing to build, despite their willingness to do so.
The Prime Ministers speech is another kick of the can down the road. Yet those who wish to preserve the status quo and only tinker around the edges appear increasingly dogmatic given the issues of rising inequality and intergenerational unfairness. There is good reason to believe that we are moving beyond the set of political ideas which have driven our politics for the past four decades, we should place addressing the housing market at the heart of this project.