I wrote this Tweet last night:
As a result I was invited onto the Today programme this morning. The discussion was to have been on how Labour would pay for this programme.
As is commonplace with such bookings, I was cancelled at 6.20 this morning, having been told that the discussion on the programme would be curtailed because of other developing news.
The reality was that the discussion did take place, but finance was simply not mentioned.
So let me summarise what I would have said, which I outlined to Radio 4 when I was booked.
First, I would have pointed out that house building can be paid for in three ways. They are money creation, tax and borrowing.
I really do not think Rachel Reeves will allow money creation and so that leaves two options.
But, tax has been ruled out: Labour says current spending and tax will be equated. It has also ruled out most new taxes on wealth although it has said nothing about the increasing tax burden on those on lower pay because of fixed allowances in an inflationary era.
Meanwhile, Labour has committed to spend £28 billion a year on investment, albeit, not yet. What I keep hearing is that this pot has to cover everything.
On top of that, the commitment is to shrink borrowing as a proportion of GDP. In other words, growth has to happen without any stimulus from the government before borrowing for projects such as this can take place.
So the question is, how can the funding be put in place within such a straitjacket? This is most especially the right question when 300,000 social houses a year are likely to cost well in excess of £60 billion per annum, assuming market prices for land are paid. It should also be noted that I am probably being generous on this cost as the need is for housing, not yet more small flats.
I made clear that funding is available. There is ample scope to tax more, and I ran through the Taxing Wealth Report.
I also made clear that it would be entirely possible for the government to raise dedicated housing bonds to fund this programme. After all, social housing has a return built into it via rents. There is nothing more suited to dedicated bond funding than this sector, and people are looking for genuine safe places to save, which this could provide.
But I did not get the chance to say so, and so challenge Labour on this issue.
Another time, maybe.
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I don’t see a problem with getting the funds to pay for this housing from the Treasury; after all, they have an unlimited amount and provided government exercises some care in its use.
Hello again Richard; your exclusion this morning mirrors my experience with a BBC vox pop during Rutherglen by-election last week. My 10-minute amicable discussion with Politics Editor Chris Mason (half of which was filmed) was edited down to 10-seconds. Excluded were all my reasons why previous SNP MP Margaret Ferrier had been cruelly abused by her own party, WasteMonster Parliament and the media. As always, BBC News will only broadcast what their imperial masters wish the population to hear. Btw, I suspect whoever booked you had misinterpreted your Tweet and thought they were getting a rabid right-winger.
More likely, a supporter of the ruling free market consensus, reflecting the stance of Starmer’s Party.
I’d like to get my hands around the neck of the ‘editor’ who made that decision.
To me this points to a retention of the 80% market rents in the ‘affordable rent’ regime (now a misnomer more than ever as affordable rents shadow market ones and these have been rising). Not everyone gets their housing benefit paid in full so housing costs are rising for the working poor. So, Labour will get tenants to pay more for their new 300,000 houses a year it seems? How socialist of them.
Homes England are now asking us to put in schemes at the old lower social rent as well ‘affordable’ rent but with not a word that it means more affordable housing grant subsidy – much of which has been handed back by housing associations because the cost of borrowing (thank you BoE) for their match funding makes their schemes unviable.
If you think our railways are in a mess, then I can tell you that housing is even more f****d up – homeless lists are growing as private landlords cash in their chips and evict or because housing associations actually evict tenants that can’t pay. In the council housing sector, tenants are staying longer in their accommodation because (1) it is cheaper and (2) council landlords avoid evictions and get tenants to pay current rent plus arrears because after eviction they go back on the waiting list anyway plus have unaffordable court costs awarded against them for their trouble!! BTW Councils run the common waiting list for both HAs and council housing – they are the gatekeepers for it all affordable housing and have to allocate B&B for the most emergency cases at huge cost to the General Fund (yet it is not allowed for those emergency costs to be transferred in the housing revenue account (HRA) even if ‘accommodation’ is being provided). It is in the general funds where local authority bankruptcies start I believe.
So all this creates a longer list of people which seems to suggest we need more homes – but do we?
It seems we need to manage what we’ve got more effectively first don’t we? Where’s Labours thoughts on:
1. Right to Buy – councils/HAs have lost over hundreds and thousands of homes to this since was revived by the Twatties 2010.
2. The Benefit Cap in Universal Credit – the housing portion is STILL being reduced. Will Labour stop this?
3. The Bedroom Tax. Well? Labour?!
4. 80% market rents – so you’re not going increase the supply subsidy. What will it be – 90%? Knock yourself out Labour.
5. Restoring brownfield remediation grants.
And there’s more but that will do for now. But FUBAR describes housing policy in this country especially since 1979.
Thanks
In what world are 300,000 houses per year a sufficient target? There are 28.2m households in the UK. The UK has the oldest, most poorly insulated, energy inefficient housing stock in (comparable) Europe; and that is a fact. We have been failed by our building regulations, the construction industry, and planning; Grenfell and the cladding disaster tell you all you need to know about the rigour of our forethought and oversight.
In the 1950s MacMillan famously demanded 500,000 houses per year should be built. At the time the UK population was circa 51m. It is now 67m; but the housing stock remains that of a different age. There is only one reason for this farce. How else do you ensure a substantial number of people can make some wealth, not through work or industry but by spending their lives on a housing ladder with values secured by creating a permanent, large shortage of stock; at least sufficient to keep the Conservatives in office almost endlessly, whatever they do.
Currently circa 230,000 houses per year are built. 300,000 is a piffling target. This is pathetic. This is not Britain in decline; it is Britain in a state of collapse. The irony is that you can predict now; whoever wins an election, they will inevitably fail to meet the target. They will just change the goalposts, and spend their effort on spin. That we can do. It is all we can do well.
According to Sunak the reason the tories are not building 300,000 homes a year is because of a legacy EU law which labour blocked in the house of lords.
https://www.youtube.com/watch?v=HH64avs6TMg
12 minutes in if you don’t want to watch the rest of the rubbish.
Sunak’s idea of government is that nothing is his responsibility. Everything is somebody else’s fault when his ‘plans’ don’t work. He sets soft targets, and can’t even deliver them. 1m homes over a Parliament was a soft target, and he failed, so he was looking for a an easy scapegoat to blame: Labour of course. Even if the 100.000 blockage is an issue, that is just another executive consequence of the shambolic Brexit legacy, and it would not have derailed a genuinely robust and substantive national housebuilding plan. He can’t do long-term planning. He is a financial short-termist opportunist by instinct and training; an asset-stripper who is stripping out the British state of its assets and its future.
Alternatively, he just makes stories up. Seven bins (false). Meat tax (false). Heat pumps (false). 100,000 European asylum seekers (false). Inflation is a tax (false and stupid). UK decarbonising fastest in Europe (false). Britain 2nd highest spender on supporting Ukraine (false – Germany 2nd).
UK HS2 costs 10 times that of France (false – it nine times, but the real problem is Conservative incompetence in long-term decision-making: their plan was badly scoped, badly budgeted, and on the wrong route)’
And that is a fact (they have been independently fact-checked and widely reported.) The reason nobody trusts politicians is because nobody can trust the PM or the Conservatives.’; the clinching fact.
I listened to the exchange – Wedgie talking over the interviewer. The “legacy Eu legislation” is this:
https://www.theguardian.com/environment/2023/sep/12/labour-to-oppose-reckless-tory-plans-to-rip-up-eu-pollution-laws.
Specifically: “EU laws, which require developers to offset any extra nutrient pollution they cause in sensitive areas, under the habitats directive. These areas include the Lake District and Norfolk Broads.” Most reasonable people would not want builders and their developments to cause more pollution to already highly polluted rivers (99.999% of which one cannot swim in).
When under pressure, one vile-tory tactic is to pin the blame for failure on the EU. Wedgie Sunak did not go into detail, because to do so would cause his erm “argument” to unravel &show that indeed, vile-tories want more pollution. The other tactic is to lie/deny reality a la Eric Pickles when interviewed by Owen Jones in Manchester – the odious Pickles point blank denying the reality of deporting people to Rwanda – permanently. Of course the UK meeja & politicos are (with one or two exceptions) a cosy club – one does not press congenital liars such as Sunak too hard, because they might not appear on the show again (& indeed you might lose your nice job)..
Instead of you Richard they had ‘an economist’ about 7.50am explaining in considerable detail about how interest rates just had to go back to ‘normal’ from now on and there would be no money for schools ,health etc. The interviewer didnt ask who were ‘we’ borrowing from, and where were the tripled interest payments going etc etc.
This is the promotion of what used to be called ‘conventional wisdom’ – the economic grounds for autocracy and increasing inequality. You wouldnt have fitted that.
Yet on another programme in thelast couple of days they did say that the seventies saw the turning of economic policy from a negotiated balance between governemtn workers and business into the increasing inequality hig interest regime we now have.
Thanks
I was too radical, I suspect
“Another time, maybe.”
I disagree, your “narrative” does not fit with the current accepted narrative (it never has) thus the big meeja outlets will not allow you to outline alternatives – there can be no alternative, because to present an alternative it to give people (UK serfs) knowledge & in turn the idea that there might be options & this could lead to change – & change, is not acceptable to the current politico-meeja set-up – which defines how things have to be in the dis-United Serfdom..
I’d be flattered – them de-platforming you (for that is what it is) shows that you are percieved as a threat. Chapeaux!
🙂
Sorry to go off topic but mention of Rachel Reeves and I read this in the FT yesterday
‘It’s not government that creates jobs’
https://www.ft.com/content/652d0a56-03b0-422a-a9c5-c0bf66db4e3c
Why would she say this?
Of course government creates jobs – it does so through infrastructure development, defence spending, research and development, and providing services to the public, among many other areas.
The comment is so bizarre it is off the Richter scale of economic insansity.
Interesting article by John McDonnell in today’s Guardian:
https://www.theguardian.com/commentisfree/2023/oct/07/keir-starmer-bold-policies-harold-wilson-labour
Selected extracts:
“…. Labour needs to palpably demonstrate at this party conference that it knows what the Tories have done to our country – and what’s needed to put it right.
This means being open and honest about the increase in day-to-day spending required to solve the crises in our public services and the capital investment needed to boost growth, fix our crumbling buildings and infrastructure and begin to address the housing crisis. ….
…..
Overall, the scale of what is needed across our public services just to reverse austerity cuts and deliver modest expansions is likely to be in excess of £70bn extra in day-to-day spending. And Labour must also be making the case for far greater public infrastructure investment to match that of similar nations.
So far, the tax changes Labour has announced amount to a little over £5bn ….
Without further redistribution of wealth, the argument that growth will be capable of paying for the significant investment needed in our public services is just unrealistic. …. ”
Sounds good as far as it goes. But a reference to your Taxing Wealth Report would have been welcome! Could it be time to end the animosity and get him onside? Just asking!
The UK built 300k houses a year in the 1930s. I’d look at going back to the planning and funding system that enabled that to happen.
Arty
A word of caution I might add from someone who works in housing.
You need to watch Adam Curtis’ ‘The Great British Housing Disaster’ (1984).
Too many of those houses built were built using system build techniques (components manufactured off-site, often badly) and assembled very badly too and not to specification because the private sector suppliers wanted to make more money out of it. Add that to the extreme pressure generated by stupid politicians in an electoral race to build more houses than each other and you have a perfect disaster in the making.
https://www.youtube.com/watch?v=hd7i5-baJAs
It’s all strangely British of course.
Broke post-war Britain built 4.5-million homes of which 80% we’re affordable housing. It contributed towards an era of growth, which continued until Thatcher sold them off… along with many other British assets.
The answer to “how will you pay for it?” is always “with money”. And where will we get that money? The government makes the money. End of.
There needs to be a political decision to “spend” (or rather, the will to provide the wherewithal for investment), and there are consequences that need to be considered and addressed (for example, by taxation), but shortage of pounds (like shortage of inches) is never an absolute barrier. Unlike for example shortage of materials such as bricks or mortar, or shortage of skilled labour.
On a different tack, the present government makes great play of how far we have come to reduce carbon emissions (although quite a lot of that has been offshored eg to China, or simply represents coming down from a higher base than other countries eg France) but did you know that at least two counties are already carbon neutral? Ok it is Bhutan and Suriname, but several other countries claim to be there or thereabouts, and others are well on their way to ambitious targets – such as Uruguay in 2030, Finland in 2035. Finland! One of the coldest countries in the world! None of this waiting to 2050. It can be done.
Thanks
Neat first paragraph.
“The answer to “how will you pay for it?” is always “with money”. And where will we get that money? The government makes the money. End of. ”
There are people who genuinely believe that only the private sector is responsible for generating wealth through business opportunities. You would have thought that if this were the case, all the billionaires would have invested their cash in businesses, rather than sitting on the cash.
How about them having more tax inspectors to improve this?
https://www.thebureauinvestigates.com/stories/2023-09-30/just-11-wealthy-people-prosecuted-for-tax-fraud-last-year
That surely can’t go against their rules, can it?
We need a massive new investment in HMRC
I will be back on the data on this during this week, I hope.
When Labour were last in power they were saying the same thing. John Prescott was running the show for a while.
He made a speech to Parliament in Feb 2003.
https://www.theguardian.com/society/2003/feb/05/housingpolicy.politics
Here is an extract.
“Mr Speaker, the history of housing over the past 30 years shows that:
· All governments have failed to meet housing need
· All government have failed to provide sufficient long term investment
· All governments have failed to deliver enough affordable housing, and
· All governments have ignored the mistakes of the past – when we built housing estates, not communities
And, not only did we under-invest in our housing. We used land wastefully, and too much of what was built was poor quality and poorly designed.
Mr Speaker, in 1970 we were building nearly 300,000 homes a year. Today it’s half that, but demand has increased.
The result is a legacy of spiralling house prices, rising land values and a shortage of affordable homes.”
Etc, etc…. Twenty years later we are hearing the same old thing whether Tory or Labour. They get into power and there is no real commitment to do anything or deliver. Failure after failure. They need to recognise that housing, an affordable roof over our heads is the most important first line of security in our lives that we all need. It is one of the greatest of needs. Without it and the insecurity it brings, everything else suffers.
I have little faith that Labour will deliver this time as well. For years, housing policy has been one of those that gets easily dropped, nice words and promises soon forgotten about, and the can is kicked down the road. What level of housing crisis will it take to get them to wake up?
Whatever it takes, find the investment.
Thank you
Well found
Well said
There is much discussion of money. I think any reader of this blog knows full well that Government can create money if it has the will. The real issue is how can we do this? I have just moved house and need to make alterations to make my house suitable for my needs. I live in Scotland and many people have moved into the area from England. Trades people are stretched to the limit.
I have spent 33 years as a volunteer on a housing Association Board. Every Government has promised to build a huge number of houses but never achieves the target set. The discussion in board meetings has always centred around where would the trades people come from to allow these targets to be met. Until Government tackles the how of achieving its goals by training enough builders, plumbers, electricians etc housing targets will remain as pipe dreams.
You are right
I know it is a bit late, but stopping developers from paying the local authority so they don’t have to provide social housing in a development would be a start.
e.g. Jenrick/Desmond/Tower Hamlets
Alan
This might sound as though I’m coming down on the side of the private developers, but the thing is in my LA it insists on 11% of private newbuild new home schemes being allocated to affordable housing through Section 106. Fair enough.
My LA offers only 52% however of open market value (OMV) for those units, so the private developer makes a loss. So some developers try to lessen that loss by going for a ‘commuted sum’ instead which is lower so they don’t lose the income form the units. It’s a reaction to a system – a flawed system.
My view is that development is a very risky business and that 52% OMV is a bad idea. Why? Well, private or not, why should the rules require the private sector to lose income to provide for social means on long and difficult projects whose costs will yo-yo up and down through the life time of the project?
To me, its not fair. Because it’s also based on government not putting its hand in its pockets to pay full market value – social housing landlords cannot get affordable housing grant on units bought at 52% OMV but can for those purchased at full market value. There are lots of arcane Treasury rules around this that do not make sense and are aimed to keep spending down in my view, related to the false relationship these matters have with tax.
The recent Community Infrastructure Levy might help but I don’t see how if the 52% OMV issue is not dealt with, plus developers still needing real grant/subsidy help to develop on brownfield land (the Tories may actually be reversing this as I write). Sometimes – as is now – the s.106 purchases can help when the new build market slows down – developers will bite your hands off for 52% OMV if a scheme’s sales are slow and they need the cash flow for the scheme but once again you are subject to the vagaries of the market – in more buoyant times, developers might prefer a commuted sum and therefore no additionality of affordable units will be attained. So much for the market determining need eh?
I’m not saying that private developers are angels – I’ve seen at close quarters what they get up to but a lot of this has to do with BREXIT (supply chain and workforce issues and lack of investment in skills in new workforces, low wage economy etc.,) and if anyone on this blog ever buys a new house, then get independent expert checks done on any electrical, water or gas installation is my advice. Period.
Private developer attitude to social housing can also be very bad and prejudiced.
But make no mistake, the lack of real money being put into the supply side of housing all lies with the Government and no one else. The government is making enemies of both the private and public sector and is happy to leave both sides taking swipes at each other. Don’t let them get away with it. The state is not doing enough.
BTW – those units the LA purchases at 52% OMV? They will still be let at 80% market rent. For the end user/tenant who is paying more for their accommodation and having the housing element of their Universal Credit reduced year on year, where’s the social justice in that I ask you?
The reduced cost of the new home is not passed onto the tenant because the LA landlord needs every penny of income because of losses to Right to Buy, forking out for Covid, having rent rises and internal rates of return on housing revenue account (HRA) loans to pay for new housing levied/ limited by the Treasury EVEN THOUGH local authorities now supposedly manage their HRAs locally (Truth? They obviously don’t, and HRAs everywhere remain at risk from the government).
As I said before, do you want to see a real f*****g mess? Then dip into the nation’s housing policy and particularly finance. It’s worse than Snakes and Ladders I tell you.
Thanks
I appreciate these insights
PSR,
This is a good example how to open what seem obscure technicalities in public policy to open inspection and explorative examination. It transforms what seems detail into policy substance. This is what I believe Richard’s Blog does best.
Thanks, and agreed
Richard,
Sometimes, for example in the case of PSR’s comment above; perhaps the way to handle this is not to post PSR’s comment as a comment, but withhold it; but for example with PSR’s agreement, promptly given, edit the comment as required and publish it as a Blog (as you schedule it) by an outside contributor. This gives you some freedom from producing an endless stream of blogs. You select what you feel is appropriate, as you would with a Blog submission. More important I think this is the only way to open the blog up to other contributions – without giving you as much work as the Commissioning Editor work I suspect may entail, ploughing through submissions, with everything that entails, and as discussed on another thread.
I think you have already done this by producing Bloge occasionally, that refer to comments. you are halfway there.
Thanks John