Grant Shapps’ plans for the housing market fly in the face of expert opinion and will seriously hinder the recovery
In the run-up to elections, political parties normally try to put their best face forward to convince a sceptical public that they have the right ideas, the sound judgment and the practical experience to make a success of government. They also have to build credibility with practitioners and experts in each field of activity by demonstrating that they understand the industry’s concerns and will be willing to listen and to engage in a constructive dialogue if given the responsibility to govern.
I well remember in the run-up to the 1997 election, as the opposition spokesperson on housing and construction, spending a huge amount of time talking to people throughout the field. By this process, I hoped to ensure (for my own piece of mind) that I really did understand the sector, and to reassure the people I talked to that I would be able to work well with the industry if appointed to a ministerial position.
So it came as something of a shock to me to read the recently published Conservative green paper on housing policy and to realise that Grant Shapps and his researchers are evidently unconcerned with the very real fears throughout the industry that their policies will cause severe damage to the housing market. Far from seeking to engage in a serious dialogue about how to support housing market recovery and ensure sustained and sustainable growth in output, the paper merely repeats the wholly untested and unpersuasive assertion that, somehow, abolishing the regional planning framework and introducing a council tax incentive will magically lead to an increase in the number of houses built in England.
There is real doubt as to whether communities viscerally opposed to new housing in their area would change their view because the council would benefit from some extra money
As Shapps must know – both from the reaction he has encountered at hustings meetings when his proposals have been debated and from the comments of industry leaders – there is deep scepticism about his plan. First, there is the very real doubt as to whether communities that are viscerally opposed to new housing in their area would change their view because the council would benefit from some extra money. More likely than not, in my experience, hostile residents will suspect the motives of a council that is due to receive funding in exchange for approving the development, and redouble their opposition to what they see as a “tainted” proposal.
Second, there is growing alarm among local government finance experts about how such a scheme would be funded. Even on the most cautious assumptions, I have calculated the cost at £2.3bn by year three and £5.5bn in the life of a five-year parliament. Shapps has made it clear that the cost of the scheme would be met by scrapping the Housing and Planning Delivery Grant and by a topslice from the main Revenue Support Grant, which underpins all council budgets.
But cutting the Housing and Planning Delivery Grant won’t help councils process planning applications more speedily, and in any case, will not yield savings on anywhere near the scale required. As this grant is worth just £135m a year, this implies a topslice off local authority grant income of between £2bn and £5bn. That would be catastrophic to most council budgets, which are expected to be under intense pressure in coming years.
The Tories’ green paper is a rag bag of incoherent schemes, which even if they did work would make no significant impact on housing supply
Shapps’ suggestion that councils will, as an alternative, have to increase their tax is totally at odds with the shadow chancellor George Osborne’s plan to freeze council tax for at least two years.
Nor is this the only serious defect in his green paper. It contains no reference to the levels and types of funding that might be made available to support the industry as it recovers from recession, nor to the ways in which the main affordable and social housing programmes would be delivered. The Homes and Communities Agency, which has played such a crucial role in helping housing and regeneration through the difficulties of the past two years, is not even mentioned – an astonishing omission.
Instead, there is a rag bag of incoherent and mostly impracticable small-scale schemes, which even if they did work would make no significant impact on the supply of housing let alone sustain the recovery of the industry – something that should be a high priority of any government. It is difficult to avoid the conclusion that this green paper has been produced purely as a public relations exercise rather than a serious prospectus for government.
Nick Raynsford MP is honorary vice chairman of the Construction Industry Council and a former construction minister