Miliband’s housing promises reflect an escalating crisis

[Originally posted at The Conversation, 25/09/13]

Modern Housing

The commentariat has gone into overdrive in the wake of Ed Miliband’s speech to the Labour party conference. Does it represent, at last, the shattering of the neoliberal consensus? Is it the articulation of a vision for a more inclusive and humane social democratic future? Or is it the sound of the clock being wound back to the bad old days of the 1970s, and a Labour leadership only marginally to the right of Fidel Castro?

Miliband’s speech roamed across relatively broad policy terrain, with the announcement of an energy price freeze generating the most coverage. But I want to look a little more closely at what he had to say about housing policy.

The measure that had been heavily trailed prior to the speech was the abolition of the so-called “bedroom tax”. This will prove popular with many voters, even if they are not directly affected by it. The underoccupancy penalty, as it is officially known, represents a policy blunder of some considerable magnitude.

You may or may not agree with the principle. There are plausible arguments for and against. But it is hard to disagree that the policy has been implemented in a context almost guaranteed to ensure that its stated aims are frustrated.

The absence of smaller homes in the social sector means the households affected by a housing benefit cut cannot move to a smaller, cheaper property. Those moving out into the private rented sector are finding smaller properties but they are more expensive. So the housing benefit bill is going up not down.

Equally importantly, the policy is having serious broader effects. Households experiencing difficulty in paying the rent means higher rent arrears, landlords making greater bad debt provision, more spending on rent collection and debt advice services. More uncertain income streams mean the risks associated with the social rented sector as a whole and with development of new social housing become greater. In the context of a crisis of housing supply that is not sensible.

The policy is a failure of holistic thinking on a grand scale. So Miliband’s proposal to reverse it may well not only be popular with many but also practical.

Miliband flagged up three further potentially significant housing policy measures. The speech gave a broad indication of the “what”, but not of “how”. And the “what” was at times unhelpfully vague.

Before the speech we had a hint that Labour was going topromise a million homes during the next parliament – 200,000 per year. That isn’t quite what Miliband said. Instead, he signalled that “we’ll have a clear aim that by the end of the parliament Britain will be building 200,000 homes a year, more than at any time in a generation”.

This statement needs a little unpacking. If this refers to Britain, total housing supply in fact reached 200,000 homes a year in 2007, rather more recently than a generation ago (if we are talking about completions rather than starts).

Clearly, reaching an output of 200,000 by the end of the parliament is going to represent rather fewer than a million homes over five years. Miliband suggests he is talking about Britain here, although subsequent clarification indicates he is talking about England.

It also isn’t clear whether he is talking about private output or total output including social housing. If he is talking about private sector output in England specifically then he has set himself a considerable challenge. You suspect he is talking about total output. That would imply that throughout the next parliament the housing shortage will be getting worse – because most estimates suggest we need well over 200,000 new homes every year.

Achieving this increase in housing supply is likely to require new approaches to planning. One possible mechanism is a new generation of new towns and garden cities, and Miliband has signalled that this will be part of his policy platform.

While creating new settlements is controversial, the debate does not line up neatly along party lines. Across the political spectrum you will find people advocating for this approach. Nick Clegg hasspoken in favour of the idea, for instance, as has the right-wing think-tank Policy Exchange.

The way localism is evolving means incremental growth to existing settlements is becoming more challenging. The NIMBYs are winning. So creating entirely new settlements may be the line of least resistance for major increases in the supply of new housing.

Finally, Miliband states:

We’ll say to private developers, you can’t just sit on land and refuse to build. We will give them a clear message – either use the land or lose the land.

This has got some right wing commentators in a lather. Is Miliband proposing the abrogation of private property rights? A number of the more hysterical comment pieces have interpreted Miliband’s statement as taking the first step on the road to tyranny. Liberal democracy is mortal danger from Red Ed.

If Miliband is proposing state seizure of land, as a first resort, then it would be a very bold move. Although it is worth noting that if you look at other countries you’ll find that a largely nationalised land market is not incompatible with a functioning capitalist economy.

The policy details are sketchy, but it looks more like Miliband’s proposal is for escalating charges for holding land with planning permission undeveloped, followed by streamlined compulsory purchase if development is still not forthcoming. It may, however, turn out that all that can be achieved is making planning permissions – which are already time-limited – non-renewable. We await further details.

At the very least Miliband’s speech suggests Labour is taking the housing problem seriously. He has grasped that the current suite of policies is inadequate for the task. Something more substantial is required. We don’t have enough detail yet to judge whether what is being proposed will deliver. But we can hope that yesterday’s speech signals a change in tempo for a debate that has been peculiarly lacking in urgency.

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2 replies »

  1. I am especially interested in a situation where a Housing Association who is the owner of the social housing stock in a town/city, is also the owner of vacant land for housing, but will not build for economic reasons or those of preference.

    Does the Council then step in and acquire,(at the last resort as mentioned here), OR

    Is the land sold to a private builder for their own profit, for the Council, having previously abdicated ownership of it housing stock, is not in a position to build itself?

    I would welcome your views on this