The Government’s Housing Strategy announced yesterday is an example of Coalition policy making at its best and its worst. Its presentation was also a welcome improvement from a Government that has lost its way in media management in recent months - Cameron and Clegg speaking as one, supported by an articulate spokesman in Grant Shapps who spent the day touring the TV studios and rebutting his critics on the Blogosphere and Twitter.
The mortgage indemnity scheme is a nod to Tory champions of home ownership, while the bung to do up empty homes has long been a Lib Dem priority. Lib Dems can point to land auctions which have been developed by their CentreForum think tank; Tories to the FirstBuy scheme which helps First-Time Buyers onto the property ladder. The Tory policy to extend the Right to Buy has been tempered by a Lib Dem sensitivity to spend the receipts on building new social homes. In doing so, the Coalition has framed a radical, comprehensive and innovative set of policies to promote housing and housing growth.
The most welcome aspect of yesterday’s announcement is the realisation by both Tory and Lib Dem leaders of the central importance of the housing market to the wider economy. As with every recession since the 1930’s, it might have been a Housing Bust that got us into this mess, but it will be a Housing Boom that will get ‘Britain back to work’. When people feel good about the money in their home, they are generally quite happy to spend on holidays, new kitchens and other consumer durables.
The plan to underwrite mortgages comes straight out of Roosevelt’s New Deal. The beauty of that initiative was that it enabled the Federal Government to subsidise lower mortgages at no cost to the taxpayer (so long as things didn’t go wrong.) It helped trigger a housing boom that became American suburbia. But it was also the first in a series of events that would ultimately lead to the sub-prime catastrophe. The scheme proposed by the Coalition might be a short term mechanism to stimulate housing demand, but it is not a solution to the real problem which is a chronic under supply of new housing.
And it is here, on the supply side reforms, where the proposals look weak and confused trying to appease both its localism rhetoric and the economic reality. The Government say they want to promote “a wave of larger-scale projects…. where there is clear local support and private sector appetite". The problem is where are these sites? Where communities want more housing development, there are no investors; and where builders want to build, there is normally an army of NIMBY objectors. By trying to have it both ways, there is a danger that the Coalition will end up pleasing no one and delivering nothing. Ultimately, the Government might have to decide whether it is on the side of the Parish Councillor or the First Time Buyer.