Five thoughts about Theresa May’s promise to get councils building houses again

The silliest picture of Theresa May giving her speech we could find. Image: Getty.

1. This is big.

Housing is a policy area infested with numbers that sound big but actually aren’t. “An extra 50,000 homes!” is a lot of homes – except we need to be building 200,000-300,000 a year, so it actually isn’t. By the same token, the government’s recent promise of an extra £2bn for affordable housing sounds huge – except it’s spread over 10 years, and is a tiny fraction of the amount the previous chancellor George Osborne cut from the relevant budgets.

In fairness, though, one should acknowledge when things that sounds small are actually big – and the housing policy Theresa May announced in her speech to Tory conference in Birmingham earlier today appears to be one of them. Here’s the key quote:

“The last time Britain was building enough homes – half a century ago – local councils made a big contribution. We’ve opened-up the £9bn Affordable Housing Programme to councils, to get them building again. And at last year’s conference I announced an additional £2bn for affordable housing.

“But something is still holding many of them back. There is a government cap on how much they can borrow against their Housing Revenue Account assets to fund new developments.

“Solving the housing crisis is the biggest domestic policy challenge of our generation. It doesn’t make sense to stop councils from playing their part in solving it.

“So today I can announce that we are scrapping that cap.”

If we take this at face value – a fairly big if – it potentially means that ambitious councils could borrow money against future rents and use it to start building again, at significant scale. And that will give them more rents, which means they can borrow more money.

And that, unlike the £2bn, really is quite a big deal.

2. It’ll allow counter-cyclical building, and so make the market more resilient.

One of problems with the way Britain’s housing market is currently constituted is that it’s so painfully cyclical. Construction firms outbid each other for promising plots of land, pushing the price up in the process – but that locks them into particular sales price targets for the homes they build on that land. If house prices fall, firms will stop building, until they start to rise again. We’re stuck.

Empowering councils will help to break that cycle, by ensuring that there are bodies with an interest in building new homes, even in down years. And so, if the government is serious about increasing the number of new homes this country builds, this is a good way to do it.

3. It’s actually not that big a surprise.

One of the things that caught me off guard at Tory conference last year was when an elderly man who had held senior roles in several ultra-Thatcherite think tanks told me he thought the state should build homes again. This wasn’t the only time I heard this from a Tory, but he was one of the most surprising Tories to hear it from.

So in some ways, this isn’t actually that radical a shift from May, merely a reflection of where Tory thinking had got to.


4. It amounts to devolving the debt.

While chancellor, George Osborne famously “devolved the axe” – slashing council budgets in an attempt to ensure his cuts were viewed as a local, not national, government phenomenon. It worked, in so far as councils are struggling on with about half the money they used to have, and are only now starting to fall over.

But fall over they will: only Northamptonshire has gone so far, but no one in local government thinks it’ll be the last. A few weeks back, the thought occurred to me that, when taxes are raised to stem the ensuing crisis, a canny chancellor might devolve that, too: granting a measure of fiscal autonomy to councils not because they believed in devolution, but because they didn’t want the blame for the inevitable tax rises.

We are some way off that, still, but this is a policy of the same flavour. Fixing the housing crisis will require the state to borrow, in direct contravention of the logic that has dominated Tory economic policy for last decade. But it doesn’t have to be the nation state doing that borrowing: why not let councils do it instead?

5. I have questions about capacity.

The devil in these things always in the detail. It’s easy to make a speech (although 2017 Theresa May might disagree); actually turning it into policy a different thing. Perhaps the Treasury will reassert itself: perhaps councils won’t simply be able to borrow as much as they want against rental income, but will be constrained in some way. We’ll see.

There’s another question: back in the days when councils used to be biggest builders in Britain, every local authority had an enormous store of in-house expertise to draw on: not just planners but architects, surveyors, and everyone else involved in creating new housing. Most councils don’t have that any more: construction expertise is now concentrated overwhelmingly in the private sector. That may yet limit the amount of homes that councils can bring forward in the short term.

All that said, if you care about solving the housing crisis, this looks suspiciously like good news. So, yay, say I.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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The Fire Brigades Union’s statement on Theresa May’s resignation is completely damning

Grenfell Tower. Image: Getty.

Just after 10 this morning, Theresa May announced that she would resign as Britain’s prime minister on 7 June. A mere half an hour later, a statement from Royal Institute of British Architects president Ben Derbyshire arrived in my inbox with a ping:

“The news that Theresa May will step down as Prime Minister leaves the country in limbo while the clock ticks down to the latest deadline of 31 October. While much is uncertain, one thing remains clear – a no deal is no option for architecture or the wider construction sector. Whoever becomes the next Prime Minister must focus on taking the country forward with policies beyond Brexit that tackle the major challenges facing the country such as the housing crisis and climate change emergency.”

I was a bit baffled by this – why would the architecture profession try to get its thoughts into a political story? But then Merlin Fulcher of Architects Journal put me right:

Well you know construction is a larger contributor to GDP than financial services, and most of the work UK architects do is for export, and at least half of the largest practice (Foster + Partners) are EU, so there's a lot at stake

— Merlin Fulcher (@merlinfulcher) May 24, 2019

So, the thoughts of the RIBA president are an entirely legitimate thing to send to any construction sector-adjacent journalists who might be writing about today’s big news, and frankly I felt a little silly.

Someone else who should be feeling more than a little silly, though, is Theresa May herself. When listing her government’s achievements, such as they were, she included, setting up “the independent public inquiry into the tragedy at Grenfell Tower” – a fire in a West London public housing block in June 2017 – “to search for the truth, so nothing like it can ever happen again, and so the people who lost their lives that night are never forgotten”.

Matt Wrack, general secretary of the Fire Brigades Union, is having precisely none of this. Here’s his statement:

“Many of the underlying issues at Grenfell were due to unsafe conditions that had been allowed to fester under Tory governments and a council for which Theresa May bears ultimate responsibility. The inquiry she launched has kicked scrutiny of corporate and government interests into the long-grass, denying families and survivors justice, while allowing business as usual to continue for the wealthy. For the outgoing Prime Minister to suggest that her awful response to Grenfell is a proud part of her legacy is, frankly, disgraceful.”

A total of 72 people died in the Grenfell fire. At time of writing, nobody has been prosecuted.

Jonn Elledge is editor of CityMetric and the assistant editor of the New Statesman. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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