As I write these words, Prime Minister Theresa May is still giving her speech to the Tory conference. The section on housing just finished – I’ve yet to even see the text written down. If journalism is the first draft of history, these are the scribbled notes on scraps of paper that may or may not make it into that draft.
Nonetheless, some first thoughts.
1) They massively over-stated how radical this would be
Last night the Sun reported that May would be “the first PM in decades to unveil a major programme to build council houses” – a statement based, one assumes, on briefings by May’s team.
The rhetoric leading up to the meaty policy part of the speech seemed to back up the suggestion that something radical was on the way. “I will dedicate my premiership to fixing this problem,” May told us.
What we actually got was an extra £2bn for affordable housing. At first glance, that looks like a significant bump – it takes the total budget to £9bn, so amounts to an increase of more than 28 per cent. Wow!
Except, in 2010, George Osborne cut the annual capital funding for housing associations from £3bn to £450m. This new money isn’t even enough to make up for that cut.
It’s also not clear if this £2bn is an annual contribution, or a one-off – which obviously makes quite a big difference.
At any rate: they’ve oversold this. By a lot.
2) Affordable housing still isn’t the real priority
Something else about that £2bn figure: it’s a lot less than the extra £10bn May promised for Help to Buy. This, she claimed, would help another 130,000 families gather the deposits they need to buy their own homes.
But it’s unclear, to say the least, that this sort of government support has actually increased building rates. As the housing charity Shelter has put it
“although the scheme genuinely helped some people on middling incomes buy bigger new builds in nicer areas sooner, over half of those using the scheme didn’t really need it. This implies that a large chunk of Help to Buy Equity sales could at best be a waste of public money and at worst, an inflationary boost to house prices.”
That’s a big enough screw-up it’s worth restating it: it’s possible that throwing more money at the housing market through Help To Buy actually inflated prices, making it harder to buy.
And Theresa May has just promised it another £10bn – five times as much as her much-trailed pledge to get councils building again.
We should probably hold the champagne for the moment.
3) Councils are still constrained
There was another change promised in the speech, of course: “We will encourage council as well as housing associations to bid for this money.” That will make it easier for councils to build, so should be viewed as significant.
What would have been much more significant, though, is letting councils borrow to invest. That would likely have had much bigger impact on housing supply than allowing them to beg for a sliver of Treasury largesse.
Once again, Theresa May has promised revolution, but all she’s delivered has been small, technical changes.
4) Seriously, these numbers are tiny
Oh, and while I’ve been writing, the FT’s Jim Pickard tweeted this:
May team admit to press huddle that extra social housing money will build 25k homes over 5 years - so 5k a year. pic.twitter.com/0zdLMRwroO
— Jim Pickard (@PickardJE) October 4, 2017
Experts believe we need to be building about 250,000 extra homes a year to keep up with demand. We’ve not made it within 100,000 of that in a decade.
If Pickard’s figures are right, this “revolution” will deal with less than 5 per cent of the problem.
Honestly, this is nothing. Why on earth did they decide to brief this would be a revolution?
4) There is some good news
For one thing, May promised that some of the money would go to “social rent” homes in areas of higher need. That’s a shift from the last few years where such funding has focused on “affordable rent” – which, since it can be 80 per cent of market rent, has often been anything but affordable.
And some of the noises coming from the housing sector are positive, too. Here’s Shelter’s head of policy, Kate Webb:
Housing twitter will find the policy detail wanting. But that the PM is pledging council housing puts us in a far better position than 2015.
— Kate Webb (@KateBWebb) October 4, 2017
While David Orr, of the National Housing Federation, which represents housing associations, says:
“The additional £2bn will make a real difference to those let down by a broken housing market.”
So yes. These are steps in the right direction.
5) Seriously though – Is that it?
All over the Tory conference this week, I heard Tories worrying that the housing market would destroy their standing with the under 40s. They are all too aware of the problem.
And yet this is their solution: another 5,000 homes a year, and shouting a bit at developers in the hope they’ll change their ways. That’s all they’ve got.
There will be a lot of snarky commentary about the problems with Theresa May’s speech: the P45 handed to her by a comedian as a stunt, the lengthy coughing fits, the fact the sign behind her literally started disintegrating as she spoke.
But none of those are the reason that she’s doomed. The real problem is the mismatch between rhetoric and policy. Once again, she’s promised a revolution and then bottled it.