Some people see Tory plans to put rocket boosters under a new right to buy for housing association tenants, funded by the forced sale of council homes in areas of high housing demand, as a big problem for Labour.
In fact, it’s an opportunity to redefine the debate and seize the political centre ground on housing.
David Cameron’s plan deserves scepticism from middle-ground Tories, and strong opposition from Labour. It fails the test of sound social policy because it will result in fewer genuinely affordable homes when the need has never been greater, and it will accelerate a social cleansing of those on low incomes – both in and out of work – from our great cities.
But importantly, it also fails the tests of good economics and sound fiscal management because it squanders a long-term asset by selling it on the cheap, and will lead to greater costs for the public purse from a higher housing benefit bill.
Public investment in housing is just that: an investment. It yields a two-fold return to the taxpayer in rental income and in lower housing benefit costs.
When chancellor George Osborne talks about fiscal discipline, he ignores the fact that every £1m invested in a genuinely affordable home generates £1.18m in long-run housing benefit savings for the taxpayer. And that by recycling those savings, we could build more and save more – helping to ease the housing crisis and deal with our long-term fiscal pressures at the same time.
When it comes to this right to buy, taxpayers will bear the cost three times over: first, for the investment to build the homes; second, for the discount to sell them; and third, for the higher housing benefit bill when they’re let to tenants paying market rather than social rents, which is what’s happened to over a third of right-to-buy homes sold.
Past, present and future taxpayers are all failed by this policy. So I’ve written to the National Audit Office, the guardians of government value for money, to ask them to investigate the proposals.
David Cameron had a choice on housing between two Conservative traditions. The extreme of Margaret Thatcher, under whom the number of new homes being built fell to the lowest level then on record and the housing benefit bill trebled to £10bn a year. Or the mainstream of Harold Macmillan, who built a quarter of a million homes a year in England, almost half of which were council or housing association homes for people on low and middle incomes.
He has shunned Macmillan and rebooted Thatcher, with the same dire results. Fewer homes being built, house prices and rents soaring, home ownership the lowest for a generation and housing benefit costs at £25bn a year and rising relentlessly.
Labour has the chance to argue economic discipline and social justice together, and recreate the Macmillan centre ground.
As I’ve set out previously, this can and must include a costed plan to match Macmillan’s success in building 100,000 new social homes a year, which can be done with no greater up-front capital costs than the housing investment when I was Labour’s housing minister in our last year of government.
But it must also mean showing that, as in the postwar years, home ownership can be an option for all, not just those with deep pockets. So Labour should scrap over-generous tax relief for buy-to-let landlords and use it to offer cut-price new homes to first-time buyers. We should promote “help to build” guarantees for smaller developers to build thousands more homes for sale. And we should end the idea that councils only have responsibility for the poorest and give them a remit to build homes for private sale at the same time.
By showing that sound economics and good social policy go hand-in-hand, Labour can not only sidestep the Tories’ political trap on housing, we can speak for the centre ground that Cameron’s right to buy proves he has rejected.
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