England expects the state to offer shelter
Tuesday, 23 October 2007
Alex Barker
THE next general election, whenever it comes, will be won and lost across a swath of southern England that has been buoyed by an unprecedented, decade-long house price boom.
From Sittingbourne in the east to Bristol in the west, politicians will pitch for the votes of homeowners keen to protect their new-found wealth -- and of a younger set of less fortunate folk priced out of the market. Little wonder that housing has shot up the political agenda.
The interests of the property-rich and propertyless are seemingly at odds. But for some time, they have been hearing the same pledge: more homes -- built at a suitable distance from any voters' abodes, naturally -- and more affordability. Leaving aside how that is to be delivered, the idea has broad appeal. Even those faring well as homeowners fear their children will be unable to do the same.
As Gordon Brown assumed the prime ministership, however, the debate changed. All three main political parties began to adjust their approach. Many issues, not least the risk of a housing slump, remain largely unaddressed. But shifts in the politics of property have arguably set the order of battle for the next election -- and delayed when it will be fought.
Inheritance tax has been pushed to the forefront of the debate. Amid speculation about a snap autumn poll, the Conservatives launched plans to slash the "death tax", although it is paid by just 7.0 per cent of estates. Senior Tories aimed to put their party on the side of aspiration and force Labour to stand at the wrong end of the biggest economic trend of their time in government.
It played so well in southern marginal seats -- where soaring house prices have in theory pushed as many as two out of five families over the tax threshold -- Mr Brown's pollsters advised him to rule out an election. Within days, Alistair Darling used his first mini-budget as chancellor to simplify married couples' inheritance allowance into a single, automatic package. His voice could hardly be heard for the Tory jeers at having stolen their clothes.
The brazen move rebalanced Labour's recent emphasis on the crisis in the supply of homes. In his first weeks as prime minister, Mr Brown put a promise to build 3.0m houses for first-time buyers by 2020 at the top of his legislative agenda. Raising the target by one-fifth, it partly atones for housebuilding having hit a postwar low under the current Labour government.
But even if it is achieved, the target barely approaches the soaring demand for housing caused by people living longer, marrying later and divorcing more often. Achieving it will, moreover, be a struggle. Structural problems with the planning system and the homebuilding industry hamper growth in supply.
Yvette Cooper, housing minister, has confronted these issues by pushing local authorities to clear more space for development and telling developers to hoard less land. Town halls cannot "keep their heads in the sand", she warned.
The political twist came by accusing "not-in-my-backyard" Tory councils of blocking vital development. Clear differences are also apparent between Labour -- which once again supports building council housing - and the Tories, who keep trying to make it easier for council tenants to buy their dwelling.
But homebuilders and analysts argue that without more fundamental reform, making it easier to build on existing sites and lower-quality parts of the peri-urban green belt, the efforts will be in vain.
Such radical proposals, which risk upsetting voters in key constituencies, remain off-limits for most politicians. While the parties are keen to help people profit from the boom in house prices, they are reluctant to tackle rampant demand or seriously increase supply.
As Danny Dorling of Sheffield University argues: "Almost any sensible policy -- such as building homes where they are most needed, or taxing people on their third or fourth homes, or encouraging people to rent more when they are young - would lower price growth and lose them an election."
John Muellbauer, economics professor at Oxford University, also expresses "deep cynicism" over the reaction to the housing crisis. "Someone has to lose and politicians have been afraid of grasping the nettle."
Of the three main parties, only the Liberal Democrats have openly discussed the possibility of a crash. Vince Cable, deputy leader, recently predicted a sharp correction in a housing market that was showing the "frenzied signs of collective madness" seen in some of the biggest asset bubbles.
Ministers and Tories have shied away from such gloom -- even as they subtly tweak their positions to reflect the risk. During the September run on Northern Rock, both main parties grumbled about irresponsible lending.
David Cameron, Tory leader, attacked Mr Brown over a "huge expansion of public and private debt" that he said was putting the economy at risk. But the latest Tory resurgence in the polls came only after the crisis abated. In the thick of it Mr Brown became more popular - and Labour will be hoping this "cling-to-nurse" response will prevail if there is a housing downturn.
All the same, allowing house prices "to get to these levels and encouraging debt has been risky", Prof Muellbauer argues. "Will the public blame the government if this market goes pear-shaped?" he asks. "It seems inescapable . . They should have tackled the supply side a bit earlier and tax reform at the very beginning. We would not have had these problems now."
Under syndication arrangement
with FE
THE next general election, whenever it comes, will be won and lost across a swath of southern England that has been buoyed by an unprecedented, decade-long house price boom.
From Sittingbourne in the east to Bristol in the west, politicians will pitch for the votes of homeowners keen to protect their new-found wealth -- and of a younger set of less fortunate folk priced out of the market. Little wonder that housing has shot up the political agenda.
The interests of the property-rich and propertyless are seemingly at odds. But for some time, they have been hearing the same pledge: more homes -- built at a suitable distance from any voters' abodes, naturally -- and more affordability. Leaving aside how that is to be delivered, the idea has broad appeal. Even those faring well as homeowners fear their children will be unable to do the same.
As Gordon Brown assumed the prime ministership, however, the debate changed. All three main political parties began to adjust their approach. Many issues, not least the risk of a housing slump, remain largely unaddressed. But shifts in the politics of property have arguably set the order of battle for the next election -- and delayed when it will be fought.
Inheritance tax has been pushed to the forefront of the debate. Amid speculation about a snap autumn poll, the Conservatives launched plans to slash the "death tax", although it is paid by just 7.0 per cent of estates. Senior Tories aimed to put their party on the side of aspiration and force Labour to stand at the wrong end of the biggest economic trend of their time in government.
It played so well in southern marginal seats -- where soaring house prices have in theory pushed as many as two out of five families over the tax threshold -- Mr Brown's pollsters advised him to rule out an election. Within days, Alistair Darling used his first mini-budget as chancellor to simplify married couples' inheritance allowance into a single, automatic package. His voice could hardly be heard for the Tory jeers at having stolen their clothes.
The brazen move rebalanced Labour's recent emphasis on the crisis in the supply of homes. In his first weeks as prime minister, Mr Brown put a promise to build 3.0m houses for first-time buyers by 2020 at the top of his legislative agenda. Raising the target by one-fifth, it partly atones for housebuilding having hit a postwar low under the current Labour government.
But even if it is achieved, the target barely approaches the soaring demand for housing caused by people living longer, marrying later and divorcing more often. Achieving it will, moreover, be a struggle. Structural problems with the planning system and the homebuilding industry hamper growth in supply.
Yvette Cooper, housing minister, has confronted these issues by pushing local authorities to clear more space for development and telling developers to hoard less land. Town halls cannot "keep their heads in the sand", she warned.
The political twist came by accusing "not-in-my-backyard" Tory councils of blocking vital development. Clear differences are also apparent between Labour -- which once again supports building council housing - and the Tories, who keep trying to make it easier for council tenants to buy their dwelling.
But homebuilders and analysts argue that without more fundamental reform, making it easier to build on existing sites and lower-quality parts of the peri-urban green belt, the efforts will be in vain.
Such radical proposals, which risk upsetting voters in key constituencies, remain off-limits for most politicians. While the parties are keen to help people profit from the boom in house prices, they are reluctant to tackle rampant demand or seriously increase supply.
As Danny Dorling of Sheffield University argues: "Almost any sensible policy -- such as building homes where they are most needed, or taxing people on their third or fourth homes, or encouraging people to rent more when they are young - would lower price growth and lose them an election."
John Muellbauer, economics professor at Oxford University, also expresses "deep cynicism" over the reaction to the housing crisis. "Someone has to lose and politicians have been afraid of grasping the nettle."
Of the three main parties, only the Liberal Democrats have openly discussed the possibility of a crash. Vince Cable, deputy leader, recently predicted a sharp correction in a housing market that was showing the "frenzied signs of collective madness" seen in some of the biggest asset bubbles.
Ministers and Tories have shied away from such gloom -- even as they subtly tweak their positions to reflect the risk. During the September run on Northern Rock, both main parties grumbled about irresponsible lending.
David Cameron, Tory leader, attacked Mr Brown over a "huge expansion of public and private debt" that he said was putting the economy at risk. But the latest Tory resurgence in the polls came only after the crisis abated. In the thick of it Mr Brown became more popular - and Labour will be hoping this "cling-to-nurse" response will prevail if there is a housing downturn.
All the same, allowing house prices "to get to these levels and encouraging debt has been risky", Prof Muellbauer argues. "Will the public blame the government if this market goes pear-shaped?" he asks. "It seems inescapable . . They should have tackled the supply side a bit earlier and tax reform at the very beginning. We would not have had these problems now."
Under syndication arrangement
with FE