By Martin Wicks
The Budget underlines the government’s ideological fixation on home ownership, refusing even to listen to its own Local Government Association (LGA) councillors’ demands for 100,000 social rent homes a year.
There is nothing in the Budget for council housing or for renters in general. The government’s slogan of “Turn generation rent into generation buy” will produce a hollow laugh from those, particularly the younger generation, faced with unemployment or insecure, low paid work, forced into the expensive and poor quality private rented sector. Even a 5% mortgage would require a £10,000 deposit on a £200,000 house. The offer is for homes worth up to £600,000. The ‘guarantee’ is to the builders.
As with Help to Buy, which has assisted many people who could afford to buy anyway, this will enable such people to buy a more expensive house than they would otherwise have done. News of the policy pushed up the share price of the big builders by as much as 7%. The scheme is not just for first time buyers, so it will probably attract Buy to Let landlords.
The earnings to house price ratio for median properties in England is 7.83 times, and even for lower quartile homes 7.25. Although the major banks have signed up for the schem, there is a question mark over what difference it will make. According to the Bank of England, customers with a 5% deposit are charged a third more than those with a 15% deposit. Moreover, banks are restricted to 15% of their lending being to buyers at 4.5 or more times earnings. Barclay’s Bank came close to their limit in November of last year and had to withdraw from some mortgage agreements to prevent them breaching the regulations.
In his speech in response to the Budget statement, Keir Starmer for the first time spoke of council housing. He said:
“If the Government were serious about fixing the broken housing market, it would have announced plans for a new generation of genuinely affordable council houses. Instead, 230,000 council homes have been lost since 2010.”
This marks a change from his previous speeches where he has solely identified “affordable housing” with home ownership. Fine. But we want action to match the words.
Firstly, Labour cannot criticise the government for failing to build “a new generation of genuinely affordable council homes” if it is not committed to it, itself. It must reiterate its 2019 commitments.
Secondly, if 230,000 council homes have been “lost”, then ending Right to Buy is the way to stop the loss altogether. Thangam Debbonaire’s suggestion that Labour might withdraw the 2019 commitment to end Right to Buy should be abandoned.
Thirdly, Labour should launch a campaign demanding that the government mirrors the Party’s 2019 commitment of £10 billion a year grant, to support the building of 100,000 council homes a year, and to end Right to Buy.
Labour needs to unequivocally state that there can be no resolution of the housing crisis without a return to councils as largescale council house builders. If the Tories in the LGA can say this, why can’t Labour? The LGA Labour group should press the LGA to act on its words.
An alliance with trades unions, councillors and the growing renters movement should be mobilised to put the government and its MPs under pressure.
Such a building programme would create jobs for socially useful production. With new homes having to be off the gas grid from 2025, there should be a programme of retro-fitting existing council (and other) homes in order to tackle global warming and to improve the living conditions of tenants. A new build programme can of course do this from scratch.
The pandemic has highlighted the health consequences of poor and over-crowded housing. The economic consequences are likely to produce a spike in evictions when the furlough scheme ends – if not before. Councils will face the prospect of having to find temporary accommodation for more households, without the resources to pay for it. There are currently nearly 100,000 people in temporary housing.
We cannot wait until the next election to tackle the housing crisis. We need to build a movement to force the government into a U-turn on council housing. The pandemic has highlighted the need for a significant increase in council housing stock without which we cannot begin to resolve the housing crisis.
Martin Wicks is Secretary of the Labour Campaign for Council Housing.
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