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Hearts and minds

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  • 20/10/2003
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Beleaguered by the media and in the polls, a defiant Labour Party has put housing policy firmly back on the agenda in the run up to the next general election

After the upbeat Lib Dem conference, the conference roadshow moved onto Bournemouth and Labour. The weekend newspapers were filled with stories about the drubbing Tony Blair was going to get at the hands of the unions and his own party. All commentators agreed that this would be one of the most interesting Labour Party conferences for a very long time.

The high politics of the conference began on Monday with a barnstorming speech by the Chancellor Gordon Brown which went down a treat with delegates. Here was the first reference to the Chancellor’s old friend prudence, but the main bulk of the speech concentrated on domestic public sector investment.

The issue of Europe cannot be avoided at any political conference, and this is what the Chancellor had to say: “We will show the British national economic interest is best advanced as active partners in Europe – not Britain versus Europe but Britain part of Europe – promoting reform on opposition to tax harmonisation and reform in the stability pact. And we will demonstrate to the public the benefits of the euro if we can achieve sustainable and durable convergence with the euro area.” For all of us following the Miles review and still working out its relationship to the continuing debate on the euro, the “if” in the Chancellor’s quote hangs in the air.

However, it is interesting to compare the Prime Minister’s warmer words on Europe: “And it’s not Britain being swallowed up in some European federal nightmare, as if Britain wasn’t strong enough to hold its own, that I fear. It’s Britain leaving the centre of Europe retreating to its margin at the very moment when the fate of Europe is being decided, 10 new nations and Britain’s leadership has never been more essential. That’s why apart from all the good economic reasons it is madness for Britain to give up the option of joining the euro.”

Changed priorities

The Government’s plans on housing were widely reiterated, both to delegates on the floor of conference and on the fringe. It was been widely admitted that this issue was not really present in the priorities of Labour’s first term, however, this has all changed. Speaking at a fringe event, the self-confessed “new boy” on the block, Housing Minister Keith Hill said that the issue is now “high on the political shopping list”.

Much of the debates surrounded the Government’s £22bn Sustainable Communities plan. Launched in February, the plan will form part of a policy document to be voted on by Labour conference next year, eventually shaping the policy of a potential third-term Labour Government. The plan has been described by ministers as not just being about bricks and mortar, but about ensuring that there is a sustainable infrastructure such as transport, incorporated into planning, to avoid recreating more “soulless” housing estates.

The current view of the housing market is that more intervention is needed. While house prices have risen sharply, supply has not kept up, with fewer homes being built now than ten years ago. The UK has around 10% fewer homes per head of population that countries like France and Germany. Many families live in overcrowded conditions, which has a negative knock-on effect in terms of social and health problems. All issues to concentrate the minds of politicians.

Speaking on the Sustainable Communities Plan, John Prescott admitted that there needs to be a step change in “planning, design, construction skills – and bringing housing, jobs, transport and public services together”. The Government has already pledged £5bn for more affordable homes; £5bn for repairs and a further £5bn for deprived areas where the housing market has collapsed. £350m is going to be spent reforming the planning system and over £1bn has been allocated for key worker housing.

The Deputy Prime Minister went onto outline policies to dovetail with this money – such as restricting the right to buy in areas where there are already long-waiting lists, giving council’s powers to lease empty properties from landlords who cannot or will not modernise houses. A new announcement of 1,600 new affordable homes on Government-owned land in the South East was made at the conference, as well as plans to introduce more equity share and home-buy schemes, giving people a share in the value of the property, which they can eventually take with them.

This Labour Government has had a sometimes difficult relationship with the so-called ‘country lobby’, and housing policy is part of its plan to address this. In a neat summarisation of the Government’s view, Prescott told delegates: “You know what really matters to ordinary hard working families in rural areas is not fox hunting, it is house hunting. It is affordable housing for their sons and daughters.” Plans for rural areas include increasing investment in rural social housing, restricting the right to buy in more remote areas, giving councils the power to reduce council tax discounts on holiday homes and giving rural communities a voice on the new regional housing and planning boards.

The Sustainable Communities Plan provided the foundation for debate off the floor of conference, with several meetings being held on the subject.

There was criticism by housing lobby groups that, while the plans were welcome, more was needed to combat the housing issues faced by many.

Imtiaz Farookhi, chief executive of the National House Building Council, addressed the issue of supply and demand. In answer to the question as to why house-builders are not able to provide for housing demand, he suggested that there is a “shortage of available land with planning permission” and acquiring planning permission for brown field sites can take very long time. Farookhi also intimated that he felt that there can be an anti-development attitude among communities, pointing out that it will take “a lot of political will” to address these key questions.

More to be done

The concerns over financial risk were echoed by housing minister Keith Hill MP, who also admitted that there was “a lot more to be done” but that he is in “listening mode.” During the conference Hill was also put on the defensive regarding the Government’s Planning and Compulsory Purchase Bill which has been criticised as weak in its declaration of sustainable development, as a key part of the decision making process. He rejected these claims, stating instead he preferred planners to be able to assert the importance of sustainability, which would avoid any unnecessary legal struggles based on misinterpretation.

The Miles review into long-term fixed rate mortgages inevitably entered the discussion with Labour MP Andy Love welcoming the Chancellor’s new interest in long-term fixed rate mortgages, which the MP argued would benefit the UK whether or not it joins the euro. Love also called for efforts to promote institutional investment into the private rented system in order to promote greater efficiency, as seen in some European countries. Another Labour MP, Barry Gardiner also welcomed the Review, stating that a lot more should be done to lock people into long-term fixed rates, but admitted there is a potential political problem should the UK enter a lower rate ‘eurozone’ in six or seven years time, with people locked in at a higher rate.

Local Government Minister, Phil Hope linked the problem of housing with wider political issues. Tenants suffering poor housing conditions at the hands of absentee landlords can be linked to the rise of the BNP in some areas of the country. He argued that many people are turning to the British National Party as a result of the perception that mainstream parties, including Labour, have abandoned them. Concluding that resolving housing issues are vital to the country, not just individual tenants.

Linked to these discussions on the provision of housing were discussions about the whether the current housing market is sustainable. This discussion developed themes around political concern at the high levels of individual debt, questions of affordability and consumer education.

Mis-selling scandals

Higher income multiples were seen as fuelling the housing boom, and the question of housing has become increasingly linked with the debate about saving for retirement as people tend to view investment in property as part of their retirement income. In a recent survey 55% of people in the 25-34 age group stated that they will use property income to fund retirement. The political fear is that property is locked into an indeterminable upward cycle and these young people could get caught out at the wrong end of the cycle.

Barry Gardiner MP raised the issue of equity release in this context. Commenting on the issue of correct advice and consumers knowing just what they are getting themselves into he said: ” We are in real danger of having a huge mis-selling scandal, having just seen endowment mis-selling coming home to roost.” Going on to talk about timescales he said: “We will start to see the mis-selling of equity release coming sooner, as the life expectancy of some customers is only eight to ten years.” Gardiner questioned why the FSA has not regulated all of these products, even accusing it of “washing their hands of the problem”, and asking just how the public is expected to understand that the FSA is regulating mortgages, but not some forms of equity release products.

It is clear Labour and the other political parties are putting together plans which will affect the supply and demand of the housing market. What long-term effect this will have remains to be seen. One thing, which is not in doubt, is that we will see more political discussion on just what is the best way of delivering more affordable housing while avoiding the housing bust of the early 1990s.

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