The Government’s new housing strategy – a mangled hotch potch of headlines

The Coalition Government’s new housing strategy, launched in a blizzard of publicity, is intended to address some of the problems first time buyers and the property market currently face. It sets out ambitious targets for building 450,000 mainly affordable homes on “publicly owned” brownfield sites, and ministers promise to “unlock” the housing market and “get Britain building again”.

Yet this hotch-potch of small scale schemes and headline grabbing ideas is hardly strategic. Nor does it seem to fit comfortably with the localism agenda being promoted in other parts of Government. And ultimately, if seen as an approach in isolation to the rest of Government activity, it will fail.

For example, there is a mortgage indemnity scheme to offer 95% loan to value mortgages, to help people buy new build properties. This means that taxpayers will bear greater risks on behalf of those who want to buy new build properties – a policy which Labour supported, but which sits uneasily with the Government’s wider objective to withdraw from direct involvement in the banking business at the earliest opportunity. It also doesn’t tackle the underlying problem in the housing market – that prospective first time buyers are priced out of it. Encouraging individuals to borrow more and more, rather than solving the longer term problem of affordability, is hardly a responsible approach for a Government which lectures the nation about its levels of debt.

The proposal to sell off more council houses will have serious implications for the Green Deal mechanism and infrastructure investment projects designed to increase energy efficiency and promote micro-generation. It means that Councils won’t be able to get the efficiencies of scale needed to make such large projects financially viable. And it’s difficult to see how the sale of a Council house under the “right to buy” proposals will automatically lead to the building of another Council or socially rented house in the area – after all, what about the financing or planning considerations about developing new social housing? What if local people don’t actually want, for example, the site of their former local hospital replaced with a housing estate or supermarket?

Financially, it is difficult to see how the housing strategy adds up. £400m is welcome investment, but only one tenth of investment that the previous Government had identified. £150m to bring empty homes back into use is unlikely to go very far, given that it will be applied nationally and the Government seems to have no understanding of the cost of delivering sustainable regeneration. And the New Homes Bonus is being offered as a panacea to solve all of the funding concerns that local authorities raise. Originally it was promised as a non-ringfenced fund – yet the Government is now starting to direct how it can be spent, raising the question of how many initiatives it will be able to support in practice.

Ultimately, however, the housing strategy will fail if it does not recognise that the provision of housing is not, in itself, the driver of economic development and regeneration. My Lib Dem predecessors in Newcastle spent £56m of public money in Walker on “housing renewal” between 2004 and 2011 – to deliver a grand total of 178 new homes. Their failure to understand that good quality jobs and well performing schools are two of the biggest drivers of the housing market appears to be a mistake being made by the Government all over again. We will only see a sustained recovery in the housing market when we see a return to economic growth and prosperity. And in that respect, the Government’s new housing strategy is silent.

Nick Forbes is the Leader of Newcastle City Council