Today, Theresa May delivered a key policy speech on the nation’s housing market, and this Conservative government’s plans to fix it. While the Labour Party and others have called for the building of social housing en masse, rent or price controls and the like, these are not the answers. The free market is.
Let’s be clear – the Prime Minister’s speech was not perfect. She was, in my view, wrong when she spoke of the profit motive creating perverse incentives – the alternative creates worse ones and in a true market economy the actions of housebuilders should not be controlled by the government. She continued to praise the Help to Buy scheme, which many economists believe has hurt the housing market as much as helped it. She held up the government’s new policy on reduction of Stamp Duty for first time buyers, which in reality is no game changer in its current form.
All importantly, though, where Mrs May struck many of the right chords was on the new solutions her government is working on. A major overhaul of the planning system is exactly what the country requires to reach a situation in which house prices will become affordable again even as the population continues to grow. She spoke of “streamlining the planning process” in order to prevent hold-ups, increasing the ease by which abandoned sites can be converted to housing and ensuring that infrastructure is in place to allow communities to support increased populations.
May was also correct in pointing out that the granting of planning permission is not where the story ends. She noted the good record of the Conservative government under her premiership of increasing the number of houses actually being built once permission had been granted, but confirmed she does not see the job as done.
She emphasised policies aimed at increasing the rate at which granted planning permission is converted to houses, taking aim at the ‘not in my back yard’ attitude of many councils. The total of £44bn in capital funding, loans and guarantees to support the building of houses mentioned in the speech will go a long way towards building the necessary homes.
Only on the green belt did we perhaps see ideology come above pragmatism. A small but significant proportion of the green belt is intensively farmed land which could be freed up for housing without creating blights on the landscape, but we only heard platitudes on protecting beautiful areas of land – with 13% of the country designated as green belt, it is certainly not the case that all of it is so attractive. May cannot really be blamed for not wishing to delve into this issue, though. Reducing the size of the green belt or scaling back protections would not go down well with many Conservative voters, regardless of its effect on the housing market.
In some ways, it is a shame not to see the PM go further.
The implementation of a radical Land Value Tax has the capacity to solve many of the country’s problems, with the housing crisis being just one of those. With the policy receiving such attention from the Greens and Labour, it is unfortunate that the Tories are behind. However, a new tax is always a hard sell, especially for a party which has branded itself one of low taxes. Perhaps now is not the time for such radical ideas, but rather for common sense policies which gradually solve the key issues in the country.
On that criteria, it is hard to find excessive fault in May’s speech. If you excuse the fact she appeared to be delivering it from within a chimney, that is.