Four paragraphs of Sir Michael Lyons’s review of the nation’s housing problems and how to fix them are devoted exclusively to London, yet pretty much all its 174 pages are very relevant to the capital. But is it missing some crucial bits? Alex Hilton of Generation Rent thinks the gaps numerous and vast:
It’s not that the report has a lack of ambition, the problem seems to be that the ambition was not to solve the housing crisis but to come up with a set of proposals that neither have a negative impact on house prices nor have any cost implications for the Treasury...
So this is Labour’s problem. They don’t want to spend any money and they don’t want to interfere with a failed housing market. This has left the members of the Lyons group with an unenviable straightjacket and they broadly did the best they could given the constraints. Though even then, you can see a lack of inspiration in the recommendations.
Splat. By contrast, Tom Copley, Labour housing spokesperson on the London Assembly, describes a glass that is more than half full:
There is much in it to be welcomed. Our dysfunctional land market is one of the key barriers to house building, so I’m delighted to see proposals to tackle land banking such as charging council tax on undeveloped land and shortening the time before a planning permission expires. Proposals to make the land market more transparent must also be warmly welcomed because they will make it easier for SMEs and others to enter a market currently dominated by a relatively small number of volume house builders.
Copley also likes the idea of housing corporations led by local authorities working in partnership with housing associations and the private sector. Even so, he has a big misgiving. It is that Lyons stops short of liberating councils to build more homes:
Arcane Treasury rules currently stymie those councils which are keen to build the housing their residents need. Lyons recommends that local authorities that want to build should be able to take borrowing capacity from those that don’t. However, it is disappointing that Lyons does not call for lifting the cap on council borrowing for investment in housing altogether.
Investment in housing pays for itself through rents. No other EU country counts public borrowing for building homes towards national debt, treating it instead as commercial borrowing. Labour should be making the case that borrowing for housing differs from almost any other kind of borrowing.
Last month I wrote an open letter with seventeen London housing leads and Parliamentary candidates calling for the cap to be lifted. Unfortunately, at Labour Party conference Ed Balls made it clear that there would be no new borrowing for housing. This is not just a mistake; it is short sighted.
Without a step change in the supply of council and other affordable housing, we are locking in a system of high welfare spending where lower-income households are forced to rely indefinitely on expensive private rented sector housing.
Steve Hilditch of the Red Brick blog elaborates on this theme, which has particular importance for London. Under the headline “Lyons does 90% of the job”, he trawls exhaustively through the document and concludes that it is a “significant and welcome advance”. If its measures were implemented by a Miliband government, Hilditch would award it six or seven out of ten for its housing policies, compared with just four for the last national Labour administration. So what’s stopping it from scoring eight or nine? Hilditch writes:
The role of central government grant is crucial in making sure that genuinely affordable housing – and by that I mean homes at target rents and not the Coalition phony “affordable rents” – is provided in sufficient numbers. The report fails to meet the widespread demand for the “cap” on HRA borrowing to be removed or at least raised...raising the cap and the other ideas for borrowing do not in themselves guarantee target rents - for that, either grant or cross-subsidy is required. Here I think the report is weak and reflects the caution displayed by Ed Balls in his Conference speech and subsequently...
There is an important discussion [in Lyons] of the downside of the “affordable rent” model – higher rents leading to unaffordability and a growing demand for housing benefit – and the need for a “benefits to bricks” policy. But ultimately the report fails to go where the logic of its argument takes it – there must be a significant increase in the level of government capital grant if the Labour Party’s ambitions to build more genuinely affordable homes and to bring the cost of housing benefit down – are to be fully realised.
All this matters so very much in the capital, a point neatly summarised by Labour mayoral hopeful Christian Wolmar: “There’s not a housing crisis in London; there’s an affordable housing crisis.” Yet it is plain that electoral fears have got the better of policy reasoning. Look at poll findings and see why: any talk of increased spending means ballot box disaster; the word “borrowing” has become a synonym for “suicide”. Meanwhile, media debate fixes almost exclusively on the (very real) plight of would-be first time buyers and public prejudice declares that council housing goes only to scroungers and immigrants.
No politician seeking office can ignore these things, but any Labour debate about whether greater boldness on spending and borrowing might actually pay dividends at the election next year is now pushed to the margins. Perhaps that will be for the best. But it will not end concerns that, for London, Lyons is not enough.
