Budget day: Groundhog day

So, despite some truly grim economic news coming out of yesterday's budget  – with stagnant productivity, downgraded growth and the slowest economic recovery in 300 years, the big headline – as has so often been the case with recent budgets – is housing. 

It’s a bit like the movie Groundhog Day, the 1990s classic where a TV weatherman finds himself caught in a time loop, repeating the same day again and again.  [*Any similarity between the main character in that film - a dour, uninspiring chap called Phil who's chioce of gags was at best questionable, and yestyerday's budget is purely coincidental.] 

But here we are again, talking about housing again.  After the July 2015 budget I wrote an opinion piece for Construction News that ended “...it really is time to get serious about housing - but then haven’t we all been saying that for years now”.  Well, we had all been saying that for years, and we’ve all continued to do ever since, and heere we are saying it again now.  In recent years we've seen housing announcements and initiatives of all kinds, yet the Government has failed to deliver on no less than seven key housing pledges from before the 2015 election - these include major policies on Right to Buy and the promise to build 200,000 starter homes (and not a single starter home has yet been built).

And therein lies the problem. Too many announcements of, predominantly, inconsequential policies that fiddle around the edges of the housing crisis, but which but make no material difference to housing supply or affordability. We're still no further on in addressing the housing crisis, let alone solving it.  It's not just the current Government that is guilty in ths regard, this practice goes back years and years.

Yesterday’s budget was no exception. 

We saw the headline grabbing figure of a ￡44bn investment in housing – but this is to be spread over five years and only a third of it is new money, and much of that isn't actually money but rather credit guarantee facilities.

If we’d built a house for every housing announcement made by successive Governments over the last 15-20 years we’d be halfway to solving the problem. 

The promise to build 300,000 homes per year sounds great, but it’s not pledged until the mid-2020s and if recent history is anything to go by it won't happen at all. The Office of Budget Responsibility certainly doesn’t think so – they have “not made any further adjustments to [their housing supply] forecasts” as a consequence of the budget announcements.

First time buyers will welcome the abolition of stamp duty, at least those who can afford to buy – but essentially this does nothing to solve affordability.  Indeed, the OBR believes it will generate just 3,500 additional sales, meaning a cost of over ￡900,000 for each first time buyer that has been helped on to the housing ladder (all other buyers could have afforded to buy anyway). It would be cheaper to provide each of those 3,500 buyers with a new house for free.  Further, the OBR believes that the stamp duty cut will simply push up house prices by the same amount, or to use their words “the main gainers from the policy are people who already own property”.

If we’d built a house for every housing announcement made by successive Governments over the last 15-20 years we’d be halfway to solving the problem. 

Sadly we haven’t, and it has left us with levels of homelessness that the Chancellor rightly calls "unacceptable in 21st century Britain". Whilst there are myriad reasons behind homelessness, the lack of housing is clearly a common thread and the rise in homelessness in recent years - a 41% year-on-year rise in rough sleeping in my home city of Manchester - is appalling.  House prices are hopelessly out of reach for the average buyer, rents are too high, affordable housing supply is shamefully low.  The number of 25 year olds who own their home has halved in 20 years.  Whilst home ownership is not he be all and end all, it's not as if renting is a particularly attractive alternative.

We have a construction industry that is on its knees. We have a desperate need to build housing. Construction companies build houses. It’s really not rocket science, but what are the odds that in ten years we'll all be saying the same.

A version of this article appeared in Construction News on 23rd November 2017 and can be viewed here.