An agenda-shifting Budget – if a little underwhelming
This was first published in the MJ
This was the moment a British government finally got serious about the most pressing social problem facing the UK: our dysfunctional housing market. It is an issue on which a long line of Prime Ministers and chancellors have talked loudly while wielding a rather small policy stick. Today that changed.
In what was otherwise an underwhelming Budget, Phillip Hammond announced a bold package of measures and money which should go a considerable way to cracking the supply shortage that is at the heart of the problem. These included: a £44bn capital investment in housebuilding; a lifting of the HRA cap for councils looking to build in ‘high demand’ areas; a speedy review to recommend how to end land-banking; new powers for the Homes and Communities Agency (now renamed Homes England); an extra £2.7bn for the Housing Infrastructure Fund; and an eye-catching abolition of stamp duty for first time buyers.
Of course, much will depend on the detail, but there can be no doubt that the chancellor has, quite rightly, made housing the big concern in British politics alongside that other issue everyone keeps banging on about. Prepare for opposition parties to start trying to outbid Hammond with the boldness of their plans.
It was also striking that Hammond didn’t use the opportunity to bash councils – as often happens when ministers get onto the issue of housing. Instead he acknowledged local authorities ‘needed support’ from central government to build the houses they wanted to build.
The only dud note was the predictable commitment to protect green belt – something that may yet come back to haunt the chancellor when the reality of delivering hundreds of thousands of extra places to live hits home.
It is worth keeping in mind that housing is more than just a single issue. It is one of those problems that, if resolved, unlocks solutions to many other challenges.
Take the chancellor’s other main theme: productivity. Britain has for many years suffered from low business investment relative to other nations. A key reason: our over-heated property market offers a more attractive and reliable return for investors. Reduce property prices and money is far more likely to flow into business innovation and growth. Over-priced housing and limited supply bears a similar relationship to poor public health, family breakdown, pressure on transport systems and carbon emissions (as people are forced to travel long distances to work) and the difficulty of delivering growth plans that rely on providing affordable homes for local workforces. So this Budget could have a real impact on many other ‘wicked issues’.
In other areas, it was a disappointing Budget for local government.
The chancellor may have felt he has dealt with adult social care through extra funding and a promised green paper consultation, but on the emerging crisis in children’s services there was nowt, with the NHS instead getting its usual moment in the fiscal spotlight.
The prone body of the devolution agenda was given a brief jolt of electricity with a deal for the West Midlands and £1.7bn for city transport but we are still operating in a world of piecemeal, bespoke arrangements rather than a bold, nationwide devolution programme.
The passing mention of business rates retention said nothing new.
But this is ultimately an agenda-shifting Budget that, at long last, gives housing its rightful place at the centre of national policy. Local government will be energised by this.
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