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Coffee House

Why Owen Jones is wrong on housing

1 July 2014

11:00 AM

1 July 2014

11:00 AM

Columnists like the Guardian’s Owen Jones have perpetuated a myth that harms rather than eases access to truly affordable homes for the impoverished on whose behalf they campaign.

Taken in by the rhetoric of special interest groups, they recycle claims that house building is stymied by Treasury restrictions on council borrowing.

Abolishing this ‘cap’ would help town halls to ‘resolve the housing crisis’ by constructing ‘hundreds of thousands of homes’. So says Jones in his personal manifesto: ‘Agenda for Hope’.

But Jones and others who adhere to such views are not only misguided. They are diverting attention from the real and practical problems that need to be urgently fixed: that many authorities lack the ambition, skills or confidence to play their part in easing the housing crisis.

That few if any councils are held back by the cap is an inconvenient truth the housing and local government lobby has kept under wraps for some time. This has not stopped these investment-hungry groups from recruiting uncritical cheerleaders to their cause, however.

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This myth has now been exposed by my analysis of council landlords’ financials for the magazine Inside Housing. As of February this year, the lion’s share of this borrowing power – a cool £1.4bn – has been untouched, this indicates. Four out of ten authorities had no plans to put a single penny to good use. And as the graph below shows, the overwhelming majority – nigh on nine out of 10 – possess sufficient loan power to get some development going.

The research also uncovered far more pressing reasons for councils’ failure to get of the house building blocks. Paralysed by fear of rising arrears, many are unwilling to invest until the impact of welfare reforms becomes clear. Others are yet to regain the house building mojo that saw them commission hundreds of thousands of homes a year through the fifties and sixties. New investment is not a priority for authorities primarily focused on cuts.

These pointers make the Treasury review of council housing the most important work on affordable homes for a decade. Led by housing finance lawyer Natalie Elphicke, it aims to discover how councils fit into the increasingly complex jigsaw that is the house building industry.

Unlike those parroting the wish lists of special interest and industry groups, the reviewers will be focused on the practicalities. Such as how councils could help those struggling to find affordable homes in the failing fringes of the market that private industry shuns. Good examples of these interventions already exist in places like Thurrock and Wakefield, where the authorities bankroll building in rundown neighbourhoods until they return to profitability.

The review will ensure such well-targeted tactics become more widely deployed. It is also expected to suggest ways of ‘buddying up’ unskilled authorities with seasoned developers like housing associations or private firms. These seem sensible means of unleashing councils’ largely dormant borrowing potential.

Whatever the review’s recommendations, it will be of interest to people of all political persuasions. The most workable solutions to the current housing crisis will trip not from the pen of Owen Jones and the like, however attractive their ideas seem on the surface. Nor from the self-interested lobbyists.

The answers will come after a prolonged and impartial analysis of some dry, dusty facts on the ground. They won’t make for pithy and punchy manifestos; but they might just help the impoverished.

Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.


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