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George Osborne: Housing crisis will still be here in 10 years’ time

4 February 2014

6:19 PM

4 February 2014

6:19 PM

George Osborne’s evidence to the House of Lords Economic Affairs Committee was dispiriting for a number of reasons. The first was that he told the peers that the chances are that politicians will still be struggling to ensure that housing supply keeps up with demand in 10 years’ time. He said:

‘I imagine if we were all assembled again in 10 years’ time we’d still be talking about the challenge of making sure that our housing supply kept up with housing demand and we’re all legislators here and we all have a responsibility to the next generation.’

Part of his point was that the housing crisis is so big that it would be foolish and rather grandiose for one Chancellor to think that five years’ worth of policymaking would be enough to solve it. But as he spoke, there was just the ghost of dissatisfaction with the policies his government has managed to introduce. Asked whether he thought the current planning settlement was enough, he said:

George Osborne: Well I think the planning reforms are clearly working and you see planning approvals up, planning application up, and the percentage of planning approvals up, and more construction. The various schemes – I mentioned the Help to Buy Shared Equity scheme is supporting the construction of new homes and other schemes to support the builders who need help with their cash flow – and then we have a large social housing programme as well underway, so across the board we are pulling a lot of levers but this is a historic problem for the United Kingdom.

Baroness Noakes: Are there any further changes needed to the planning regime, not that they’d necessarily be popular?

Osborne: Well, look I think at the moment, we’ve just got this new planning regime, and, you know I’m keen to see it bed down and have its effect, it is having, I think, a positive effect in creating new homes, and those homes are being built in appropriate places.

It’s well known that few people in the Treasury really think that the current planning reforms are sufficient. But they also don’t think there’s much they can do before the General Election because voters have been so antagonised by it.

There are a few things, though, that ministers could tweak to at least calm things down at the moment. I understand that the whips are taking soundings from Tory MPs at the moment about whether their councils have local plans in place and the problems with new development in their areas. It will be interesting to see what they come up with.

But there are no tweaks on the way for the Help to Buy scheme: he rejected suggestions that he could reduce the current £600,000 cap on the value of the properties that people can buy with the government’s help.

P.S. I stumbled across some advice for Osborne in our archive… from Enoch Powell in 1950. On whether it was possible for the Conservative party to meet its 1950 pledge of building 300,000 homes, Powell wrote:

‘One more question, which was perhaps the real meaning of the original one: “Can we build 300,000 houses a year and still keep Socialist planning and control ? ” This time the answer is No.’

Interestingly, one of Number 10’s newest advisers, Alex Morton, would argue that the government has kept Socialist planning and control to this day: his Policy Exchange report on planning reform is quite clear that the reforms need to be far more radical than the current settlement. It will be interesting to see how his thinking influences policy from now on.

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