The Tories are obsessed with home ownership in the same way that the Catholic Church is obsessed with sex and the Church of England with gender. It is the ruination of the potential for something more valuable and worthy from all three.
Harold Macmillan presided over the great post war Tory triumph of building 300,000 new houses per year in the 1950s. Unfortunately the need to provide modern affordable homes to rent in the public sector, which led to the biggest home building era since Victorian times and massive slum clearance, gave way to a notion that everyone should own a home; a cynical policy based on the premise that owner occupiers vote Tory.
The first housing bubble occurred in 1963/64, the next in 1972/73, the next in the late eighties and the last through most of the naughties. All but the last were in periods of Tory rule. All led to recessions. The last was under New Labour when the cat fighting Blair and Brown thought it would win votes if they wore Tory clothes. All these home ownership binges have sucked resources from the wealth creating economy, from industry and business and have led to over inflated property assets and borrowing beyond reasonable means.
Economies like France and Germany where property ownership is less of a priority and the rental sector better organised have sustained better industrial growth and are now significantly less burdened by total debt. The Tory obsession led to the sale of council houses at a huge discount of their market value, though near to their true value, which gained Thatcher lots of previous Labour votes. Had she ploughed the sale proceeds into more housing stock, things might have worked out. Instead all this money was taken from local authorities who had built the housing and blown by central government. We now have a chronic housing shortage and the lowest level of new house building since the great depression.
The half-witted response of the Tory led Coalition, flying in the face of all the data and accumulated wisdom from disasters past, is to provide public guarantees for mortgages which the re-organised financial services industry, regard as unwise and beyond the prudent levels of both ability to repay and value security of the asset. This new plan will help all the wrong people to do things they will regret and risks, as was repeated again and again on TV yesterday by commentators of every persuasion, another housing bubble. This is utter madness.
What is required is a massive house building programme of affordable homes to rent on the scale of Macmillan’s effort. A million homes over five years. This would boost the construction industry and should be set alongside infrastructure renewal. The cost of housing would come down rather than go up and the economic revival would help boost the wealth creating economy to broaden its base and resilience for the prosperity of future generations. To do this, without fresh borrowing, would require a more focused and creative approach to quantitative easing. This is where the thinking should be directed, so as to create a sounder base for economic revival. Instead we have a cheap off-balance sheet trick to gain votes. It will fail in every direction, but not until it has done much damage.
This nation deserves better.
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