Isabel Hardman

George Osborne has won over the IMF to austerity. Now can he win over Eric Pickles to planning reform?

George Osborne has won over the IMF to austerity. Now can he win over Eric Pickles to planning reform?
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Fresh from celebrating the Tories' victory in Newark, George Osborne is continuing a very joyful day by celebrating the International Monetary Fund admitting that it got it wrong on austerity. Christine Lagarde today conceded that 'we underestimated the growth of the UK economy in our growth forecast a year ago'. The report the IMF published today contains its usual mix of things that all parties can celebrate: plenty of compliments for the Government such as 'the economy has rebounded strongly and growth is becoming more balanced', along with criticisms that Labour finds useful for its press releases.

Osborne has very little to worry about immediately from the main criticism, which unsurprisingly relates to the Help to Buy scheme. The concluding statement says:

'Help to buy is enabling creditworthy lower-income households to purchase homes, especially outside London and the Southeast. The program has also played a role in unlocking mortgage credit for lower-income borrowers from other sources. If these flows increase significantly, the FPC and the Treasury may wish to consider whether HtB should be modified or even remains necessary for the full three years of the policy.'

There's an 'if' in that recommendation which means Osborne can dodge the criticisms reasonably well, until after the 2015 election at least. And he hopes that the Help to Buy scheme will help that victory by suggesting to voters that the Tories are on the side of hardworking people and so on. The polling certainly backs that up: in July 2013, 75 per cent of voters had heard of this policy. But in a later point in the IMF report, a challenge pops up:

'New initiatives to spur house building are welcome, but political consensus for further reform is needed. The government has introduced major changes to the planning system to create incentives for local councils to increase available land for housing development, and there are some signs of recovery in housing construction. Nonetheless, key inefficiencies remain. These include: unnecessary constraints on key brownfield and greenfield developments; tax policies that discourage the most economically-efficient use of property and undeveloped rental markets with relatively short lease terms.'

The challenge for Osborne when it comes to finding political consensus for reform comes not from the other parties, but from within his own, where key figures such as Eric Pickles are desperately nervous of any further reforms to planning. How to secure political consent from colleagues will be a key challenge for any Tory chancellor after 2015.