Here are Grant Shapps’ answers to the questions put forward by CoffeeHousers:
Colin
“What advice do you have for the individuals who are now deep in debt, after a decade long credit bubble; especially now that the safety net of massive house price rises is not there to save them?”
The first thing to say is that someone who finds themselves in debt should seek urgent debt counseling advice, ideally before things get completely out of control. Either way, seeking professional help from an organisation like the Citizens Advice Bureau is an absolute must because all creditors will prefer to be in discussion and negotiation with their debtor. Tempting as it can be, burying your head in the sand is just about the worst approach to take.
Gordon Brown is fond of telling us that despite 11 years in power as Chancellor and then PM, the economic woes are nothing to do with him. He is wrong. One of his first acts was to remove responsibility from the Bank of England for calling time on banks who were overstretching their own capacity to lend. The result was the easy provision of mortgages which bore no relation to someone’s earnings. The housing credit bubble therefore grew, in part, as a direct response to Gordon Brown’s change to the regulatory regime for the banks. He cannot now walk away from his responsibility. Individuals obviously have a key responsibility for managing their own household budgets, but in a world where housing became so expensive, partly as a result of the lax credit environment, Brown is in many ways the bailiff knocking at your door.
David Preiser
“The people who are losing their homes due to mortgage problems can no longer afford to be home owners in the current climate, so would need to find “affordable housing”. Would you authorize and fund the construction of new, “affordable housing” units to provide accommodation for these people? And what about all those who now have no chance of buying a home in the current credit climate?”
One of the big difference between this recession and that of the early 1990s is that this year we will probably see a record low in terms of the number of affordable houses built. This is in stark contrast to 1992 when the then Housing Minister Sir George Young ensured that 60,000 affordable homes were constructed. The difference is that government now puts a much smaller share of money into each affordable unit built, expecting the private sector to fund the balance. But in the current financial climate the economics just don’t stack up for house-building, whilst the waiting lists grow by the day. We believe that the government should be thinking more creatively about this problem and assist a house-building industry that is on its knees.
Rex Burr
“How would you, ‘Get the housing market moving again’ and prevent the formation of another destructive bubble?
The market is not a suitable system for housing because the supply is not free to respond to demand.”
Back in 2004 the government commissioned economist Kate Barker to write a report which was exclusively about the supply side of housing (in other words how many homes are built). The government used this report, which was later updated by Barker, as a basis to propose its flawed 3m homes by 2020 headline grabbing announcement. Unfortunately there were two problems with this approach.
Firstly, housing is every bit as much about demand as it is supply, yet the terms of reference provided to Kate Barker prevented any consideration of broader policies which might impact on the number of homes we require in this country.
Second, the reason why housing was becoming so incredibly unaffordable turned out to be as much about the explosion in credit – which took place because Gordon Brown removed the ability of the Bank of England to call time on bank lending – as it did lack of house building.
Moving forward there are three ways to prevent another destructive bubble. First, we have to ensure that the Bank of England regains the power to call time on banks who over-leverage their balance sheets by engaging in reckless lending. This would prevent the loose credit that led to the house price explosion. Second, we have to consistently build more homes. It surprises many people to learn that this Labour government has consistently built far fewer homes than the last two Conservative administrations. On average Labour has overseen just 145,000 new dwellings per year, compared with 176,000 under Margaret Thatcher and John Major. We will get back to house building by providing real incentives to local communities to develop, rather than engaging in top-down, national and regional house building targets which have manifestly failed to produce more homes. You can think of our approach as being more flexible and responsive to local communities needs. More market driven. Third, it’s crazy to only consider the supply side of housing and so a proper review needs to take into account demand for housing which would properly consider the factors leading to increased demand like migration and the size and shape of families in the future – what you might think of as the Breakdown Britain agenda which has led to people living alone much more than in the past.
Mark Stockwell
“Grant
You have been admirably candid about the need to build more houses to tackle the housing crisis and to smooth the boom bust cycle in the market. How do you propose to overcome opposition to this from environmental campaigners, including many in your own party?”
The top-down approach to housing with massive headline grabbing targets dictated by the Prime Minister has been a complete failure. It’s clear that communities resent the regional structure which leads to so called Regional Spatial Strategies (RSSs) which seek to instruct local communities about how their own areas should develop. But not only does it put the backs up of local residents, it also fails to deliver the homes we need in this country. Everyone loses out.
As I’ve indicated in a previous answer, less housing of every type has been built in each year under this government than by its Conservative predecessor, but we managed to build an average of 31,000 more dwellings a year without the top-down targets or the slow clunking regional structures in place today. So our plan will be not only to return to the days when we have a proper conversation with planning authorities at a much more local level about what needs to be done to satisfy their housing aspirations, but we’ll also specifically incentivise local people and local government to produce the right level of housing. We’ll do this by ensuring that rather than being heavily inconvenienced by development which nearly always seems to destroy local quality of life under the present regime, we will seek to bring benefits to local communities when they do develop. We will establish a direct link between more houses being built and the collection of 100% of the council tax for those local authorities who develop their communities. We will ensure that once planning gain returns to the system it’s the existing community, rather than the one which has yet to be built, that gets the benefit. And we’ll join up policies that mean that growing populations get to keep their cherished services like post offices, hospitals and schools, rather than be both forced to expand and scale back popular local services at the same time – as is incidentally the case in my own Welwyn Hatfield constituency.
We will lend our support to measures which build sustainable, eco-friendly communities on Brownfield sites, provided the plans have local support. Yet we are concerned that Gordon Brown’s top-down plans will undermine local democracy, harm the environment and will not be accompanied by the necessary infrastructure.
Environmental protection and tackling climate change need to be at the heart of Government policy. We will not weaken national Green Belt protection (PPG2) or national protection for farmland, or undermine special designations like National Parks, SSSIs or AONBs.
Lastly, the government has wrongly framed anyone who is worried about the future of their communities as a nimby. This is both wrong and misleading. I constantly visit communities including villages and towns who are desperate to develop, but just not in the way that the flawed Regional Spatial Strategy tells them they must. Adding to existing conurbations will prove both popular and workable, but we must learn to work with people, not against them.
rugfish
“Is there any problem shifting liability for Stamp Duty to the seller, increasing it to 5% and bringing MIRAS back in to get the market working again?
The way I see it this would pay for itself.”
I don’t think this is the answer. Moving Stamp Duty to the seller would of course require a rather tricky transition period which would most likely distort the market in a rather undesirable fashion. Regardless, I would struggle with a system which sought to increase tax on Stamp Duty and then return some of the tax through MIRAS. Bearing in mind that each time the government collects and redistributes your money it loses some along the way in administration and bureaucracy, I would need some convincing that this would be a worthwhile and workable solution.
Time Will Tell
“Why should council house tenants in Waverley (Surrey) hand over 48% of this year’s Housing Revenue Account to the Treasury – £10.8m out of £22m – and as a result cannot possibly meet the Decent Homes Standards by 2010 as required by government.
In the 2009/10 financial year, the tax on tenants rises to 51% and subsequently to 54%.
Selling a council house does little to help as 75% of the proceeds go to central government -aka Labour heartlands. Hackney received a £44m subsidy this year – that Waverley has three areas of severe deprivation apparently counts for nothing.
Much more social housing is a with huge priority with 3000 people on the waiting list but only c300 properties becoming available each year out of total stock of 5000 units.
It is very important that the Conservatives can give a reasoned response to a huge national problem which will inevitably get much worse.
Please – no platitudes as this crisis transcends party politics.”
A problem that I’m acutely aware of from my own constituency where £16m is to be sent to central government this year from the council rents paid by my constituents, some of whom live in quite severe deprivation. This ‘Tenants Tax’ has become the latest weapon in the government’s drive to centralise everything and the most worrying part of all is that having collected in all of the rent money, the Treasury then grabs £200m which is never spent on housing needs anywhere in the country!
The so called Negative Housing Revenue Account is an enormously complex area of local government finance and as you will have gathered from one of my previous answers above, we don’t believe that it’s generally productive to channel money via central government because too much gets eaten up in transit.
Comments