To win the next general election in four or five years’ time, Labour needs to be more ambitious and focus more clearly on what people want. We need to look at how we can make a major change in the availability of housing, childcare and green jobs. Clearly, this cannot be done through public spending alone – even if we had a rosy fiscal outlook. A mixed economy facilitates diversity and innovation. But if we are to make progress, government action is needed through the flexible use of a variety of policy instruments.
Housing problems are well known: high and rising housing costs, particularly in London – the latest figures show that, on average earnings, a first-time buyer in the capital would be 52; serious shortages, waiting lists and overcrowding; poor standards, low energy efficiency and mismanaged private rented stock, which all bring disastrous levels of anti-social behaviour into some streets.
A man in a terraced house in my Durham constituency – the last of two owners in his street – told me that the neighbouring house had been let to tenants who did a moonlight flit, taking with them the boiler and the bath, but not switching off the water, so the whole street was flooded. The landlord, when they tracked him down, lived in Devon. To coin a phrase: “We can’t go on like this”.
And yet the last Government did put a great deal of energy and resources into housing. Unfortunately, three quarters of this was subsidy payments through housing benefit rather than the funds for new building. Any government looking seriously at this problem is faced with the same dilemma: how to switch resource to tackling the underlying problem, without unfairly cutting the incomes of those dependant on housing benefit.
When I was appointed as a minister at the Department of Work and Pensions, officials trooped into my room and, with that mixture of sympathy and condescension in which Whitehall specialises, said: “We’ve come to talk to you about housing benefit. It is very complicated and you probably don’t know much about it.”
“As a matter of fact”, I told them, “30 years ago I was on the working group that invented it. Do you still have those diagrams that show how the tapers affect work incentives?” And they did. Changes to the structure and formulae of housing benefit are important and can increase the effectiveness of support without putting up barriers to work. But they do not secure the big prize of solving the housing crisis. The Conservative-Liberal Democrat Government is like an elephant trampling on every delicate flower, cutting both funds for building and benefits.
Tabloid newspapers have been running stories on “immigrant families receiving £50,000 a year to live in Mayfair”. In reality, fewer than 100 households have ever received such high payments. But ministers are now using this as a smokescreen to cut benefits across the nation.
Cambridge University calculates that 134,000 families will have to move. The severely disabled and poor pensioners will be among the hardest hit. Apart from opposing these cuts, Labour needs an answer to the question: “What would you do?” Ed Balls and John Healey have both been creative in looking at a £6 billion building programme to build 100,000 homes, boosting jobs and growth. If we looked at this money and the benefit resources together, we would be able to make further progress.
But to succeed we would have to be prepared to go against some long-held principles and articles of faith. Small-scale individual schemes for turning benefit payments into equity have been tried, most recently in Newham, but have proved very costly and prone to moral hazard. How can we stop people hiding assets to get onto schemes? Such schemes change the ownership of properties, but they don’t create new homes.
Nevertheless, the principle of turning the flow of benefit payments into finance for new building is right – and we need to do it on a big scale. The underlying reason for the increasing housing benefit bill is rising private sector rents. So controlling this is only tolerable, in human terms, if rents are similarly controlled. Short-term controls in rent hot spots could give more seed capital to leverage in private finance for building, which would actually tackle the underlying shortages in some areas. At the same time, the biggest variable in new building costs across the country is land prices. We need to re-examine a planning process which enables property developers to buy land, secure planning permission and then wait to build until they can maximise their gain.
This is not just about housing, it is also a question of ambition. If we want to make a real difference to our fellow citizens and give them a reason to vote Labour next time, we need to be far more creative and flexible in securing what they want.
Helen Goodman is Labour MP for Bishop Auckland
