A recipe for a U-turn

Government should talk to experts earlier.

This morning the CBI boss John Cridland has moaned to the Financial Times that the government’s growth plans have fallen into something of an implementation black hole. Having announced major plans to get the economy back on track last November the plans are now, says Cridland, mired in bureaucracy and sitting gathering dust on ministers’ and civil servants’ desks.

While this is not a new problem, the time lag between announcement and action does seem to have worsened under the current government. Some observers put this down to cuts in departmental budgets, with fewer civil servants able to jump to it and get new initiatives moving. Others claim its down to a lack of joined-up thinking across government departments.

In particular, the growth plan is apparently suffering from the emasculation of business secretary Vince Cable, since BIS should be a key co-ordinating ministry in this area. Whatever the cause, the outcome is the same. Months have passed without, as Cridland puts it, us seeing “diggers on the ground”. Cridland’s own view is that members of the government appear to be “dazzled in the headlights”.

I wonder if the reality might be something simpler. This expectation of early action has been caused by a tendency to rush into making announcements for political expediency, rather than weighing up the practical considerations.

A senior banker told me last week that following George Osborne’s Mansion House speech the week before, at which several key new policies around stimulating lending to small businesses were announced, his firm received a flurry of phone calls from Treasury officials asking exactly what those policies might mean in practice and how they might be implemented. To re-cap, that’s officials working out the practical details of implementing policies after they have been announced.

If nothing else that sounds like a recipe for a series of sudden and unexplained policy U-turns. As the omnishambles budget unfolded, George Osborne told the Today programme that the only worse than listening was not listening.

I’d suggest that it would make more sense to do that listening – to professionals and industry experts in particular – before announcing key policies rather than after.

This article originally appeared in economia.

Photograph: Getty Images

Richard Cree is the Editor of Economia.

Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.