Confusion grows over the purpose of the coalition

Coalition 2.0, an attempt to thrash out a joint agenda for the second half of parliament, has been w

They called it Coalition 2.0 -- a working group of ministers and policy wonk Tories and Lib Dems, with the task of thrashing out a joint agenda for the government for the second half of the parliament. Last summer's coalition agreement doesn't contain enough plans to fill up a whole legislative term. Or at least it wasn't meant to, but with sufficient "pauses" along the lines of the recent NHS reform pit stop, they might eke it out for a good few years. That wouldn't look good though and the more enthusiastic supporters of Coalition 2.0 thought it might deliver a second formal agreement. It won't. The whole thing has been downgraded, with one participant telling me recently it is most likely to deliver some vague statement of shared principles after the Olympics next summer. It is a sign of growing confusion at the heart of government about what the coalition is actually for -- the subject of my column in this week's magazine.

On the Conservative side, I've looked at the competition between what I call Romantic and Pragmatic tendencies in David Cameron's inner circle -- those that see the whole project in terms of a grand re-alignment of politics, and those that see coalition more as a means to a Tory end: securing a second term with an outright majority.

That has focused Lib Dem minds on the need to carve out a distinct and positive agenda within the coalition. Party strategists know they won't make any progress with voters by simply watering down Tory proposals, as they did with the NHS reform.

Clegg can hardly build an electoral recovery by casting himself as an iceberg, lurking mostly beneath the surface waiting to sink Tory boats. If the Lib Dems block too much legislation the Tories will denounce them as unfit for office. "There's no advantage to us from stalemate government," says one senior Clegg aide.

How to avoid stalemate was the main subject of discussions at a recent Lib Dem "away day" (technically two days) in Bingley, Yorkshire -- in a conference centre and hotel in a converted Gothic mansion. One detail from that meeting of no great consequence and therefore not included the column: there was a pub quiz to break up the heavy political chatter. The result was close, but I gather deputy leader Simon Hughes's table won. Clegg's Special Branch security protection team also put in an impressive performance, apparently.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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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.