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The public won't buy Right to Buy

David Cameron's Right to Buy policy scored good headlines but the public won't buy it.

Earlier this week, David Cameron announced the Conservative Party’s flagship election policy: to extend the Right to Buy to housing association tenants. The discounts, it was explained, would be funded by selling off high-value council houses. Scoring every national paper’s front page (bar The Mirror) was certainly the PR coup that that Conservative Party was looking for, but more in-depth analysis has been mixed. Will this policy stand the, albeit short, test of time between now and polling day?

I hope not. I don’t think that voters will buy it for three reasons: unlike politicians the general public understand that this nation’s housing crisis’ roots lie in the shortage of homes, particularly affordable homes; the public have also been told time and time again to keep the faith that we’re midway through a programme of austerity; and, the public will recognise that it is wholly unfair.

Our polling shows that 8 in 10 members of the public believe that there is a housing crisis in this country. And, perhaps unsurprisingly, they don’t think that an extension of the Right to Buy policy is the answer. Just 16% think extending Right to Buy to housing associations is good way to tackle the affordability crisis, in comparison to 46% who want the Government to give more public money to housing associations and councils to build more affordable homes that will benefit more people. 

Swathes of the public will almost certainly not ‘buy’ this policy, especially those millions of people in private rented homes who are desperate to buy but have no hope of doing so, nor the three million adult children living with their parents because they can’t afford to rent or buy. Little wonder then that 60% of the public believe that it would be unfair for social housing tenants to get a discount to buy their home while private renters do not.

The £17.5bn the Conservatives are planning to raise to fund the discount is enough for housing associations to build nearly one million shared ownership homes open to everyone, not just the lucky few already well housed in secure social homes. That would be a far better way of meeting the nation’s housing aspirations and ambitions than this policy.

 

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR