Further and further out of reach. Photo: Getty Images
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The root cause of London's housing crisis: we don't build enough houses

Far from fixing the underlying problem, the Conservatives' mucking around with demand-side issues will only make things worse.

Elizabeth is in her early thirties. In January, after more than a decade living in London, she decided it was time to leave. 

The staggering rise in the cost of renting – up by around £3,000 a year for the average London property since 2010 – has left many of those, like Elizabeth, without a foot on the property ladder considering whether it makes sense to stay here. Meanwhile, increasing house prices have essentially guaranteed that very few of those who do stay will get the opportunity to buy.

Rising costs are perhaps the defining issue, but they are far from the only problem facing London’s housing stock, with inexcusably high levels of overcrowding, homelessness, dire property standards and rogue landlords on the rise.

Yet, these seemingly disparate problems have a common thread; we simply haven’t built enough homes in London. For Elizabeth, this has meant unpalatably high rents. For Emma – who contacted me because her landlord consistently failed to fix a chronic damp problem that led to her son developing asthma – this means increasingly few options to escape the type of negligent landlord to whom she and her husband pay large sums of rent every month.

This raises a fundamental question: Does the proposal to extend Right to Buy to housing associations do anything to solve the extensive problems we have with London’s housing stock?

The National Housing Federation estimates the policy could cost UK taxpayers as much as £12billion if all eligible and able housing association tenants took up their new right. £2billion of this would be required in Greater London. Alternatively, this would be enough to fund the construction of more than 66,000 much needed affordable homes, many of which would be for first-time buyers.

But the implications for housing supply run much deeper than government spending. This is a policy which facilitates state-sanctioned asset stripping of housing associations (many of which are charities), undermining their ability to borrow for new house building. The result could be fewer homes, higher prices and a deepening housing crisis – it is the antithesis of what London should be aspiring to.

There is a double injustice in the proposals though, with plans to fund it by forcing councils to sell their most expensive homes when they become available for re-let. Analysis of the proposals show that this could result in the forced sale of every council home that becomes available in the City of Westminster. The parallels with Shirley Porter are stark, and the implications for London’s mixed and balanced communities dire.

Even then, it is difficult to see how the funding will stack up. The £4.5billion that the Conservative manifesto estimated would be raised through local authority housing sales has been pledged to three different items – the cost of the extra Right to Buy discounts, building replacement homes for those that are sold, and funding a new £1billion ‘Brownfield Regeneration Fund’. Compare this with the NHF estimate that discounts alone could cost up to £12billion and the figures just don’t add up.

Many Londoners will understandably have trouble believing the government will fulfil their pledge to replace all sold homes. The previous Government promised the same in April 2012 when announcing the reinvigoration of Right to Buy. But since then 4,017 council homes have been sold in Greater London and only 1,530 started, and this without the additional pressures of compensating housing associations and funding an additional £1billion programme.

The fact is that we can only fundamentally tackle London’s housing crisis by building more homes, and we need to do so urgently. We can see that the personal dilemma faced by Elizabeth is shared by thousands of other Londoners and that the city’s public services and economic competitiveness are increasingly undermined by this crisis.

Yet, it would be difficult to devise a housing policy that is as carefree with the public finances but as socially damaging as the proposal to extend Right to Buy to housing associations.

Ask yourself this question: If you suddenly found £12billion that you were willing to spend on a housing policy, would you use it in a way that delivers fewer homes, makes it harder for most to get on the property ladder and increases the difficulty of tackling homelessness? I wouldn’t. I don’t think the Government should either.


Tom Copley AM is the Labour London Assembly Housing Spokesperson and a Londonwide Assembly Member


Tom Copley is a Labour member of the London Assembly

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

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