How the Tories can re-engage with working class voters

Rather than aping UKIP, the party should focus on the cost of fuel, the cost of housing, job security and the cost of travel.

The 'town hall debate' in the 1992 US presidential election was one of the most potent moments in modern western politics. An audience member asked, "how has the national debt personally affected each of your lives? And if it hasn't, how can you honestly find a cure for the economic problems of the common people if you have no experience in what's ailing them?" Billionaire Ross Perot was wrongfooted, George Bush Snr muttered something about the deficit, interest rates and his grandchildren. And then Bill Clinton stepped away from the podium and towards the lady in the audience who had asked the question, asking how the recession had affected her.

After establishing that the questioner knew people who had lost their homes and jobs during the recession, Clinton talked about the similar experiences of people he knew in Arkansas before relating it to his overall campaign themes. In a few seconds, Clinton had achieved the holy grail of modern politics - illustrating empathy and authenticity in difficult times. Bush and Perot failed to do that and paid the price. And modern British politicians are largely failing to do this as well, leading, at least in part, to the UKIP surge of last week.
"Politicians don't understand the real world at all." That was the firm view of over 80 per cent of voters in a poll last year. And last Thursday's elections saw the bursting of that dam of frustration with a Westminster elite seen as narrow and out of touch. If mainstream politicians don't act quickly to reconnect with hard-pressed, ordinary voters, they'll find that last week's results could mark the beginning of a trend, rather than a one-off howl of voter rage.
The same poll showed that, for the vast majority of voters, the Tories are seen as the "party of the rich, not ordinary people" - an impression that is one of the party's biggest electoral handicaps. But the leadership of the other parties also seem out of touch with the struggles of much of the country. As people struggle to make their pay packet last and worry about job security, senior politicians are not seen to understand people's everyday struggles.
And that, at least to an extent, has helped contribute to UKIP's surge and the general lack of enthusiasm about all of our mainstream political parties. As Lord Ashcroft's extensive research showed, concern about Europe is not the primary reason for UKIP's rise. Rather, UKIP voters are likely to agree with the statement that the party is "on the side of people like me" - something that they don't regard the mainstream parties as being.  Indeed, a recent YouGov poll found that 53 per cent of voters thought that Labour used to care about "people like me", compared to only 30 per cent today.
That helps explain why the shift to UKIP last Thursday wasn't, as conventional wisdom once suggested, largely from once Tory voters. Indeed, as Mark Pack and John Rentoul have argued, Labour may have lost more votes to UKIP than the Tories. And UKIP seemed to pick up votes from the skilled working class voters once courted so successfully by Thatcher and Blair. Both Labour and the Conservatives failed to capture the imagination of the skilled working class last time, with Labour's vote plunging from 51 per cent in Blair's biggest landslides to 29 per cent.
This disengagement of the skilled working class with the major political parties has hardly come as a surprise. In 1992, 75 per cent of 'C2' voters turned out to vote. In 2010, that figure was 58 per cent.  Parliament remains too middle class, with too few MPs who can genuinely relate to the struggles that accompany a squeeze in living standards. To many voters, frontline politicians all come from a narrow background and have little to no experience of 'the real world'. It was always inevitable that a party would come along that capitalised from this sense of disengagement.
There's no simple solution to this problem, of course, but one thing the mainstream parties mustn't do is to ape UKIP - that would look desperate and forced. Instead, politicians have to try harder to show that they understand the pressures that hard working people are under and do something about it. The Budget was a step in the right direction, but it's clear that so much more needs to be done about the cost of fuel, cost of housing, job security and the cost of travel. The political establishment also has to take active measures to broaden the social base of parliament.
Knee jerking and gesture politics are not going to re-engage voters with mainstream politics. Instead, through their words and actions, politicians have to display the kind of authenticity and empathy that Clinton illustrated to devastating effect a few decades ago.
David Skelton is former deputy director of Policy Exchange and is launching a new campaign group to broaden the appeal of the Conservative Party to working class and ethnic minority voters
David Cameron addresses Conservative Party supporters at the Amberside Sports Club in Nuneaton. Photograph: Getty Images,

David Skelton is the director of Renewal, a new campaign group aiming to broaden the appeal of the Conservative Party to working class and ethnic minority voters. @djskelton

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Has Brexit burst the British housing bubble?

The fall in value of the pound is having a negative impact on property prices.

The high cost of housing in the UK has almost nothing to do with supply and demand. What matters is political control. Rents are high because landlords have gained the upper hand politically. The consequences are vividly illustrated in Ken Loach’s new film focusing on inequality in Britain, I’ Daniel Blake.  As a student in the 1980s I paid £9 a week to rent a room in a shared house in Newcastle upon Tyne. Private rent was low because for decades before then rents had been regulated. It was the lifting of that regulation that meant rents could rise so that now students have to borrow vast sums of money just to have a place to live. Today’s students pay many multiples more in rent than I ever did, and millions of families with children are also struggling because they have to rent privately.

Because rents have been allowed to rise as high as landlords can get away with, the landlords have been encouraged to buy up more and more properties that were once social housing or lived in by a family, who had bought the property with a mortgage. The number of people renting privately doubled between the last two censuses of 2001 and 2011. That has never happened before. It was the end result of years of deregulation and the withdrawal of our government from representing our interests in housing. Well-regulated private renting is a benefit, but without rent regulation it becomes a social evil.

Housing prices are not determined by supply and demand because you do not have a choice about needing to be housed. Allow an unregulated market to develop when social housing is also being cut and there is no choice not to buy what is on offer, other than sleeping on the streets. Prices will go sky-high. The purchase prices for mortgage borrowers also rise to astronomical levels as first-time buyers are competing with landlords to buy properties, and so have to be able to secure a mortgage equal to the amount a landlords can wring out of people desperate for a home.

In the first blog in this series on affordable housing published by Taxpayers Against Poverty, Stephen Hill, director of C2O Futureplanners, explained: “There are over one million less affordable homes than there were in 1980. The population has grown by nearly nine million people. Incomes at the median level are flat, and secure employment is increasingly scarce.” He is correct, but the situation is even worse than that — it is not lack of housing that is the problem. Each annual census in the UK records the amount of housing that exists at each point in time. It does this by recording the number of rooms in homes over a certain size. The number of rooms per person has risen at every census since 1981.

The 2011 census was the first to count bedrooms and found that in England and Wales there were 66 million for a population of 55 million (21 million of whom were married or in a civil partnership). So even if we make the ludicrous assumption that only married people share a bed and no children use bunk-beds, there were at least 22 million bedrooms empty on census night 2011. We have not been building a huge number of new houses or flats in recent years, but we have been adding extensions on to our existing homes and so we now have more housing than we have ever had before, per person and per family. We just share it out more unfairly than we have ever done before.

If housing prices were about supply and demand then our surplus of bedrooms would result in falling prices, but this is not a free market. You are not free to buy a flat that has been left empty in London to appreciate in value by its owner. They do not want to sell, or sometimes even rent it out, and you almost certainly would not have the money even if they did.

It is in the housing market that the majority of investments are made in the UK, housing is where most wealth is held. As we become more and more economically unequal it is through housing that we most clearly see that most of us are losers while just a few (who own multiple properties) are winners. Recent UK governments have been allowing wealth and income inequalities to rise and rise.

As Fred Harrison explained in the second blog in this series, government has not only withdrawn from regulating housing rents and profits to avoid this winner-takes-all-economics — it is now even prepared to provide £2bn to buy properties that home builders can’t sell so that they don’t need to lower prices even if landlords and first-time buyers will not buy their properties. The government sees renting-seeking as a social good, and believes that the market in housing should be regulated less and less with each year that passes, other than intervening to keep prices high and rising. Meanwhile, street homelessness rises, evictions rise, the debt of mortgage holders rises, housing prices rise and a small minority of the population become richer. So how will it end?

You might have thought that prices would stop rising when landlords stopped buying properties because the return on their investments in terms of rent would not making it worth their while paying, say, one million pounds for a three-bed house in a part of London near a tube station. Suppose that the most a family could pay was £20,000 a year in rent. The landlord’s “return” on their investment would only be two per cent a year, ignoring wear-and tear and anything else that they might be able to off-set against paying tax. If the forces that were actually at play were “supply and demand” then surely prices have to stop rising when people can no longer afford the rents?

However, landlords have another return: the escalating value of the property itself. If the property is rising by five per cent a year in value then they are making a seven per cent return when they rent it out, even if annual rents are just two per cent of its value. The rise of five per cent a year is due to speculation which is itself partly fed by a belief that the government of the day will do all it can to protect their investments, but it will only do that up to a certain point.

Because it needs to raise taxes a little given the state of the national finances, the UK government is now withdrawing its support of reckless profit taking by smaller landlords. In October 2016 a group of buy-to-let landlords lost their appeal in the courts to try to continue to be able to claim their mortgage interest payments as a business expense. From 2017 only the largest of landlords who set up companies to rent out their properties will be able to continue to do that.

The government knows that the housing market is in trouble. That is why Philip Hammond, the current Chancellor, announced that their “Help to Buy” scheme (which was aimed at the very best-off of potential first time buyers) will end in December 2016. The government knows that with the risk of falling house prices in future it cannot afford the guarantees that “Help to Buy” created. “Help to Buy” schemes were the previous Chancellor, George Osborne’s biggest spending commitment. They were designed to help inflate the housing market and keep prices rising, but eventually every speculative bubble has to burst.

On 21 September the first reports of a stalling market were released under headlines that included: “Q2 UK house sales at an all-time quarterly low says Land Registry”. UK Land Registry figures now show housing prices to have fallen in London by 7% so far in 2016, with the number of sales roughly halving. Investors have stopped buying; if a recent investor wants to sell they have to do so at a loss. Nationally prices fell by 4.5%.

So what happened to the magic-money-tree? In short the pound fell in value and it has been continuing to fall ever since the UK voted to leave the EU. There was always going to be “the event” that triggered the end of speculation and it is looking more and more likely as if Brexit was that event. Once the pound begins to fall in value then any overseas investor knows that if they buy property in the UK, even if its value in pounds does not fall, it will be worth less to them in future.

Suddenly UK housing is not a safe asset. Suddenly prospective landlords actually have to try to rely on their tenants’ rent to pay back their borrowings. Suddenly housing prices change despite no great alteration in supply or demand. Suddenly the whole edifice looks unsafe, not just for the majority of young and almost all poor people in Britain, but for the large majority of the population.

It was never “supply and demand” that determined our housing costs and profits. Relying on that belief did not result in greatly improved cheaper housing for most people, but it was easy to claim that somehow tomorrow would be better if we just left it to the market — until we left it to the ever more unregulated market for too long. Housing costs, prices and supply are determined by governments, including those that shirk their responsibilities and have too much concern for the economic fortunes of the affluent few.


This is part of a series of blogs on affordable housing published by Taxpayers Against Poverty. You can read others in the series on their website or sign up to attend their seminar in Parliament on the 16th November here: