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19 September 2018

Theresa May’s social housing plans show how British politics is moving to the left

Faced with the threat of Labour, the Tories have abandoned the ideological ambition of remorselessly shrinking the state. 

By George Eaton

The problem with social housing, David Cameron and George Osborne believed, was that it “just creates more Labour voters”. This attitude was confirmed by their policies. Rather than building more affordable homes, the Conservatives focused on selling off yet more social housing (through Right to Buy) and enriching homeowners (through Help to Buy).

But Theresa May’s speech today confirms a marked change in Tory housing policy. Having previously announced £9bn in public funding for council and housing association homes, May announced a further £2bn for the latter from 2022-28 (the Tories previously ended almost all state funding for council homes).

Labour has rightly noted that this remains insufficient to compensate for a severe shortfall (the number of homes built for social rent last year fell to a record low of 5,900). But a new trajectory has been set.

Equally notable was May’s implicit rebuke to her Tory predecessors. “Many people in society including too many politicians continue to look down on social housing and, by extension, the people who call it their home,” the Prime Minister observed in her speech to the National Housing Federation. Who could she possibly have in mind?

The rebirth of social housing reflects the wider leftwards drift of British politics. Austerity is far from over (most areas, outside of the NHS and international development, face further cuts in the next spending round). But the Thatcherite ambition to remorselessly shrink the state has been abandoned.

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Faced with a decaying public realm (as charted in the New Statesman’s Crumbling Britain series), and the threat of Jeremy Corbyn’s Labour, the Conservatives, for the first time in a decade, are embracing higher spending. Though overshadowed by the absurd claim of a “Brexit dividend”, Theresa May’s pledge to raise taxes to sustain the NHS (£25bn extra by 2023/24) was a significant concession to the Tories’ ideological opponents.

Rather than challenging the state-funded model, the Conservatives have acknowledged that the public favour a social democratic approach. Polls have repeatedly shown that voters are willing to pay higher taxes to sustain the NHS (“the closest thing the English people have to a religion” in former chancellor Nigel Lawson’s imperishable description) as they did when Gordon Brown increased National Insurance in 2002.  

The past Tory aim of achieving an overall budget surplus by 2019/20 has been entirely disregarded. And on the right, few now talk of cutting the top rate of income tax from 45p to 40p, still less of reducing the state to just 35 per cent of GDP (as was Osborne’s ambition). The May government, unlikely its predecessor, has borrowed to invest in council housing.

This shift reflects both public weariness with austerity and Corbyn’s rise. Such is the right’s fear of a left-wing Labour government (whose renationalisation programme, for instance, enjoys overwhelming support) that they are prepared to break with ideology in an attempt to appease voters. As a Tory MP told me in 2016, the Labour leader has “moved the Overton window” – the spectrum of policies deemed acceptable by voters and the political class.

But the UK’s leftwards trajectory also owes something to Brexit. Though many Tory Leavers, such as Daniel Hannan and Liam Fox, are small state libertarians, their campaign was a collectivist one. The promise of £350m extra a week for the NHS (now pledged by May) was an appeal, albeit cynical, to socialist instincts. Brexit was framed as a post-austerity project. Government would expand to better care for British citizens and to keep others out.

As May’s domestic announcements show, far from heralding a a libertarian age, as Tory Leavers once hoped, Brexit is ushering in a statist one.