This article was originally written in 2015……
The KLF burned a million pounds. Yet what the Government is proposing on housing is worse.
Last week started so brightly. The Homes for Britain rally. Valiant Home Guard Uniforms. Politicians promising to build more homes. And it ended so badly. Where did it all go so wrong?
Firstly the budget came along. Successive governments have got addicted to interfering in the housing market to help some group that is deemed electorally important. From key workers (who always seem to includes nurses, teachers and police) to first time buyers there have been schemes that brandish extremely large sums of public money and make the housing market even more unaffordable. The latest current wheeze is for a ‘Help to Buy ISA’ on top of the Help to Buy scheme. This has been criticised by the Institute of Financial Studies as a ‘dubious’ policy that could push up house prices further.
A few years ago the KLF burned a million pounds. You can watch it on You Tube. It is extremely depressing. Yet what the government is doing is worse. Not only are they burning millions of pounds for no effect in doing so they are making the housing market more unaffordable. The simple solution is to build more homes. Lots of them. This would reduce the pressure on the housing market and lower the housing benefit bill.
Yesterday it all got a lot worse. The floating of the idea of extending Right To Buy to housing associations, with presumably the same discounts as for council tenants, isn’t exactly new. This is all designed to echo the Thatcher Right to Buy for council tenants from the 1980’s and presumably reap the same electoral rewards. Yet someone has to pay for all these discounts.
The recent record of the extension of the Right To Buy discount for council housing has been a disaster. Promises of one-for-one replacement have proven empty and delivered a pitiful amount of new homes whilst reducing the amount of affordable social housing homes further.
The Housing Association sector has some £200bn of pubic and private assets invested in it. It builds many of the new homes needed. To borrow money it needs financial stability. The biggest threat to Housing Associations remains welfare reform and its implications for income streams. However making Housing Associations pay for Right to Buy discounts will inevitably result in less money for new build, which makes housing even more unaffordable.
The KLF now regret burning that million pounds.