Javid is right. Hammond should borrow more to invest in infrastructure.

30th October 2017

We’re now just a few weeks away from the first Autumn Budget. You can tell because the papers are suddenly full of calls for more spending on this policy, higher wages for that sector, and of course lower taxes.

However, in the slew of policy and spending suggestions, there was one that really caught my eye. That was the suggestion from the excellent DCLG Secretary of State, Sajid Javid, that the Government should be willing to spend more to help build more houses. I strongly agree.

Just look at the Conservative voting figures broken down by housing tenure of the last few years. In 2010, 45 per cent of outright home owners voted Conservative; in 2017, that rose to 55 per cent. With mortgage holders, 36 per cent voted Conservative in 2010; 43 per cent voted for us in 2017. Then compare those results to social tenants, only 26 per cent of whom voted Conservative in the last election (with 57 per cent preferring Labour) and most concerningly private renters, where we fell from 35 per cent of their vote to 31 per cent in the last seven years. Meanwhile, Labour went from getting a 29 per cent vote share amongst private renters in 2010, to 54 per cent in this year’s election.

Conservatives cannot be comfortable with these figures. When the number of private renters seems to be increasing exponentially, the fact that Labour have almost doubled their vote from this group, while our vote fell, could reasonably be said to have stopped us gaining a majority in June. Remember that this was a demographic we won in 2010. These are not people who are naturally anti-Conservative. They have just stopped viewing our party as being on their side. We need to start thinking radically about how we can help these people out.

Conservatives recognise that the most important thing in life is security. This doesn’t just mean physical safety for you and your family, or the general economic security of a strong economy. We have to think more about personal financial security. That means thinking about traditional political areas like wage growth and inflation, but we also need to think about how many families in the UK have seen greater and greater parts of their monthly income eaten up by housing costs. More people are feeling more insecure, each time their rent goes up and their wages don’t; each time they come to the end of a twelve month tenancy and don’t know what will happen next. Previous generations talked proudly about working hard, and setting money aside for a deposit for a house; current generations talk about working just as hard and barely having enough to pay the rent.

Javid is rightly focusing on infrastructure. He makes a compelling argument that we should invest now, while interest rates are at historic lows, in providing the infrastructure around which houses can be built. Without this infrastructure, housing companies have to build more themselves (and driving up prices) or houses just won’t get built in certain areas at all. Small amount of investments from the Government could unleash a large burst of housebuilding from the private sector.

But if this doesn’t turn out to be enough, then we should not be afraid to do even more. One radical option would be to set up a new housing fund run by DCLG, that local authorities would be able to bid for, providing they can show there is support for more housing in their area. They would then use this money to directly fund the building of social rent, market rent, or affordable housing. It would be entirely up to the local authority to decide what is necessary in their local area. Any profit that came in from the programme could then be split between DCLG and the local authority to fund more developments, or other schemes. Some of these houses could also be provided on a rent to buy basis, with the tenants slowly building up their portion of the home over the years, until they own the property outright. By undertaking such a scheme we would provide security, long-term tenancies and a safe and secure route to home ownership in modern Britain at a local level. We would also be doing more to build stable communities, rather than seeing individuals and families moving around every 12 months as they come to the end of tenancies.

The important thing to remember is something that Nick Boles pointed out on Twitter last week. There is a big difference between borrowing to fund the deficit (which we have successfully brought down from unsustainable Labour levels), and borrowing to build houses. That is because you’re creating an asset which retains, or increases in, value and from which you see returns on. While we can lock in low interest rates we would surely see strong returns on the investment, and before long have a self-sustaining system.
Our Party needs to think outside of the box to demonstrate to Labour voters, swing voters and under pressure Conservatives that we are on their side; that we are the party of security. We cannot forget how important personal financial seurity is to supporting families and building communities. We cannot ignore the largest financial concern for so many people in our country. We have to do more to get Britain building.

This article was first published on the Conservative Home website

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