Boris Johnson’s Thatcherite housing ideas won’t go very far

0
Placeholder while loading article actions

In the words of Noel Coward’s bubbly song, ‘there are bad times just around the corner’ for Boris Johnson.

The Prime Minister ends the week injured on foot, having narrowly survived a vote of no confidence against the leadership of his Conservative party on Monday. While such an ordeal was long anticipated, the ferocity of the insurgency caught even a leader known for his boosterism by surprise.

Opinion polls and 41% of his MPs may be against him, but Johnson is usually the most resourceful when he has his back to the wall. Can it stop the rot?

First, the Prime Minister must find a clearer strategy to survive. According to the evidence so far, he has no plan other than personal defiance, a game to buy time, and scattered policy proposals.

The context of this political fight to the death is grim. An OECD report released this week predicts that the UK will see the weakest growth of the G7 countries next year (at 0%), driven by double-digit inflation. Household incomes, which have so far supported the stuttering economy, will fall sharply in real terms.

It’s not fertile ground to fight a general election two years from now, and Johnson will be grateful to survive that long. His former Brexit minister David Frost, now the darling of the party’s nervous right, warns the PM will be out by October unless he presents ‘a Conservative 10-year plan’ to change Britain. Brittany.

In the short term, two by-elections in seats held by the Tories at the end of June should lead to victory for Labor in the north and perhaps the newly resurgent Liberal Democrats in the south west. The House of Commons Privileges Committee will also decide whether Johnson misled Parliament over the Partygate scandal – a matter of resignation, although Johnson is not one to resign.

In a high-profile speech in Blackpool on Thursday, the Prime Minister set out to prove his government still had a purpose. Yet he begged many of the same old questions.

Johnson’s former chief adviser, Dominic Cummings, once compared it to “a shopping cart that breaks from one side of the aisle to the other.” Despite his large majority in the House of Commons, rebel factions in his party are already vetoing controversial legislation. After an unconvincing victory on Monday, will the Prime Minister dare to take a bold course that could turn more MPs against him?

A natural big spender, Johnson is being urged by his party’s powerful right wing to fund tax cuts from state spending cuts. They demand “red meat” and the juicer the better – recent tax hikes must be reversed and VAT on fuel bills reduced. In Blackpool, Johnson ritually paid homage to this wing by accepting that the tax burden was too high. But he backed his fiscally orthodox chancellor who wants to postpone income tax cuts until next year. Watch for the next swing.

The centerpiece of his speech, however, was a proposal to revive ‘The Right to Buy’, an iconic policy associated with Margaret Thatcher that allowed millions of council housing tenants to buy their homes at reduced prices. In the 1980s, this drove a wedge between ambitious working-class voters and Labour, their former political home. The electoral logic of home ownership remains the same: 57% of those who fully own their homes and 43% of those with mortgages voted for the Conservatives in 2019, while large percentages of social tenants and private tenants opted for Labour.

But a lot has changed since Maggie’s big homeownership push. Since peaking in 1991, homeownership has declined, especially among young people. Among those aged 35 to 44, this figure was 78% some 30 years ago. Today, it is at 56%. For those under 34, it is well under half. The cost of a deposit is also constantly increasing – during the pandemic it has usually reached 110% of the average annual salary.

In his Blackpool speech, Johnson proposed that millions of households should have the right to buy the property they rent from housing associations, as they currently can with social housing. Housing assistance that low-income people receive from the state could also be used to purchase their property.

However, this idea was already tested by a previous conservative administration and abandoned because it was too cumbersome and expensive. How will the current government compensate largely private housing associations for property sold to tenants? Money is already tight, and Johnson has also pledged to replace sold properties with new homes.

In theory, economic logic prevails. A new report from the Center for Policy Studies think tank estimates that just 2.3p is spent by the state encouraging homeownership for every pound that subsidizes rental. Long-term savings to the Treasury are set at £140,000 ($172,480) for each house sold. Yet in the medium term it would cost £3bn to fund the scheme, and the government is offering £500m at best.

The key policy is also risky. Getting first-time buyers to pay a smaller down payment has also been tried before. Last time around, it helped fuel house price inflation and cost insurers billions when the bubble burst. The Treasury is reluctant to take on the responsibility of insuring against defaulters.

The simplest solution is to build more homes and continue to loosen planning rules, as Johnson promised in a key part of his party’s manifesto. Yet there too he is torn.

After furious opposition from several of his MPs and the by-election loss of a southern seat to the Liberal Democrats last year, Johnson has abandoned plans for a planning bylaw bonfire that will restrict construction in desirable (conservative) neighborhoods. In his Blackpool speech, he even moved away from the government’s current target of building 300,000 homes a year.

Meanwhile, the Prime Minister boasts of doing everything for growth, as he pledged to revise the Northern Ireland Protocol which he himself negotiated with the European Union. Is he mollifying his Brexit rights by tearing up his deal and risking a trade war with Brussels that will hit the economy? Or will he rely on his pro-EU MPs and the House of Lords to defeat the legislation and save him from himself?

The achievements he has to his credit all stem from his executive authority – forcing Brexit through, appointing Kate Bingham to implement Europe’s fastest pandemic vaccination program and relying on weaponry of Ukraine right from the start. Unless he can revitalize his calling as commander-in-chief of his party, Johnson will face a political firing squad.

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Martin Ivens is the editor of the Times Literary Supplement. Previously, he was editor of the Sunday Times of London and its main political commentator.

More stories like this are available at bloomberg.com/opinion

Share.

Comments are closed.