Monday, 3 September 2012

Right issue – wrong solution

George Osborne has kept repeating his mantra “Cutting the deficit is our number one priority.” However, each and every month that he has been Chancellor, the deficit has increased.

Economic growth has stalled. All the economic forecasters have been busily cutting the prospects for the future. The balance of trade figures – the difference between our imports and exports - have massively worsened.

And, it’s going to get worse, as only 10% of the public expenditure cuts that Osborne has announced have so far been implemented. The rich are getting richer – partly due to the cut in the top rate of income tax that Osborne announced, and Nick Clegg supported, in the budget – and the poor, including all low-income working families, are bearing the brunt.

New housing starts have fallen to less than 100,000 – compared to the 250,000 annual starts that the Barker Review said was required. Homelessness is up, and rents keep rising.

We have just been through a major review of the planning framework, where the government was forced to back down on its proposals to allow developers free reign on the green belt and to build on playing fields. Now, this weekend ‘George Osborne invited developers on to the green belt yesterday and promised new fast-track planning laws to get Britain building its way back to prosperity.’

So, Osborne has finally recognized that we have a housing problem, but his ideological blinkers and policy mantra immediately has him reaching for the wrong solution.

There is no shortage of housing land with planning permission. It’s not a supply-side problem; it’s a lack of demand that’s the issue. Whilst ever ordinary families are concerned about their own economic prospects, they are unlikely to commit themselves to new financial commitments.

The developers are sitting on huge land banks, it is not planning that is the problem but the state of the economy and the effect on family finances.