Gove’s answer to the levelling up doubters

As Britain’s first Secretary of State for Levelling Up, Housing and Communities, Michael Gove can surely be under no illusions as to the task that awaits him. But should any last vestiges of complacency remain, then the opening remarks to The Spectator’s panel discussion on social housing – held at the 2021 Conservative party conference – should have helped dispel them.

‘I honestly can’t remember the last time I talked about housing without saying the word “crisis” after it,’ began Helen Barnard, deputy director of the Joseph Rowntree Foundation (which sponsored the event) in her opening remarks. That sentiment was shortly echoed in tone in the statements of our other guests: Bob Blackman MP, chair of the all-party parliamentary group on Ending Homelessness; Councillor James Jamieson, chair of the Local Government Association and a member of Central Bedfordshire council; and Professor Jo Richardson, president of the Chartered Institute of Housing. The consensus was clear: Mr Gove had his work cut out for him.

For Ms Barnard, though, the more important question was defining the specific nature of the housing crisis. ‘I think what we’ve really seen, and in particular during the pandemic, is that the impact of the crisis lands most heavily on people on low incomes who have the fewest options in the housing market,’ she said. In support of this, she pointed to her foundation’s own research which showed that nearly one million private renters were unable to afford their rent. ‘This is one of the biggest things driving people to food banks or into debt,’ she said.

At the root of this problem, she added, was the lack of social housing. ‘Our analysis shows that we currently need 90,000 more social-rented homes per year to deal with that need. Yet we’re only building around 6,000, while also losing around 15,000 a year through “right to buy”,’ she said. This great shortage of social housing, she said, had been obscured by a slightly slippery definition of ‘affordable housing’ (used to set government house-building targets) which included any homes for rent or sale at 80 per cent of market levels. These, she added, were still well beyond the means of those people and families who needed social housing.

As Mr Blackman – Conservative MP for Harlow since 2010 and, prior to that, a member of the Greater London Assembly – pointed out this was a problem that had immediate consequences for the Exchequer. ‘We are ending up with “affordable housing” that people can’t actually afford, which means that housing benefit has to subsidise the rent – so the Treasury is stuck in a vicious circle paying for it all,’ he said. Furthermore, he added, there was a clear conservative case for social rent – provided that those living in the homes were able to buy them when their circumstances improved. ‘It’s about encouraging people to stand on their own two feet, but also giving them a helping hand when they need it to get on the housing ladder,’ he said.

Though Mr Jamieson shared this analysis, he pointed out problems within the structure of government which disincentivised taking action. ‘If you build social housing, the saving is going to happen within the DWP, while the cost will happen within councils,’ he said. The question, he said, was how to extract some of the money currently going into the wider private rental sector and use it to build social housing. ‘In the south of England, there’s a lot of talk about land value capture,’ he added. ‘I was talking to one Conservative MP who said that land in his constituency was going for several million pounds an acre, and yet the council had no money for houses, infrastructure or anything else.’ He also proposed tweaks to ‘right to buy’, and stressed the need for councils to be able to reinvest any proceeds made in building more council homes for those that need them.

But how much would it cost to provide a big uptick in the number of social homes? Quite a lot. ‘We estimate the total cost for building the 90,000 social homes per year we need in England is £46.2 billion,’ said Ms Richardson, who – aside from her role with the Chartered Institute for Housing – is also professor of housing and social inclusion at De Montfort University. Most of this would be met by private borrowing, cross subsidy from private sales (where some money from the sale of private housing is used to fund social housing) or implied subsidy from planning gain agreements. But the remainder of the money, between £12 billion and £14 billion, would have to come from a direct government grant, she said. ‘Our estimate is that it could be done for between £11 billion and £14 billion a year, depending on developers’ contributions,’ said Ms Barnard.

Did the panel have much hope in the ‘levelling up’ agenda? ‘I think putting Michael Gove and Neil O’Brien in the rebranded levelling up and housing department is very significant,’ said Ms Barnard. ‘I think these are two people who can actually nail down a policy agenda and drive it through.’ Mr Blackman also showed cautious optimism. ‘I’m relieved that Michael [Gove] is actually listening to us, because I don’t think Robert [Jenrick] was,’ he said. ‘One of the problems with the old planning white paper was that it didn’t really mention councils at all. Whereas, as we know, we need to be doing more to get the people on the lowest levels of income into a secure home.’

As he gave his closing remarks, Mr Jamieson returned to the theme of how the combination of investing in social housing and enabling ‘right to buy’ would benefit not just the levelling up vision, but also the broader Tory themes of self-reliance. ‘What I like about “right to buy” is that it gives lower-income renters a perceived stake in their house,’ he said. ‘If they have ambitions to buy that house they’re more likely to look after it and contribute to the community. It’s giving people that stake which changes their approach and can make a massive difference to outcomes.’ Now over to you, Mr Gove.