While Westminster has been preoccupied with the political consequences of the historic Brexit vote, what really matters is the policy response, and in particular how government chooses to deal with the emerging economic shock of the referendum result.
This month, the Bank of England governor cut interest rates to a record low and announced a big monetary stimulus. But he also admitted “the future potential of this economy… are not the gifts of monetary policymakers”. So to keep the economy on track government must play a role. It was the role housing can play in boosting jobs and growth in a downturn that I used to win the argument with the prime minister and Treasury for big new investment in housing in 2009/10.
So one of the best pieces of advice I can give to new housing minister Gavin Barwell (above) is that he should do the same. If not he’ll not just have to take flak for continuing the failures of the past six years – there’s a good chance things could get worse. Housing isn’t just an important social policy goal. When the economy’s weak it’s an economic imperative.
In 2009, our annual housing investment at the time was nearly £3bn but I secured spending from other departments to help put an extra £1.5bn into new homes over two years. As well as more grant funding for housing associations, we started a local authority new build programme to get councils building at scale for the first time in generations, and a ‘kickstart’ scheme to unblock stalled private sites.
And, by and large, it worked. As well as keeping more people in their homes and unblocking mothballed developments, we hit almost 54,000 government-funded affordable housing starts in 2009/10, of which 40,000 were for social rent – a number which has plummeted by 98% since to less than 1,000.
We could do the same again now. The only difference is that we’d be borrowing for investment at the lowest cost in British history. If we fail to act, the housing slowdown will be more severe, with consequences for growth, jobs and housebuilding.
So the new housing minister should seize this opportunity. On investment, I’ve argued government should bring spending up to the level of the housing programme in 2009/10 – a boost of more than £6bn over five years. We should also relax the artificial constraints councils have on borrowing to build housing to allow local authorities to play their part too, alongside associations.
We must now be much bolder on housing in the longer term. The truth is housing has become a totem for government policy failure – it’s hard to think of another area of public policy that has failed so badly in recent decades. So my message to Mr Barwell is simple: if you want to deal with the emerging economic shock of the Brexit vote and start to rebuild trust in politics, be bold, and invest in new affordable homes.