What kind of post-pandemic stimulus do we need, asks Matthew Warburton, Policy Advisor at the Association of Retained Council Housing (ARCH).
The Government has spent the last six months in fire-fighting mode, making, implementing, reviewing and unmaking policies at a dizzying pace to manage and mitigate the impact of the coronavirus pandemic. The Spending Review announced in July was intended to provide a much-needed opportunity to take stock and develop a more considered, strategic and long-term response to the massive challenges posed by a COVID-induced recession, potentially leading to a higher rate of unemployment than the 1930s.
Prospects for the housing market may appear relatively rosy given a summer of booming sales and buoyant prices, but appearances may be deceptive. Some households have been relatively unaffected by lockdown and able to take advantage of the opportunity to buy; many others have been furloughed and now face the prospect of unemployment and the inability to afford their current home, particularly if they are private tenants. Disproportionately, these are younger households, or BAME, and on lower incomes.
Whether or not the future appears rosy, the key point is that it has become much more uncertain. All forecasts rely, in one way or another, on the assumption that the future will, in most respects, resemble the past. That is the least safe assumption to make under current circumstances. It is increasingly clear that the coronavirus will permanently change our society and ways of working. We have yet to work out what the post-pandemic ‘new normality’ will mean for us.
Long-term strategy needed
The Government now faces key decisions about how to lead the nation forward. Despite their urgency, it is important that they reflect a long-term strategy. This argument applies in most policy areas but is particularly relevant to housing where we are planning investment in assets that are expected to endure for many years. We have already seen how establishing a clear target for a zero-carbon economy by 2050 is beginning to provide clarity on how we should plan investment today. Clear goals for the housing market by the same time can play the same helpful role.
For the fifth-largest economy in the world, the following ambitions should be both reasonable and achievable:
- As part of a zero-carbon economy, every household should enjoy a home meeting an updated standard of decency; the necessary investment should be seen as a key focus for recovery, not an expendable luxury;
- To achieve this, the Government’s ambition of 300,000 homes a year should not be dropped or diluted, but a third of these homes will need for the time being to be for social rent;
- Four out of five households aspire to become homeowners — and this proportion has been broadly constant for decades. The over-50s have achieved their aspiration; younger households have seen it slip beyond their reach. By 2050 this must have changed.
- Those who do not wish to become homeowners, whether now or forever, should not be condemned to second-class housing, but enjoy the same standards, dignity and esteem as others, at a rent they can afford.
Councils can play a crucial role in this agenda as a major supplier of new homes at a genuinely affordable rent, meeting the housing need that is immediately evident, but with properties available for sale to sitting tenants through a reformed Right to Buy with a fair sale price that is nonetheless sufficient to fund a replacement home so long as it is needed.