Okay, so this is weird. The Chancellor of the Exchequer is making an announcement about housing, and I think it might be… good? Not really good. Definitely not transformative. But more good than bad, and if I’m honest that’s kind of freaking me out.
It probably isn’t going to be the aspect of Philip Hammond’s speech that everybody talks about today. Everyone’s going to focus on a) the fact he seems pretty comfortable with the idea of Britain leaving the EU’s single market (oh, god), or 2) the way he’s just abandoned austerity in an attempt to stop the economy tanking when he fulfils the goals set out in (a).
But he’s also said some stuff about housebuilding. Which, as it turns out, he’s in favour of.
Firstly, Hammond promised to borrow (yes, borrow) £2bn for an “Accelerated Construction” scheme. This will be used to develop publicly-owned brownfield land (e.g. stuff the state owns which already has stuff on it) which can be brought to market quickly.
How many nhomes will that pay for? “Up to 15,000” in this parliament. There’s around three and a half years of that parliament left, so it works out to about another 4,300 extra homes a year, and it’s not clear it’s repeatable. We need to increase housebuilding by upwards of 100,000 a year, so this isn’t very much – but every little helps.
The other part of Hammond’s announcement is more promising. The £3bn Home Building Fund will provide loans for smaller building firms to get building. It’s not all new money – nearly two-thirds of it will come from combining several existing funding streams – but if it works it should get another 25,500 new homes built this parliament.
This figure is also, you’ll note, small. So why do I think this is more promising? Because it’s focused on small builders.
One of the reasons we aren’t building more houses in Britain is because we’ve relied on the big housebuilders to raise their output. And they don’t want to: it’s more profitable for them to produce fewer homes at high prices, than it would be to produce more homes and risk crashing the market.
Resuscitating smaller building firms – a sector that was hit hard by the 2008 financial crash – should make it possible to raise output in a sustainable way. It’s not an instant fix. But it’s a step in the right direction.
Whether this will work or not is a different question, of course: apart from anything else there are still questions over whether there’s enough brownfield land to meet our housing need. But it already looks like Hammond is more serious about fixing the housing crisis than George Osborne ever was.
Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.
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