Natalie Elphicke is the Conservative MP for Dover. She was formerly chief executive of the Housing & Finance Institute, co-chair of a Government housing review, and founding chair of the New Homes Quality Board.
Help for Households
Many commentators are likening the current economic situation to the 1970s because of the inflationary element. But each recession or economic crisis is unique. If any comparison is to be made, the current challenges have echoes of the political and economic period after the Second World War. This includes the extreme costs and public debt overhang of battling Covid, shortages of materials and supplies caused by global supply chain disruption, and the simultaneous energy and food price spikes.
Following the Second World War, issues like this plagued the economy for years. The rationing of goods, materials, and even housing, lasted long after VE Day. The political consequences for Labour and the Conservatives were brutal. It wasn’t just Churchill who faced an ungrateful public when he was booted out after winning the war. Labour’s Nye Bevin truly transformed the country’s approach to health and housing, only to see Labour also unceremoniously dumped for not delivering quickly enough. If the Conservatives are to learn from the lessons of history, there will need to be muscular application of Government – acting single-mindedly for the people, and delivering at pace.
Department for Housing and Households
The seriousness of the crisis will require Government to have a laser-like focus on overall household costs. This will require some particularly tough decisions around housing, council tax costs, and household utilities regulation.
There is a compelling case to reshape the ‘Levelling Up’ department to become the Department for Housing and Households. This would include oversight of all household utilities costs – gas, electricity, water, telephone and broadband, tv licensing and council tax as well as housing mortgages and rents. Currently no-one is responsible or accountable for total household costs – yet that is what every householder up and down the land is thinking about. How much do all my bills cost, how much do I have to pay them, how am I going to make ends meet?
This matters because we don’t just pay for the utilities we use. Bills include massive commitments for costs like net zero along with building new physical infrastructure to meet future population growth. All of these costs need to be more tightly managed like any other tax and national spending decision. All household utilities regulation should be under one roof overseen by Ministers who can look at the total household cost, and the cost of all these different regulators too.
There’s a real opportunity for the new Government to refocus regulators on getting the best deal for householders, not those they have been set up to mindlessly regulate. Breaking down the existing silo of governmental and regulatory structures to create a household-centred approach would allow better decisions to be made about how much households can pay at any one time and when extra investment can be best afforded. Right now, if things can be deferred by a few months or the next year so that bills can be reduced, then they should be.
Keeping people in their homes
Back in 2009, as the impact of the financial crisis hit, I wrote about at the likely impact of that massive financial event on housing costs and repossessions – and the range of interventions available to the Government. Things looked grim with hundreds of thousands of repossessions forecast in line with previous housing crashes. One of my recommendations was that mortgage arrears were added to the whole life of mortgages so that people could stay in their homes and weather the crisis. Judicial and financial regulatory guidance were changed accordingly. Due to policy interventions, large scale mortgage repossessions were avoided, although rent repossessions were hard hit.
The adverse impact of repossessions cannot be overstated to those affected by them. In addition, there is a massive cost to the Exchequer, not just on rehousing but too often on family breakdown, health, and education. Keeping people in their homes in a financial crisis is not just the right thing to do, but it is a sensible action for the nation’s public finances too.
The distribution of housing today is very different from earlier recessionary events. The majority of rented housing is now owned by private sector landlords, some 20 per cent of all housing stock. It is neither equitable nor feasible for renters to pay higher rents in order to fully shield landlords from challenging times. Rent needs to be affordable and Government should not shy away from any necessary interventions.
Rental market reform
The role of the private rented market within housing policy is a key issue. It has become the provider to all – including those in need, without any of the safeguards of council housing. It has become an alternative savings and earnings vehicle, when the equity share markets are no longer either attractive or available to the average person. The mushrooming of buy-to-let has too often been at the expense of those who could have afforded a mortgage themselves but who have been crowded out of the housing market by landlords.
A fresh look needs to be taken at renting to manage the welfare bill. Too many people are housed in overpriced substandard rented housing, where the housing allowance is much lower than the rent. That means – and this is the inevitable policy outcome – that too many people are having to make additional rent payments out of money which is intended to meet their other bills. This undermines the structural intent of welfare support to be sufficient to meet a roof over your head, heating and food on the table, as well as providing poor value for money for taxpayers and renters alike.
Yet again we face serious times and grave challenges. It won’t be enough to promise jam to the people. Jam will need to be on the table, and at a price that can be afforded. That means this next Prime Minister and their government will need to have an absolute clarity about who they are governing for, and for what purpose. Parliament must sit for as long as needed and as often as is required, using that strong Conservative majority to govern with muscular determination. For the next government must govern for the people – and deliver at pace.
On Thursday, I will set out ideas on specific policy interventions to reduce household costs.
Notes
Source reference: CPS paper
Click to access 111027112017-20090205EconomySave100000HomesFromRepossession.pdf
Natalie Elphicke is the Conservative MP for Dover. She was formerly chief executive of the Housing & Finance Institute, co-chair of a Government housing review, and founding chair of the New Homes Quality Board.
Help for Households
Many commentators are likening the current economic situation to the 1970s because of the inflationary element. But each recession or economic crisis is unique. If any comparison is to be made, the current challenges have echoes of the political and economic period after the Second World War. This includes the extreme costs and public debt overhang of battling Covid, shortages of materials and supplies caused by global supply chain disruption, and the simultaneous energy and food price spikes.
Following the Second World War, issues like this plagued the economy for years. The rationing of goods, materials, and even housing, lasted long after VE Day. The political consequences for Labour and the Conservatives were brutal. It wasn’t just Churchill who faced an ungrateful public when he was booted out after winning the war. Labour’s Nye Bevin truly transformed the country’s approach to health and housing, only to see Labour also unceremoniously dumped for not delivering quickly enough. If the Conservatives are to learn from the lessons of history, there will need to be muscular application of Government – acting single-mindedly for the people, and delivering at pace.
Department for Housing and Households
The seriousness of the crisis will require Government to have a laser-like focus on overall household costs. This will require some particularly tough decisions around housing, council tax costs, and household utilities regulation.
There is a compelling case to reshape the ‘Levelling Up’ department to become the Department for Housing and Households. This would include oversight of all household utilities costs – gas, electricity, water, telephone and broadband, tv licensing and council tax as well as housing mortgages and rents. Currently no-one is responsible or accountable for total household costs – yet that is what every householder up and down the land is thinking about. How much do all my bills cost, how much do I have to pay them, how am I going to make ends meet?
This matters because we don’t just pay for the utilities we use. Bills include massive commitments for costs like net zero along with building new physical infrastructure to meet future population growth. All of these costs need to be more tightly managed like any other tax and national spending decision. All household utilities regulation should be under one roof overseen by Ministers who can look at the total household cost, and the cost of all these different regulators too.
There’s a real opportunity for the new Government to refocus regulators on getting the best deal for householders, not those they have been set up to mindlessly regulate. Breaking down the existing silo of governmental and regulatory structures to create a household-centred approach would allow better decisions to be made about how much households can pay at any one time and when extra investment can be best afforded. Right now, if things can be deferred by a few months or the next year so that bills can be reduced, then they should be.
Keeping people in their homes
Back in 2009, as the impact of the financial crisis hit, I wrote about at the likely impact of that massive financial event on housing costs and repossessions – and the range of interventions available to the Government. Things looked grim with hundreds of thousands of repossessions forecast in line with previous housing crashes. One of my recommendations was that mortgage arrears were added to the whole life of mortgages so that people could stay in their homes and weather the crisis. Judicial and financial regulatory guidance were changed accordingly. Due to policy interventions, large scale mortgage repossessions were avoided, although rent repossessions were hard hit.
The adverse impact of repossessions cannot be overstated to those affected by them. In addition, there is a massive cost to the Exchequer, not just on rehousing but too often on family breakdown, health, and education. Keeping people in their homes in a financial crisis is not just the right thing to do, but it is a sensible action for the nation’s public finances too.
The distribution of housing today is very different from earlier recessionary events. The majority of rented housing is now owned by private sector landlords, some 20 per cent of all housing stock. It is neither equitable nor feasible for renters to pay higher rents in order to fully shield landlords from challenging times. Rent needs to be affordable and Government should not shy away from any necessary interventions.
Rental market reform
The role of the private rented market within housing policy is a key issue. It has become the provider to all – including those in need, without any of the safeguards of council housing. It has become an alternative savings and earnings vehicle, when the equity share markets are no longer either attractive or available to the average person. The mushrooming of buy-to-let has too often been at the expense of those who could have afforded a mortgage themselves but who have been crowded out of the housing market by landlords.
A fresh look needs to be taken at renting to manage the welfare bill. Too many people are housed in overpriced substandard rented housing, where the housing allowance is much lower than the rent. That means – and this is the inevitable policy outcome – that too many people are having to make additional rent payments out of money which is intended to meet their other bills. This undermines the structural intent of welfare support to be sufficient to meet a roof over your head, heating and food on the table, as well as providing poor value for money for taxpayers and renters alike.
Yet again we face serious times and grave challenges. It won’t be enough to promise jam to the people. Jam will need to be on the table, and at a price that can be afforded. That means this next Prime Minister and their government will need to have an absolute clarity about who they are governing for, and for what purpose. Parliament must sit for as long as needed and as often as is required, using that strong Conservative majority to govern with muscular determination. For the next government must govern for the people – and deliver at pace.
On Thursday, I will set out ideas on specific policy interventions to reduce household costs.
Notes
Source reference: CPS paper
Click to access 111027112017-20090205EconomySave100000HomesFromRepossession.pdf