It’s easy to dismiss political party manifestos. There is a big difference between what politicians say to get power and what they actually do if they succeed.
First up was the Labour manifesto, which garnered a lot of media coverage for being radical.
It had a few interesting policies and, as we have seen with energy price caps, policies that are radical one day can often be taken up by another party down the line.
Labour’s announcement of 100,000 council homes a year by 2021 is certainly more achievable than the 500,000 council homes in the first five years they announced at the last election. It will take time to ramp up given that councils haven’t built large numbers of homes in recent decades and don’t have the in-house skills.
Labour’s policy of insulating four million homes as an infrastructure priority is interesting. In the long term, lower household energy bills isn’t about capping prices; it’s about energy-efficient homes.
New-build is already energy-efficient but only accounts for 0.7 per cent of the housing stock each year. So the focus has to be on the 24m existing homes and not just insulating – it needs to be across a range of energy-efficiency measures.
Offering homeowners loans at zero per cent interest to fund energy-efficiency improvements sounds good and addresses one of the concerns about the ill-fated Green Deal. But however much consumers complain about energy prices, they still prefer a new kitchen or loft conversion to an energy-efficient retrofit.
Labour’s manifesto also had an extension of Help to Buy to 2027, which will be absolutely crucial for major housebuilders. Strangely the other parties were silent on this issue.
Housebuilders are hooked on Help to Buy, which accounted for 39.8 per cent of their sales in Q4, and it needs to be extended beyond 2021. Otherwise we will see firms slow down land purchasing and housebuilding in the next few years.
However, the major question with Labour’s manifesto is whether the finance is there to pay for it.
Lib Dem manifesto
The Liberal Democrat manifesto didn’t garner major headlines despite a lot of populist proposals. But again, it may be that other parties take up their policies.
They announced £100bn for housing and infrastructure investment, 300,000 directly funded homes by 2022 and 10 new garden cities. Again, there was little detail about how this would be funded.
The Lib Dems did announce a lifting of the borrowing cap on councils and increasing the borrowing capacity of housing associations so they can build more social housing, which would boost housing supply quickly and is financially viable. It’s a surprise the other parties haven’t picked up on it.
However, they also said they would scrap exemptions on small housing schemes, which would place additional burdens on SME housebuilders – the last thing they need in a market highly skewed towards the majors.
The Conservative manifesto had little new for construction, as the party is presumably relying on ‘strong and stable’ previous Autumn Statement and Budget policies such as the National Productivity Investment Fund, which is a fancy name for infrastructure spending.
They did announce that their one million new homes by 2020 target has been extended to a further 500,000 homes by 2022. But that sounds a lot better than it is due to the definition government uses.
Current housebuilding will achieve both targets. However, the Conservatives also announced a £2,000-a-year immigration skills charge levied on companies employing migrant workers by 2022. Given construction’s reliance on foreign labour, particularly in London, this could have a significant adverse impact in the medium term, restricting labour and raising costs when we are currently not training enough people.
Overall, there are some interesting policies here and there across the parties but no one single party with a range of policies needed to deal with the industry’s issues.
Noble Francis is economics director for the Construction Products Association