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May's housing pledge raises more questions than answers

Rebecca Larkin

With party tensions threatening to upstage the Conservative Party Conference, leaked announcements in the weekend papers were perhaps one way to divert attention back to policy.

As a result, chancellor Philip Hammond’s confirmation of an extra £10bn for Help to Buy equity loans and an additional £300m for rail investment in the Northern Powerhouse was old news by the time he made his speech.

Under the Help to Buy scheme, the government has so far provided £6.7bn in equity loans on just under 135,000 property purchases, and it now accounts for one-third of new-build completions. Stronger uptake over the last 12 months meant there was growing pressure on the initial £8.6bn budget set aside, but the size of the additional sum committed for the next three years or so to March 2021 took some by surprise.

Moreover, the question of what happens beyond 2021 – a period now looming into view for major housebuilders and their pipelines – is yet to be addressed. A few extra years of support of the current magnitude seems implausible.

’Unlikely to make a dent’

The £300m for high-speed rail connections with HS2 between Liverpool, Manchester, Sheffield and Leeds looks like a drop in the ocean in comparison and will be little consolation for regions outside of the Northern Powerhouse that had major electrification schemes cancelled in July.

Alongside this, £100m in previously announced funding was assigned to 33 local roads projects in the North, but is unlikely to make a dent in the backlog of repairs facing financially constrained councils.

“What was intended to be the party’s crowning glory was again trailed in advance of Theresa May’s now infamous speech”

What was intended to be the party’s crowning glory was again trailed in advance of Theresa May’s now infamous speech. Touted as a housebuilding boom by councils, the £2bn of funding she announced will be opened up to bids from housing associations and local authorities to provide affordable-rent homes, as well as being available for social-rent homes in areas where the need is greatest.

The focus for affordable housing has shifted between affordable rent and shared ownership since 2010 and as a consequence, building for social rent hit a record low in 2016/17.

While this makes a start in reintroducing the social rent tenure back into publicly funded housebuilding programmes, it remains unclear how the £2bn will be split between affordable rent and social rent – or where the homes will be built.

Rebecca Larkin is senior economist at the Construction Products Association

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