Blog: August 2018
It is over forty years since Tony Crosland set up the Housing Finance Review in order to simplify housing policy and make it more coherent. A reasonable view of the current situation is that his initiative and many since have all failed in that objective.
With housing nothing seems to change. This is what I wrote in 1999:
“Concerns [about rising house prices] focus on the short term symptoms but it is really a long term problem. The constraints policy applies to the most basic attribute of housing – space – remain the same…When … the National Playing Fields Association complains that – despite government assurances to stop the sale of school playing fields for development - another 80 went last year, it is the flip side of the same coin (see here for a more recent example).The amount of land made available for development is decided in physical units and is intentionally highly constrained by the planning system. But market forces allocate the land that is made available. So developers bid up its price. In turn this creates an incentive for cash strapped councils to sell off any land they own. Since people regard space not only as desirable but – like health care, eating out or short breaks – something they want to buy more of as they get richer, the price of space inevitably goes up.”
The Government admits “the UK housing market is broken”. No other major economy has experienced such a large rise since 1970 in house prices compared to income. The symptoms include the rise in the number of family units without their own home, dramatic falls in the rates of owner-occupation, particularly for younger households and the rise in the Housing Benefit bill.
The UK government published a White Paper on 12th July outlining its preferences for a future relationship with the EU. In this blog we compare the proposals outlined in the White Paper against other EU free trade agreements (FTA) and also estimate the impact on the UK relative to our central forecast, published in August 2018, that assumes a soft Brexit.
Our results suggest that the UK is looking for a trading relationship that is similar in scope to the arrangement between the EU and Switzerland. If that is indeed the case, we believe that the EU will insist that the UK make concessions on the freedom of movement of people and also ask for a budgetary contribution to EU programmes related to the single market.
We estimate that the economy will suffer an annual loss of around £500 per head over time if the White Paper proposals are broadly agreed.