Borrowing to boost housing
“Borrow more to boost housing”. It isn’t something one would expect to hear from a Conservative Minister, but it’s what Communities and Local Government Minister, Sajid Javid has stated is the best way to deal with the housing crisis.
For seven years we have heard how the Conservative government want to curb borrowing in order to reduce the deficit, they’ve accused the Labour Party of fiscal irresponsibility for criticising spending cuts and lack of investment in public services, so this statement from Mr Javid may come as a surprise to some.
Yet it is reported that Mr Javid wants Chancellor, Phillip Hammond to cough up a cool £50bn in his next budget announcement which is scheduled for 22 November. The Communities Secretary wants the extra cash to invest in 300,000 new homes, which would be a rise in house building not seen since the Labour government in the 1960s.
When questioned on the apparent change of rhetoric from austerity measures to wanting to borrow more by Andrew Marr, Mr Javid highlighted the difference between "vitally important" deficit reduction and "investing for the future" in housing and infrastructure. He continued: “So for example... you borrow more to invest in the infrastructure that leads to more housing - take advantage of some of the record-low interest rates that we have. I think we should absolutely be considering that,”
It comes as the government acknowledges they cannot keep up with demand in a failing housing market. Perhaps we shouldn’t be so surprised to hear this from Mr Javid as a white paper from the Department for Communities and Local Government in February 2017 outlined a need to invest in infrastructure in order to help solve this crisis.
Housing charity, Shelter, are supportive of the Minister’s calls for additional funding, saying that the government “appear to be going in the right direction” before adding: “What the government are now talking about is exactly what they should have been talking about all along.”
So, can we expect to see this massive increase in government borrowing for house building? Well, not according to the Chancellor himself, who sought to distance himself from the comments made by his Cabinet colleague by insisting it was not government policy. These mixed signals are not ideal when trying to deal with such a crisis, however any extra investment must be welcomed and there have been positive signs that the government is committed to solving it.
This article was written by Daniel Barry, Account Executive as MPC.