The Government is under pressure on housing and particularly on apartment building where, despite significant incentives being put in place, there is no sign of a sustained increase in building levels of the scale required. Recent figures on commencement levels and planning permissions are concerning and show an ongoing lack of the required investment.
Political pressure brings danger of yet more attempts to find quick fixes. Senior ministers in this Government should know from past experience that one is not available. The last administration did not make anything like enough progress in tackling the fundamental factors holding back house building and this one is paying the price.
There are signs of a new urgency in areas like the provision of key supporting infrastructure for housing development. And this is welcome, if overdue. But a revised housing strategy is still awaited and without this it is difficult to see how the various proposals already announced or being mooted would fit together.
In this context, the risk is of announcing new budget incentives in the hope that some of them “stick”. Talk of new tax breaks for developers – offering write-offs for various types of project – fit into this category. There are already significant State supports through a variety of schemes, which the Comptroller & Auditor General has found are delivering homes at hugely varying costs to the exchequer.
RM Block
Better, rather than adding to this quagmire of incentives, to address the key issues in planning and skills requirements and to ensure that State spending is forensically focused on delivering where the private sector cannot. A VAT cut on new homes – or possibly just new apartments – appears to be under discussion, but if implemented needs to be part of a wider plan which includes provision at lower prices.
A new housing plan is, we are told, due shortly after the budget. It will be a key moment for the Government. As well as new approaches, the Coalition needs to show that it can drive through change. Otherwise the best it will achieve is to “fail better.”
