Monday, November 05, 2007

Building Buzzwords.

A big rise in shared home-ownership deals for young people will be promised by ministers today, in a move to give local councils in England more control over providing affordable housing for key workers and first-time buyers.
The phrases that I've bolded in this Guardian report of the government's housing policy are ones that seem to have been accepted as neutral terms by the media when they really are not. They originated, or gained popularity at least, when John Prescott was in charge of planning, (and I don't mean planning how to fit groping his female staff around his croquet schedule).

Anyone trying to sell unaffordable housing would quickly go out of business, so presumably "Affordable housing" is not meant literally so it presumably means "cheaper housing". The presumption behind the phrase is that the current high prices are the result of property developers and planners having decided to build sumptuous palatial residences for the rich whilst neglecting to provide for everyone else. In reality the problem with the UK's housing situation is that that there are not enough homes period, it doesn't matter whether the new homes are aimed at the higher end of the market or not, if 2 million new penthouse apartments are built it will have pretty much the same effect on house prices as building 2 million Noddy boxes. However artificially intervening to force developers to restrict the value of new houses will simply achieve exactly what de facto price controls achieve anywhere, to reduce the supply.

"Key workers" is the other buzz phrase that annoys me. First of all who decides which workers are "Key Workers"? From what I can tell the chosen few are exclusively public sector workers. Apparently the private sector consists of work that is essentially trivial to the functioning of the country, so whilst Social Workers, Bus Drivers and Diversity Consultants are "Key Workers", those that work in the manufacturing or service sectors of the economy will have to damn well learn to commute. Rather ironically the builders who are supposed to be erecting all this "Affordable Housing" aren't "Key Workers" whereas those employed at the council planning office creating obstacles to development are.

Secondly we are supposed to believe that there is a tremendous problem in retaining "Key Workers" in some parts of the country. This may well be the case but surely it would be simpler to raise the salaries. This isn't an appeal for even more public sector pay inflation, but rather to ask why public sector pay doesn't take account of local conditions. At the moment central government operates national pay scales in many of the sectors where shortages of frontline staff exist, pay rates that are very attractive in the North East of England where the cost of living is lower are less appealing for someone in the South East. The only reason this situation exists is to appease the public sector unions who have correctly come to the conclusion that local pay scales would result in a large majority of their members being paid less.


JuliaM said...

"...In reality the problem with the UK's housing situation is that that there are not enough homes period..."

Or alternatively, that there are too many people.

Elliott said...

Hi Ross,

Interestingly, exisiting rules on "key worker" housing are part of the problem: developers have found it all but impossible to make the financing work for projects where a specified minimum (sometimes as high as 40%) of accommodation has to be set aside for eligible KWs. (Why put up the same amount of capital to build houses which have effectively to be sold at a discount to fair value?)

So in a classic incidence of the Law of Unintended Consequences, planning regimes established to increase the proportion of "affordable housing" for "key workers" actually operated to shut down homebuilding altogether.

The government has promised to solve the problem it caused by new legislation. I'm not holding my breath.

James Higham said...

Key workers, fit for purpose, the terminology is pointless and papers up cracks in the fabric which the government neither can nor wishes to deal with.

Ross said...

Julia- Yes that is the other side of the equation.

Elliott- That pretty much sums up the problems of this government's housing policy. Firstly they exacerbate the problem by trying to micromanage who new houses are being built for, and when they realise the effects they interfere some more.

King Tut- That's a pharaoh point.