A little over six months ago we got a new housing minister, Alok Sharma.
At Property Week’s RESI conference last September I literally chased him into the lift as he declined an interview after his uninspiring speech to delegates.
In said lift, I discovered that, like almost every housing minister we’ve had since 2010, he knew very little about how the industry works. The usual lines were trotted out about how important a role he had, and how he was in it for the long haul. Oh well.
Now he’s gone, replaced by Dominic Raab, another with little to no experience of the housing sector. Raab is the third housing minister in 18 months and goodness knows what number since the Tories won back No. 10 in 2010.
We also now have housing at cabinet level, with a tweaking of Sajid Javid’s role at the newly named Ministry of Housing, Local Government and Communities.
It’s just tinkering, and the tinkering has to stop.
While the government has tinkered, the industry has cashed in. This week we have witnessed the unedifying spectacle of Persimmon’s chief executive Jeff Fairburn defending a £107m bonus package.
And he’s not the only one who’s coined it in from generous incentive schemes – the UK’s housebuilding sector has benefited from huge government subsidies from schemes such as Help to Buy. Berkeley’s Tony Pidgley hasn’t done too badly either.
“It’s just tinkering, and the tinkering has to stop”
Sometimes a line has to be drawn. Fairburn’s £107m could build more than 1,375 council houses – houses this country really does need, but that the industry and this government have failed to deliver in any meaningful numbers.
As suggested by Persimmon’s now ex-chairman, Nicholas Wrigley, the company should have put in place some limits on its bonus scheme.
Time to live outside the bubble
The government is often accused of not having a ‘Big Idea’. It is so distracted by Brexit it appears to have no clue what it should be focusing on in other policy areas.
So here’s a suggestion for Theresa May and Javid – make housing this government’s Big Idea. Beef up the housing white paper with bold plans to rekindle the spirit of Harold Macmillan, who in 1951 was tasked by his prime minister Winston Churchill with building 300,000 council homes.
To achieve this laudable goal, allow local authorities to borrow funds to build on their own land banks, or land housebuilders will refuse to develop. Make the planning process quicker by funding the LAs so they can hire more planners who follow an enforced national planning policy.
Force private housebuilders to build on their land or face losing it, and homes will become increasingly affordable thanks to the simple economics of supply and demand. Do we really need Help to Buy if housebuilders build on their vast land banks? The government should axe it.
Then, if Fairburn can repeat the fivefold increase in Persimmon’s share price that it has enjoyed over the past six years, he would have done so without significant help from subsidies and the market will decide what he’s worth.
Taking the actions above will also negate the need for the government to take action against the obscene pay packages that act as a lightning rod for criticism of the industry.
I realise that few in the private housing sector will agree with me, but outside our property bubble I suspect that few will disagree. Time to live outside the bubble, perhaps.