Why Rayner’s bricks and mortar is more important than Reeves’s economic growth in building for victory
While Labour made economic growth its first mission, it is tackling the spiralling housing crisis that could make the difference between winning or losing the next election, writes David Maddox
Keir Starmer’s speech last week was a difficult and confusing listen for those who switched on, with his different lists of six milestones, five missions, six first steps, seven pillars of economic stability and, not to forget, the three foundations.
But in the 54 minutes of speaking and taking questions at the iconic Pinewood Studios in Buckinghamshire, two very important milestones unveiled by the prime minister will make the difference between success and failure when he goes back to voters in 2029.
The first was to change the emphasis from pure economic growth to “raising living standards”. This is partly a result of the catastrophic US election failure of the Democrats, who were hammered by Donald Trump despite achieving economic growth because it was not felt in people’s pockets.
The second is related to the first, in that it was a clear and unequivocal commitment to build 1.5 million homes in the next five years. And to do what is necessary to get that done.
It is arguably the one area where a major, tangible difference can be made in people’s living standards.
The housing crisis in numbers
Selling people their council homes was arguably Margaret Thatcher’s greatest legacy but gradually, since then, the dream of home ownership has withered and died.
The Office for National Statistics (ONS) shows how few people are now able to own their own homes. The top category is the 65+ age group, 35.6 per cent of whom are homeowners. This drops to 19.6 per cent among 55- to 64-year-olds; 19 per cent for 45- to 54-year-olds; 15.2 per cent for 35- to 44-year-olds; and 10.1 per cent for those aged 25 to 34.
It may not be surprising because the lack of housing stock in places that need it has driven up the average price and been made worse by increasing interest rates. In January 2022, a two-year fixed-rate mortgage was 2.5 per cent; now it is 5.5 per cent.
Meanwhile, according to the Building Society Association (BSA), the average age of a first-time buyer has risen to 33 years and 8 months. In London it is 36 years and 8 months; and even in Wales, where property is much cheaper, it is 31.
The average mortgage term now ranges from 28 years (Wales) to 31 years (Yorkshire and Humberside).
The average age of paying off a mortgage is now 63 but rises to 66 in London, beyond retirement age.
This means that most people are forced to find a place to live in a diminishing rental market in which changes to regulations and mortgage interest payments are forcing many landlords to sell off old properties.
The ONS reported average rent for England was £1,319 in July 2024, up 8.6 per cent (£104) from a year earlier.
This all makes finding somewhere to live one of the biggest uncertainties of the cost of living crisis.
What is Angela Rayner’s solution?
The deputy prime minister hopes that building 1.5 million homes will begin to stabilise the cost of housing and make it easier for people to find a home.
Labour is not the first to identify this target as a top goal but to illustrate the scale of the problem, the last time that was achieved was in 1972. You have to go back to the 1950s to see a similar rate of building.
To achieve it, Rayner has to – in the words of Keir Starmer – get “the alliance of naysayers” out of the way. This includes neutering council planning committees, ending the right of local residents to object to a scheme; and demoting the importance of various wildlife concerns like newts and black-legged kittiwakes.
New beefed-up local plans will force constituencies to accept thousands of new homes. She hopes that her new “grey field” definition will allow for more green space to be concreted over.
Where are the big political risks?
To understand the risks involved in taking on the so-called nimby (not in my backyard) brigade, we need only look at Rayner’s actions as a local MP when she led protests against a major housing development in her constituency.
The last Tory government dropped housing targets per constituency because MPs were rebelling against it after receiving furious complaints from their constituents.
Concreting over green spaces (grey or not) is never popular. Labour now has scores of new MPs with very small majorities. Once this plan of action comes into full force, they will be writing to Rayner forwarding the pressure they will be getting from their constituents.
She is also already coming under pressure over how many of these new homes will be swallowed up by the estimated 2.5 million net increase in migration expected in the same period. It is worth noting that 1.5 million may not be enough to cope with that increase.
Who holds the answer to economic growth?
Apart from people getting new homes and feeling happy with a Labour government, the big prize in unlocking planning for homes and major infrastructure is the economic growth which was the party’s original first mission.
Many are pointing out that £40bn of tax rises in the Budget, particularly the hike in national insurance, will harm economic growth. Added to that Rayner’s own project of improving workers’ rights is also likely to cause problems in that area, despite her claims that it will boost growth.
But loosening up planning restrictions and allowing building is the one weapon in Labour’s arsenal that could unleash the economic growth the UK needs.
Rayner has warned that she “hates failure” but Labour will be hoping that if she succeeds, the positives will help secure election victory in 2029.
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