Robert Halfon: Now is the time for Common Market 2.0, and an EFTA-type plan for Brexit

Plus: We must be the Party for social housing as well as home ownership. And: why don’t we trumpet our history of social reform?

Common Market 2.0 deliver can Brexit before 29 March

Whilst I can understand that there are different views about the future of Europe, and that some prefer No Deal, I am mystified why some regard Common Market 2.0 as a retreat from Brexit. This is far from the case.

 For years, many Eurosceptics would have been very happy to see Britain in an EFTA-style relationship with Europe rather than be a member of the EU. Such an arrangement, advocated by Brexiteers in the past, would gets Britain out of the CAP and CFP.

Common Market 2.0 also means an end to Britain being subject to the jurisdiction of the European Court, and brings us out of political union. All these things were what many Leavers felt was most objectionable about membership of the EU.

The plan also safeguards jobs and ensures stability for business and our economy through membership of the Single Market. But members have far more powers to derogate from it (Norway obtained derogations from 55 proposed Single Market laws and Iceland from 349 legal acts).

It would also mean that we continue to be a part of an alliance of democracies – it would strengthen EFTA – which is important for geo-politics and would help to build up a useful counterweight to the EU.

On freedom of movement, under Common Market 2.0, there are significant safeguarding measures that place us in a far stronger position of power to stop freedom of movement in the event of “serious economic, societal or environmental difficulties of a sectoral or regional nature liable to persist”.

Financial contributions to Common Market 2.0 would also be significantly lower than under our payments to EU budgets – well south of £5 billion per annum. We would simply pay for what we participate in – membership, joint programmes, schemes and agencies and, on a “goodwill” basis, the EEA Voluntary Grants scheme.

All this means that we could take back control of our finances and can afford to invest in what matters most domestically – the NHS, policing, schools and community. 

Significantly, unlike the other proposals, Common Market 2.0 would enable us to deliver on Brexit by the end of March. We would scrap the Political Declaration, instead outlining Common Market 2.0 as the basis for the UK’s future relationship with the EU.

The transition period would give us the time we need to finalise and implement the agreement with the EU and EFTA states. This would means that the UK would leave the EU on the 29th March – with no extension of Article 50 necessary.

Common Market 2.0 is an agreement that delivers on the vote of the people, takes back control of our key institutions, ensures a good, free trading agreement with the rest of Europe. All this can be achieved without the need for the Northern Ireland backstop to be activated or weakening the Union.

Bleak House

We have a housing crisis in this country. Whilst I am passionately in favour of the Right to Buy and Help to Buy schemes, there is so much more we must do to help families on low incomes.

It’s worth remembering that one in four families have less than £95 in savings, and that the idea of affording a deposit is just for the birds. 682,000 households live in overcrowded accommodation and 1.2 million households are currently on the waiting list for social housing.

Millions more are struggling with extortionately priced private-rented accommodation, with one in five private renters cutting back on food to pay the rent. Many of these families simply cannot afford rent on their wages, costing the taxpayer £23 billion to cover the 27 per cent of private renters receiving housing benefits.

If we want to both ensure a good quality of life for millions of our fellow countrymen and women ,and save the taxpayer billions on the housing benefit bill, we need as much radical action on social and affordable housing as we do for those who want to buy their first home.

This is why the reforms set out by Jim O’Neill in Shelter’s new social housing commission is something that Secretaries of State, such as James Brokenshire, should be listening to. They propose 3.1 million more social homes, costing £10.7 billion a year, but which in reality, would be reduced to £3.8 billion with savings in benefits, and returns to the Government arising from the knock-on economic benefits across the economy.

The housing situation in our country is bleak. We must be the Party of home ownership but we must also be the Party for affordable and social housing. Whether these proposals are adopted or not, the Government has got to come up with a solution that solves our social housing crisis in our country.

The Party of social good

There is an umbilical cord between the British people and the NHS. It was extraordinary and wonderful to see two days of wall-to-wall coverage showing Government financial support for our NHS and its Long-Term Plan. It is an important tribute to Matt Hancock and Jeremy Hunt.

Even better, Hancock reminded the House in his statement that it was a Conservative, the Sir Henry Willink, who first put forward proposals for a NHS and, whilst built by a Labour Government, it is clearly the Conservatives who pioneered the idea of health care free at the point of access.

Matt’s mention of a Conservative creating major social justice reform is something that all Conservatives should be doing all the time. Why on earth do Conservatives not do more in Parliament, speeches, articles and conversations, to remind the public that, so often, in the history of our country, it has been  Conservatives at the forefront of groundbreaking social reform in our country? Whether that was  Wilberforce and slavery, Disraeli and the condition of working people, Macmillan and affordable housing, Thatcher and the Right to Buy, Osborne and the National Living Wage.

Labour mention their historic record on social justice time and time again. It’s time we did so.

There are signs of modest progress in increasing the housing supply

Probably enough is being done to maintain the status quo. The problem is that for millions of people aiming for home ownership, that is pretty dire.

Last week there was a piece of good news for the Government that you might have missed:

“Annual housing supply in England amounted to 222,190 net additional dwellings in 2017-18, up two per cent on 2016- 17.”

So that hits the (pretty arbitrary) target of 200,000 a year, set by Brandon Lewis when he was Housing Minister in 2015, to get to a million more homes by 2020.

These are new homes. But not all are built from scratch – some are converted from buildings that had been used for something else:

“The 222,190 net additions in 2017-18 resulted from 195,290 new build homes, 29,720 gains from change of use between non-domestic and residential, 4,550 from conversions between houses and flats and 680 other gains (caravans, houseboats etc.), offset by 8,050 demolitions.”

On the other hand, various claims have been put out that we “need” more than 200,000 extra homes a year.

When Sajid Javid was the Communities and Local Government Secretary, in 2016, he said:

“Even if the number of people coming to live in this country falls, we’ll have to build at least 220,000 homes a year for the next decade just to keep up with population growth. 220,000 new homes every year, just to stand still. To maintain the status quo.”

A year ago he said:

“If we’re going to do more than just stand still, if we’re going to make serious inroads into tackling this nation’s housing crisis, we’re going to have to build at least 300,000 homes a year.”

The National Housing Federation has given a figure of 340,000 a year. The Labour Party’s Lyons Review gave us a figure of 243,000.

Last year’s Conservative Manifesto said:

“We will meet our 2015 commitment to deliver a million homes by the end of 2020 and we will deliver half a million more by the end of 2022.”

It all has a bit of a whiff of central planning about it, doesn’t it? The Government doesn’t produce figures for how many new dishwashers or pairs of trousers we need each year. Then again the market is allowed to operate in those areas. If the state was building the “housing units” – in the spirit of Harold Macmillan – or the dishwashers or trousers, then such targets might have some relevance. As it is, such plans are pretty much cheerful guesses.

The other problem is that suppose meeting “need” means increasing supply to an extent that house prices do not increase in real terms. Would that be fine and dandy? No. It would simply mean the status quo was maintained. Millions unable to get on the housing ladder. Millions in overcrowding. Millions paying extortionate rent in the private sector, or caught in shoddy accommodation in the public sector. Paralysis restricting people from being able to move. So that is not fine and dandy – unless you are Jeremy Corbyn seeking to gather in the votes of those angry with the current arrangements.

What is needed is a sufficient supply of new housing to allow a steady and substantial fall in house prices over a period of several years. That would require bold action: to make it much easier to win planning permission (provided the new homes are attractive); and releasing a huge amount of surplus state land for development.

Of course, the amount of new housing is not the only figure to keep track of. Within that total, the share of tenure can also vary.

The Dwelling Stock Estimates for last year showed “the owner occupied dwelling stock increased by 262,000 and the private rented stock decreased by 46,000. The social and affordable rented stock increased by 3,000 dwellings and the other public sector stock decreased by 1,000 dwellings.” That meant that homeownership did go up – albeit by only half a per cent. It rose from 62.4 per cent to 62.9 per cent. The problem is that it meant the private rented sector was diminished. Tinkering around with schemes such as Help to Buy and clobbering the buy to let market will tilt things a bit towards those buying to become owner occupiers. What is really needed is to have more homes becoming available – rather than fiddling around assisting or penalising one group of buyers over another.

It’s not all doom. There is an important increase in supply which these figures don’t capture: Many existing properties are being extended to provide extra bedrooms. Walk along terraced streets in London and it won’t be long before you see builders at work. This could allow for greater scope for the old fashioned arrangement of taking in lodgers – especially if the Government had the sense to increase the Rent a Room tax relief.

The upshot is that overall the housing situation is stable – perhaps it is getting very slightly better. The hitch is that that is another way of saying it is still pretty dire for many people. What is the Government going to do about it? One strategy would be to compete with the Labour Party for the number of “units” the state will build. That would be flawed as a strategy. Nobody believes that the taxpayer would be able to fund building on the scale required. Even if it was viable to borrow the hundreds of billions, past experience is that they would be pretty awful places to live. Apart from these practical points there is also a political and philosophical difficulty – such a contest of who is most socialist would inevitably be won by the Labour.

The other strategy, more in keeping with Conservative principles, would be to allow the housing market to function – to release land from the Government’s grasp and lift the restrictions.

So far the Government is making a token pursuit of both strategies. But not doing enough to make much of a difference.

Judy Terry: More new homes could be built in Suffolk is the bureaucracy was hacked back

Here is one firm’s account of how unnecessary costs and delay in the planning system holds them back. Timescales promised by councils are not honoured.

Judy Terry is a marketing professional and a former local councillor in Suffolk.

Building around a thousand new homes across East Anglia each year, Hopkins Homes is a thriving Suffolk-based housebuilder which prides itself on its no compromise approach to design and build quality.

Hopkins Homes delivers a substantial number of houses to meet the region’s housing shortage, yet each property continues to be sympathetically designed to reflect the architecture and character of the local area whilst still offering the convenience and energy efficiency expected of a new build home.

“There is no doubting the need to build new houses to help solve the country’s housing crisis. However, we believe that housebuilders have a responsibility that goes beyond simply providing new homes”, says Development Director, Simon Bryan. “It has always been a challenge, but we use our extensive local knowledge to design developments which reflect the character of their setting”.

However, the Planning process is a growing frustration:

“We have always recognised the importance of working with and listening to communities and stakeholders to explore local views on issues, for example on drainage, travel planning, wildlife and archaeology to name a few, and worked to ameliorate these concerns prior to submitting our application. But planning has become increasingly more bureaucratic, involving a large number of consultees who have growing influence. The expansive range of parties involved in the decision process is only creating significant delays and cost without improving the process. Ultimately it delays the rate at which new homes can be delivered.”

He confirms that some local authorities don’t always appear to understand the benefits which quality, sustainable, new housing can bring to their local economies. Good housing helps to attract new investment, creating thriving communities.

“Most authorities do not have site allocations or an adopted Local Plan. Even when land has the benefit of an outline planning consent, it often requires a high level of pre-application work, demanding more public consultation, exhibitions and more meetings with planning officers. Typically, surface water drainage would be addressed by our engineers as part of an application, but we are now finding some flood authorities are taking an extreme view requiring additional and unnecessary requirements to be met.

“As a result, the level of up-front costs incurred before submitting an application have significantly increased. To prepare and submit an application of a reasonably sized development can regularly cost around £150,000.”

Iain Jamie, the firm’s Land Director, interjects:

“From the time we identify a piece of land, it could be two or three years before we start on site because of the growing bureaucracy we have to contend with. It is only in the final stages of a project that we realise the profit on our original investment.

“Planning should be determined within 13 weeks, but that’s far from reality. It frequently takes a year just to get our application to a planning committee. Even at that stage, some councillors can disregard data from statutory consultees, and even overrule officer recommendations for approval.

“Section 106 obligations should then be a formality, but it can take months to reach agreement after planning consent has been granted.

“Despite the introduction of Community Infrastructure Levy (CIL), which was supposed to simplify and speed up matters, there is still a tendency to see developers as a cash cow, by making unreasonable demands for local amenities or infrastructure which are too often unrelated to a new housing development.

“This is not conducive to making things happen, leading to unnecessary delays and erroneous accusations of ‘land banking’ because sites cannot be developed without agreement, whilst adding to the pressure on housing.”

From the beginning of October, local planning authorities are no longer permitted to impose pre-commencement conditions. Nevertheless, both directors suggest that, to reduce frustrations and delays, the Government should consider introducing measures to enforce timescales, and authorities should beef up their resources, or perhaps share specific expertise with others to speed up the process.

Simon added:

“Whilst we are fully appreciative of the reduced resources available at many Local Authorities, we are not seeing the same quality in planning service that was evident just a decade ago as there is often a lack of proper management of the application experience process. Furthermore we feel that senior officers should be empowered further to issue decisions, when applications are fully compliant with local and national policies.”

The company prides itself on developing sites which offer a good balance and variety of traditionally built new homes suitable for different types of home buyer, from first time buyers on Help to Buy, to families and downsizers, with two thirds of sites providing bungalows, which are in high demand. “There is definitely a trend for low maintenance, energy-efficient, single storey properties in locations which are easily accessible to public and private amenities.” Some sites offer shared equity homes that are sold at a discount to open market value, which are only available to ‘qualified’ buyers who have local connections and salaries below certain thresholds.

Arguing against the questionable leasehold practices now offered by some developers and management companies, Iain confirms, “We have never sold leasehold ‘houses’, and the ground rents for our leasehold apartments do not exceed 0.1 per cent of the value of the property, giving buyers security that this is fixed for 25 years and then only increasing in line with inflation.”

Increasingly, resident management companies control the communal areas on their completed sites, in the absence of local authorities agreeing to adopt them. “This approach gives buyers comfort, with every householder becoming a shareholder in their community, controlling their environment and the costs incurred. It also brings added responsibility to sustaining high standards”, explains Iain.

To maximise efficiency, the company uses subcontractors for on-site construction, closely monitored by their own management team. “Getting good quality tradespeople is an increasing challenge, and we are aware that some of our subcontractors are going overseas to recruit”, adds Simon.

“In the UK, the building industry isn’t recognised as a profession, yet more young people should be encouraged to learn trades, from plumbing to carpentry, brickwork to plastering, and landscaping. These are world-class skills, paying good salaries, yet all the emphasis is on academic careers, which can leave students in debt, and don’t necessarily bring the same financial rewards over a lifetime of working.”

Meeting with Hopkins Homes is yet another indication that, instead of interfering in what works well, in the interests of taxpayers and the economy, Government and local authorities should reduce bureaucracy – and actually listen to business.

Howard Flight: The best part of a week on, we can see that last week’s Budget was a popular one

The Chancellor has been fortunate that the public finances have improved substantially at a particularly convenient time.

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

Philip Hammond has been fortunate that the public finances have improved substantially at a particularly convenient time. Economic growth has been revised up next year to 1.6 per cent; employment has been revised up, with 800,000 more jobs than forecast in 2023; wages will rise above inflation for the next five years.

The borrowing target has been met three years early, with the deficit now down to 1.9 per cent of GDP. The debt target has also been met three years early at a peak of 85 per cent of GDP. Borrowing is £11.6 billion lower than forecast at 1.2 per cent of GDP. This has improved significantly the scope of what the Budget can seek to address.

Overall public spending will increase by 1.2 per cent per annum, between 0.2 per cent and 0.4 per cent less than forecast growth. The improved tax yields have enabled the Prime Minister’s NHS commitment to be fully funded.

The Chancellor presented a pragmatic “micro” Budget, seeking to address virtually all of the issues which came up as needing attention. Yet perhaps its most important ingredient was a significant cut in taxation for the majority next April – increasing the personal allowance to £12,500 and the higher rate to £50,000 a year.

Local Authorities are getting an extra £1 billion of funding and business rates for retailers with rateable values below £51,000, will be cut by a third for two years. A further £1.7 billion each year will be provided to benefit working families on Universal Credit with the work allowance – the amount families can earn before losing credits – being increased by £1000 per annum.

A new two per cent digital services tax to insure that large digital firms pay a “fair share” of tax, is expected to raise £400 million per annum. Schools will get a further 400 million this year and defence will get a further £1 billion this year and next. There is also £160 million for counter-terror police. The national living wage will increase by nearly five per cent to £8.21. The national productivity investment fund will be increased to £37 billion and will be extended to 2024. Large roads will get £28.8 billion for 2020-25, and even potholes will get £420 million! PFI will be abolished, leaving a bill for £200 billion to be honoured.

There was a range of extra funding largely for small business – extending the annual investment allowance to £1 million; extending the start-up loans programme for 10,000 entrepreneurs; delivering the lowest corporation tax rate in the G20; keeping three million small businesses out of VAT; reducing the cost of taking on apprentices by halving the co-investment rate for non-levy payers; £121 million to support cutting-edge digital manufacturing; £78 million to fund electric motor innovations; £315 million in quantum technologies and £50 million for new Turing Fellowships.

Measures to help more people into home ownership include abolishing stamp duty retrospectively for first time buyers of all shared ownership properties of up to £500,000; an additional £500 million for the housing infrastructure fund; committing over £7.2 billion to a new help to buy equity loan scheme to support 110,000 new home buyers and the abolition of the housing revenue account cap controlling local authority borrowing for house building.

There are measures for those keen on the environment and more money for the Transforming Cities fund. Remarkably, the Chancellor has addressed virtually all the issues of concern to citizens and, as a result, I think, the best part of a week on, that this has proved to be a very popular Budget. The one important reform it has not addressed is the confiscatory rates of stamp duty on larger properties in London and the South East. This had led to a freezing up of the market – bad for revenues and for economic mobility.