The house that Thatcher broke

Some of the money will have an immediate effect for ordinary people, though. The private sector often has to build a certain amount of social housing into newbuild schemes as a price of getting planning permission. But as the rest of the plots are sold, the social houses and flats frequently lie empty because they are priced too high for housing associations to buy them. 

Part of that stock will now be unlocked by Reeves. Yet the big benefits of what she has announced will only be felt a long way down the road – years, if not decades away. 

The crisis in social housing that has made this investment essential goes back to the right to buy legislation of Margaret Thatcher. It benefited some, but destroyed the ability of councils to build new homes after decades in which millions had been built.

After 45 years, the shortfall now runs into millions of missing homes. The consequences are soaring house prices, huge rents, falling home ownership, homelessness and lower productivity, as workers can’t move to where they are needed because of a lack of housing. 

Housing associations have tried to fill the gap and failed, so has the private sector. Now Labour is spending £4 billion a year to try to repair the damage, but there are huge obstacles in the way.

The construction industry is beset with skills shortages and has been for decades. It needs far better training and apprenticeship schemes, it needs to attract far more young workers, and it needs immigration too. But the panic over net migration numbers means it will be very difficult to find those Polish plumbers and brickies.

Suggested Reading

How to build a new town

Hannah Fearn

The planning system needs faster and further reform. Planning approvals in England in the first three months of this year were at a 13-year low. That is a sign of a real crisis, and it must be hoped that if councils can grant their own planning permission and start to build again, this logjam will be cleared. 

Then the NIMBYS need defeating. There is already a long list of campaigns springing up across the country to fight new homes, using environmental and other more spurious grounds. But the fact is that there is no shortage of suitable building land in the UK, even in London and the Southeast and there never has been.

All of this will take years, but what happens if it works and we start building hundreds of thousands of affordable new homes? The economy will grow faster as we bolster the construction sector, with productivity growing as a result.

House price inflation will be seriously reduced. It is the shortage of housing that is forcing up prices at such an appalling rate (private rents should also come down, or at least be far more difficult to increase). 

But not everyone will see this as good news. Isn’t it bizarre that house price inflation is the only inflation that is seen as a good thing? Property porn is everywhere, and people think themselves wealthy because of their house price, even if they never sell up.

The idea of house prices failing to rise or even falling risks headlines about Labour tanking the property market and your kids’ inheritance. Meanwhile, those who will benefit – new home buyers and those who can finally get reasonably priced social housing – are unlikely to thank the housing minister and the government. 

Labour governments often have the thankless task of repairing damage caused by Tory cynicism, ideology and incompetence. House building is just another case of this, and it is impressive and important that Keir Starmer and Rachel Reeves are trying to tackle it in the national interest. 

But neither should expect quick results – or any gratitude.