Alex Morton is Head of Policy at the Centre for Policy Studies. This is the first piece in a mini-series on housing.

In the 2015 election, housing was central to the Conservative offer and reversing the fall in home ownership was a key message. In 2017, housing was central to the election in a negative sense. Theresa May’s approach of more council housing did not seem to go down well, and younger renters in particular swung away from the Tories toward a Labour Party which focused heavily on both ownership and promising even more council homes (a bidding match Conservatives can never win on).

But in 2019 it was (correctly) thought that the issue of housing was less important than the messages on Brexit and core public services, and the goal was to frame the discussion around the choice between Jeremy Corbyn and Boris Johnson as potential Prime Ministers.

The manifesto did talk about boosting home ownership, with the idea of 95 per cent Loan To Value, long-term, fixed-rate mortgages for those with good incomes but only a small deposit (which came out of a Centre for Policy Studies paper), as well as discounted home ownership and other pledges. But it did not really major on these issues.

Home ownership continues to drive the Tory vote

Despite this, tenure continues to be a major driver of the Conservative vote. Conservatives draw their support from owners, not just among older voters who own outright and overwhelmingly vote Conservative, but also among the much younger mortgaged group where the Conservative-Labour split largely matched the national total of 43 per cent to 33 per cent.

After the 2017 election, Matt Singh, the election analyst, drilled down into the data and successfully argued that much of the 2017 ‘youthquake’ was about a privately renting generation that was locked out of ownership.

Singh’s work shows that home ownership and renting are powerful independent explanatory variables separate from issues like age or class. As renting becomes not a temporary and accepted life stage but extends into those who are trying to put down roots and have a family, people become angry. It is hard for the Tories to even get a hearing among many young and young-ish people when they feel they and their generation will never own a stake in society, Fixing that is crucial for ongoing Conservative success.

Private renters now match social renters as the Labour ‘core vote’

Private renters now match social renters as the Labour party’s core vote. Indeed, the share of social renters who vote Conservative is now fractionally larger than the share of private renters who vote Conservative, at 33 per cent to 31 per cent.

In either case, the only difference is the size of the Labour landslide, with a gap of 45 per cent to 33 per cent among social renters and 46 per cent to 31 per cent among private renters, but it is a major turnaround from 2010 when private renters broke 35-29 per cent toward the Conservatives and social renters broke 47-24 per cent toward Labour. It is much more the case that private renters have moved toward Labour than social tenants have moved toward the Conservatives.

Schemes to boost ownership, as well as supply and demand reforms, are necessary

So if home ownership continues to be important, what next? The first thing to note is just how bad things are. The UK has the fifth lowest rate of home ownership across the whole of Europe (we have the second highest rate of sub-market or social rent).

To fix this, my colleagues and I at the Centre for Policy Studies would argue for a twin track approach.

Firstly, continue to support home ownership. As well as 95 per cent long-term, fixed-rate mortgages, we have proposed a cost-neutral way to massively increase the number of owners through a voluntary CGT rebate split between landlords and tenants where the tenant buys from the landlord. In the Spending Review and Budget, Government should continue to focus on shared ownership, which at least gives a foot on the ladder, rather than social and affordable rent. There is more that can be done to boost ownership through new and innovative thinking.

But longer term, focusing on supply and demand is needed. Reduce immigration, boost regional growth, but also build more homes in areas of high demand. Planning reform is a fundamental challenge that has to be grasped.

A few pointers on this thorny issue are:

  • Focus on systemic reform not just spending more, or giving more power to one group or other within the current system. Do not be distracted by gimmicks and realise fixing the big issues will fix many of the smaller issues over time.
  • Focus on the housing delivery test (which is about building enough homes in each local authority) rather than local plans (it is no point having documents, we need delivery). Just six in ten areas would meet the 95 per cent housing delivery test according to Savills – this is where the problem is greatest. It is amazing that it was only in 2015, when I was in the Number 10 Policy Unit and David Cameron signed it off, that basic monitoring of whether or not areas were meeting housing need via the delivery test was implemented.
  • Realise there are two different sets of issues. As Savills set out, in the North and Midlands, housing demand (measured by household formation) and housing supply are largely aligned. The issue there is how to ensure continued or higher supply on brownfield to help regenerate areas, without reducing numbers overall.
  • Meanwhile in the South, and particularly London, housing supply is miles away from household formation (which is itself not enough to meet demand over time). The issue there is how to build more whilst ensuring infrastructure is delivered, new homes are attractive, and ensuring permissions actually get built out while minimising political pain more broadly. It also means working out how the delivery test and green belt policy mesh more effectively.
  • Systemic reform also means streamlining planning, and working out how land flows through the system from getting permission to actually having a home built on it. This means more than tinkering – an overhaul of the National Planning Policy Framework which governs the whole system is probably necessary.
  • This also means ensuring that the typical stakeholders do not just end up running the whole show. Housing is a morass of vested interests, and failures often relate back to this. There is no point fighting more than you have to, but stakeholders will need to be fought. For example, we have a tiny self and custom build sector, unlike practically every other country in the world, and it is hard to not see that as a result of the fact they have no big lobby in Whitehall or Westminster championing them.
  • Finally, the whole system needs to be ‘recession-proofed’. The current model is still structured in such a way that it will effectively halve supply in a downturn despite historic undersupply. Many other issues, from skills to the outdated technology involved in housing are linked to the extreme pro-cyclicality of our housing supply system, which creates a dysfunctional ‘boom-bust’ industry. Fix this big issue to fix those other issues.

If the Conservatives want to both do the right thing, and ensure that both conservative principles and Conservative party continues to thrive, fixing housing will need to be a key domestic priority for the 2020s. Action should start as soon as possible.