I think, if you asked Theresa May last year what she thought defined modern Conservative politics, she would have said that it’s a belief in the free market. In her conference speech last year, she went so far as to call it “the greatest agent of collective human progress ever made.”
However, Theresa May seems to be the next in a long line of people to refute Fukuyma’s idea that history is over, and that liberal democracies with market economies are the end point of civilisation. In her housing speech on Monday, the Prime Minister said the fact bonuses are paid to developers “not on the number of homes they build” but on profits “creates a perverse incentive.”
This perverse incentive, tied to maximising shareholder value, is one of the cornerstones of the modern Anglo-American form of capitalism. Yet housing has become too big an issue for even the most hardline free marketer to ignore.
One in every 200 people in the UK is currently homeless, with charity Shelter explaining that the structural causes of homelessness include a lack of affordable housing, housing policies, and the ways in which housing benefit is administered.
The English Housing Survey found last year that home ownership is at its lowest level since 1985, and that the number of people in the private rented sector has doubled in size since 2004.
Home ownership has been seen as one of the major signs of being a stakeholder in the economy since the premiership of Thatcher—increased home ownership was one of her defining achievements, and a goal for future generations.
But now, rising housing costs, and a supply-side crisis, has shown the failings of the market.
The Prime Minister’s comments about “perverse incentives” show that both she and her Housing Secretary Sajid Javid realise this. Javid has said that the planned overhaul of policies around housebuilding will lead to him “breathing down” the necks of local governments.
This is a clear departure from the praises of the free market being sung by the Prime Minister only months ago, and in the direction of massive state intervention in the housing market.
The new plan for housing policy is that if councils don’t meet targets that will be set for the number of houses being built, they will no longer be able to decide where houses are built. This level of state oversight in housebuilding is a major step towards government intervention where before they had an almost unwavering faith in the power of the free market.
It also highlights the problems that an over-reliance on private companies can have: local governments are unable to borrow money for housebuilding, and are therefore lacking in some of the necessary resources to help meet the goals that they’ll be set by the government.
Yet to assume that reforming housebuilding will solve all the problems of home ownership and homelessness is foolish at best, and wilfully ignorant at worst. The government is paying particularly close attention to the planning powers of councils and the number of houses built takes aim at one of the problems, but is by no means an antidote for all of them.
Nor is this the government taking a major step to the left; prioritising families dream of home-ownership over businesses’ profits may sound more left-wing, but ultimately it is designed to push forward Conservative end goals around the family and the home, even if they are using some of Labour’s methods to do it.
Theresa May is right to argue for greater state intervention when it comes to housebuilding, even if this puts her at odds with the Theresa May of only nine months ago.
But while it might be a step in the right direction, fixing housing will be closer to a marathon than a simple walk in Wales. One step forward won’t be enough to solve the problems of the housing market, and a reform of building regulations alone is unable to solve the systemic issues that keep people locked out of the housing market, or worse, on the streets.
