Britain\u2019s doomsters and gloomsters may have other contenders \u2014 the cost of living, healthcare, immigration \u2014 but the Policy Exchange think tank certainly has a case that \u201cthe housing crisis remains arguably the most acute and intractable socio-economic crisis facing the United Kingdom today\u201d.<\/p>\n
It has caused not just a divide between rich and poor but an intergenerational one, with all kinds of deleterious effects: reduced labour mobility, delays starting families, social exclusion. A chronic shortage of houses has left property increasingly unaffordable. As the think tank points out: \u201cIn 1970, the average house in London was four times higher than the average salary.\u201d Today, with prices averaging \u00a3510,000, it\u2019s 14 times. On top, it\u2019s not merely a question of getting on the ladder; rents too have rocketed. <\/p>\n
Of course, building more houses would help. Yet since Tony Blair brought in the much-repeated 300,000-a-year target in 2004, guess how many times it\u2019s been hit? Answer: precisely none, not by Labour or the Tories. This government is proving no exception.<\/p>\n
And even then, what about the mix? A chunk of new housing is meant to be \u201caffordable\u201d, but we\u2019re not building enough of that stuff either; it\u2019s hardly a priority for private developers. And, as the think tank puts it, the definition \u2014 \u201cno more than 80 per cent of market rates\u201d \u2014 is for many \u201cspurious\u201d too. They can\u2019t afford that either. <\/p>\n
Hence, its big idea: Building Beautiful Council Houses, the title of a new Policy Exchange report by Ike Ijeh. It advocates 100,000 a year. And yes, \u201cbeautiful\u201d does sound a bit Trumpian, even if the sentiment is valid; new council homes need to be \u201chigh quality\u201d and integrated into local communities, not the sort of thing that creates grim ghettos. Still, isn\u2019t there a case for reversing the damage from Margaret Thatcher\u2019s \u201cRight to Buy\u201d<\/a> \u2014 the programme that sold off Britain\u2019s council housing stock, which successive governments have failed to replace?<\/p>\n Go back to 1969 and council houses were 28 per cent of the total, a figure down to 6 per cent by 2023. It\u2019s a decline that has been accompanied, too, by the hollowing out of local authorities\u2019 ability to build new homes: just 2 per cent of the total in 2022, versus nearly 70 per cent in 1954. No one\u2019s suggesting going back to that, or 1979\u2019s level of council homes: 5.1 million versus 1.5 million today. But building more could boost the whole market. <\/p>\n First, it would stop new homes being the preserve of the big private housebuilders \u2014 a crew focused on making a profit out of balancing supply and demand, not hitting government targets for new homes. Second, it could revitalise smaller, local builders, working in partnership with councils. Third, it could push down rents, also giving tenants more scope to save up for a deposit to buy their own home. <\/p>\n Yet how do you pay for it? Well, one result of our dysfunctional market is that Britain now spends \u00a325 billion a year on housing benefit, paid to private landlords \u2014 a figure that the think tank reckons will \u201cballoon\u201d to \u00a370 billion-plus by 2050. Instead of subsidising them, money could be better spent on \u201ca new generation of council properties\u201d, with an obligation to replace each one sold via Right to Buy. On top, a levy on all new infrastructure developments could help finance new council houses. <\/p>\n Sure, there are obstacles to all this. Local authorities don\u2019t yet have the funds or skills to build 100,000 new council homes a year \u2014 and the big developers will focus on more profitable stuff. People will also argue that if immigration was under control, Britain wouldn\u2019t need so many new homes anyway. Still, when it comes to fixing the UK\u2019s housing crisis, more council houses should be part of the foundations.<\/p>\n Underdog triumph<\/p>\n Pit a rottweiler against a chihuahua in a fight and there\u2019s typically only one winner. So the big puzzler is how the $130 billion KKR (and its chums from infrastructure firm Stonepeak) managed to get thumped<\/a> by the \u00a31.25 billion Primary Health Properties in the set-to for Assura. <\/p>\n As Shore Capital analyst Andrew Saunders put it, \u201cthere are not many examples in M&A history where the underdog has come out on top\u201d, suggesting it was proof of the old adage that it\u2019s more about \u201cthe size of fight in the dog than size of dog in the fight\u201d. He\u2019s right, too, to \u201ccongratulate\u201d PHP chairman Harry Hyman and chief executive Mark Davies on their victorious scrap: 63 per cent acceptances for their \u00a31.7 billion cash and shares bid. <\/p>\n They saw KKR was trying to buy rival healthcare property group Assura on the cheap, a bottom-of-the-cycle cash bid at no premium to net asset value. And that investors didn\u2019t want out of a sector enjoying political oomph: \u00a329 billion a year extra for the NHS, with a shift to more primary care boosting the value of buildings housing GP surgeries. PHP just needed to give them a convincing reason to stay in. <\/p>\n Yet KKR and its adviser Jefferies also made a huge tactical blunder. They made their bid \u201cbest and final\u201d too early, leaving them zero room for manoeuvre once PHP raised its offer. One result? Friday\u2019s desperate attempt to trash it, which required three corrections from the Takeover Panel. It was a sign even they knew their bid was going to the dogs. <\/p>\n Nuclear reaction<\/p>\n