Members of the Thorncliffe team have excellent insight into the new Ministry of Housing, Communities and Local Government. Here Thorncliffe MD Richard Patient gives his take on five key areas of concern for the new Ministry.
1. The name
The real news about the Ministry is not the name, it’s the people.
Housing now has four of the best brains in the government trying to deliver on what is fast becoming the number one issue of the government (maybe Brexit is still no 1 for the moment).
Sajid Javid now heads a department that contains two ministers that have been named future prime ministers (and he himself has been named a future chancellor). Dominic Raab, the new Housing and Planning Minister, has become more prominent than at least half of the Cabinet put together – BBC Question Time last night is just his latest appearance.
Under both is Rishi Sunak, a former Goldman Sachs employee, who is clearly going places. Rishi is likely to take the local government finance role, but Dom and Rishi are not only colleagues but close friends and Rishi is likely to be put to the tricky task of working out how to get more SME developers into the market.
Despite many commentators sniggering about the name change this past week, it’s been done for a very important reason. If Housing is the number one policy of the Government, then Housing should be in the title of the Ministry. That helps to remind Sajid’s Cabinet colleagues that housing is his number one priority, but more importantly reminds staff in the Ministry that this is the priority of the government. Names matter.
The government are aghast that the number of SME developers have fallen dramatically over the past few years. They put this on the radar in the Housing White Paper last year. Is it about finance? That’s the task of Rishi Sunak, who understands this sector, to find out.
3. Letwin review
I mentioned there were four massive brains in the new Ministry, but then only named three of them. Oliver Letwin has a brain bigger than all of the rest of the government, and he has been tasked with a review to find out why planning consents don’t get built, and what to do about it. Expect an announcement about how this is going to happen imminently.
4. Green Belt and new towns
Most commentators have read what Dominic Raab has said about green belt (“green belt is sacrosanct”) and concluded that green belt is sacrosanct and the government won’t be altering green belt policy any time soon.
This is too simplistic an analysis. Yes, the quantity of green belt is not going to reduce. But Dominic is a pragmatist above everything else, and if a good argument (emphasis on ‘good’) can be made to move green belt to allow housing development to take place, then we should expect the argument to be given an extremely good hearing. Maybe his previous comments can be put down to the seat he represents – Esher and Walton.
New towns have been on the government’s agenda (Labour and Conservative) for the past twenty years. Expect this to be given fresh impetus, particularly in the triangle between Oxford and Cambridge.
5. Stamp Duty
The other player looming large over the new Ministry is Philip Hammond. Philip has been bombarded with representations from developers telling him that high rates of stamp duty are detrimental, killing the market and unjust.
Hammond cut the stamp duty for first time buyers but the answer is an absolute firm “No” when asked to reduce it generally. Don’t expect high rates of stamp duty to come down anytime soon, at least whilst Hammond is at the Treasury. It might be having an adverse effect on the housing market, but the Treasury under Hammond has looked at the tax revenues it is bringing in and concluded that the electorate won’t accept a cut in taxes that are perceived to mainly benefit wealthy people.
The priority of the Government
The Conservatives know housing is massive for the next election, probably in 2022. They recognise that it should be possible for a professional couple to be able to buy a modest home in London and the south east, and see that this is not possible at the moment – they know this is electoral suicide if this continues. Conservatives, after all, are the party of social mobility. But they also don’t want to crash the market.
A difficult one.