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And now the EU urges Britain to boost housing supply Matthew Warburton - 06/06/2013

EU Commission 300Following the IMF's criticism of the British government's economic strategy, the European Commission has called for a similar package of action to boost housing supply and infrastructure investment. 

This comes as one part of a set of country-specific recommendations to 23 of the EU's member states to restore sustainable economic growth across Europe.   The Commission notes that in Britain high house prices and stringent mortgage conditions have put house purchase out of the reach of many middle-income households, but is worried that, without more action to increase housing supply, the government's Help to Buy scheme risks pushing house prices even higher.   It also argues that the legal framework for the rental market is inadequate for the role it is increasingly playing, particularly in not making more longer-term tenancies available for those who want them.

Like the IMF, the Commission calls for further liberalisation of planning law and more efficient operation of the planning system to help smooth the path for infrastructure investment as well as new housing supply, although it stops short of the IMF's explicit recommendation that planning decisions be further devolved, with councils and communities getting a bigger share of the benefits as an incentive to approve development in place of a system where the big decisions are made over the heads of local communities.  The Commission focuses instead on recommending reform of land and property taxation to remove incentives for landowners to sit on land suitable for development.

Meanwhile, back in Westminster, there is little evidence to suggest how the government is likely to respond to the flurry of helpful advice it is getting - from these august international agencies and many domestic voices, too - when it comes to announce its spending plans on 26 June.  The most it is willing to admit at this stage is that there are some issues it is thinking about.  These include relaxing or removing the caps on council borrowing to allow more housebuilding. 

Answering a question from Caroline Lucas, the Green MP for Brighton Pavilion, Don Foster, one of the CLG Ministers confirmed that the government is looking at the issue and will make an announcement on 26 June.  Which doesn't mean the government will agree to remove the caps, but does suggest that at last it is giving the possibility serious consideration.

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