Following 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
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.