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Tories' housing bill set to fail

The Queens Speech on Wednesday gave us the first idea of what sort of Government David Cameron now intends to lead, though we wont get the full picture until George Osbornes Emergency Budget on July 8th, says David Ellesmere.

 

There were a lot of Bills announced in the Speech. In reality David Cameron didnt have much choice. He needs to try and get as much through as quickly as possible before by-elections and discontented backbenchers whittle his small majority down to nothing.

 

 

Many were disappointed that the ill-thought through plans to give large discounts to housing association tenants to buy their houses are still going through.

 

The Government intends to pay for the discounts by forcing councils to sell their most expensive houses, but it also wants these proceeds to fund the building of new council houses.

 

Even if the scheme works as intended it will lead to one fewer affordable rented home for every housing association house sold. In reality the proceeds from the sale of council houses is unlikely to be enough.

 

The right-to-buy scheme launched by the Government in the last Parliament was supposed to deliver a new replacement house for each one sold. In fact only one council house was built for every five sold.

 

So councils wont have enough money to build new houses and housing associations will find it much harder to borrow money so they wont be building as many new houses either.

 

The end result is that house prices are going to continue to rise.

 

The lucky - and increasingly dwindling - few who manage to get a council or housing association house will have the opportunity to buy their house at a discount. But for people living in private rented accommodation the dream of home ownership is going to be put even further out of reach.

 

And, given that a third of council houses sold under right-to-buy are now being let privately at higher rents, tax payers are going to be faced with a bigger bill for housing benefit.

 

This is going to be a very expensive policy in the long run.

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