Is the Housing Strategy Facing the Future?

Before facing the future, those involved in housing policy would do well to look back on the past. Once celebrated as a driver of the boom, housing now epitomises the dubious thinking and practices that led to the collapse - reckless lending, an over-emphasis on market solutions, wasteful speculation, excessive optimism and a lack of regulation. Indeed it was the housing crisis in the USA which triggered the 2007 credit crunch and led to the broader economic crisis which continues to this day.

So have lessons been learned? Facing the Future does not offer much in the way of reflection but its stated commitment to a “stable and sustainable housing market” that is “better aligned to the overall performance of the economy and household incomes” and which supports “the most vulnerable in society” would certainly signal a new direction.

If these aspirations are to be realised, an expansion of social housing seems necessary. It would help ease the over-reliance on home ownership and reduce the waiting list for social housing which totals almost 40,000 households. Housing construction would also provide a much needed economic stimulus. However, only 6,000 new social homes are expected to be delivered over the four years of the current budget period. This is 2,000 short of the 8,000 new homes which the Housing Executive estimates is required to keep up with demand.

The shortfall largely stems from the budget constraints imposed as part of the UK government‘s ‘deficit reduction’ strategy. Critics often accuse the UK government of failing to learn the lessons of history. The belief that the stimulus of World War II helped to end the depression was conventional wisdom for decades. Having been marginalised in the 1980s the argument that government should raise spending during recessions has re-emerged with the current crisis. The extent to which the experience of the 1930s can provide answers to today’s economic problems is open to question but it is notable that our understanding of how to manage an economy is not characterised by continuous learning and improvement.

Perhaps part of the problem is that our political culture does not lend itself to frank assessment. The mentality was evident in the motion proposed in the NI Assembly last week expressing “dismay that Invest NI appeared to display an attitude of resigned acceptance to the job losses at FG Wilson”. This followed the comment by Invest NI’s Alastair Hamilton that if he was a manager at the company he too may have relocated jobs to China. One MLA argued that “We should seek to highlight the advantages of doing business in Northern Ireland, not agree with decisions to move business overseas”. In a similar view earlier this year the First Minister’s criticised the local media “for talking the Northern Ireland economy down”.

Hamilton could have been more diplomatic and the ‘oh dearism’ of the media may leave much to be desired. But given the role of irrational exuberance in creating both the housing and the broader economic crisis, perhaps sober analysis will enable us to face the future with more justified optimism.