Brexit is distracting Theresa May from pressing problems of housing and the NHS

If it weren’t for Brexit, it might be possible for No 10, the Treasury and the Health Department to work together to try to solve the social care problem that was botched in the election, which would go a long way to easing the pressure on the NHS

John Rentoul
Saturday 10 March 2018 14:27
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If May really wanted to make housing the ‘mission’ of her Government, then the energies currently being devoted to the Irish border question would need to be devoted to it
If May really wanted to make housing the ‘mission’ of her Government, then the energies currently being devoted to the Irish border question would need to be devoted to it

The most striking thing said by a politician this week was the Prime Minister’s attack on capitalism: “The bonuses paid to the heads of some of our biggest developers are based not on the number of homes they build but on their profits or share price,” she said in her speech on housing on Monday.

“In a market where lower supply equals higher prices that creates a perverse incentive, one that does not encourage them to build the homes we need.” That was the sort of thing Ed Miliband used to say, and much mocked he was for his punk Marxism.

So Theresa May deserves to be mocked for her cod economics, using the language of supply and demand and of incentives without apparently understanding them. Of course property developers have an interest in scarcity, but any company that tries to raise prices by refusing to build houses risks being outflanked by rivals that will build to take advantage of prices that are already high.

Such nonsense might not have mattered if the Prime Minister had any plans to change the incentives to encourage companies to build more houses, but she hadn’t. She spoke of “their obligation to build homes local people can afford”, but a sense of duty isn’t going to make builders build if they haven’t got the land or the planning permission.

This might not matter so much if May were up against Miliband. Then both parties could spout platitudes and misuse economics and the voters would find nothing to choose between them. But she is not. She is up against Jeremy Corbyn, and Corbyn doesn’t bother with supply, demand and incentives. He simply condemns rich, unscrupulous developers and says the state should build houses instead.

I am told that there was at one point a paragraph in Theresa May’s draft speech along these lines, telling private developers that, if they didn’t fulfil their “obligations”, the Government would do it for them.

It was taken out, possibly because the only part of the state that could build houses – local government – is not considered up to the task.

This could be an example of how Brexit is distracting the centre of Government – No 10, the Cabinet Office and the Treasury – from attending to the pressing problems facing the country. You can imagine an adviser saying: “It’s too difficult – let’s just delete that section.”

If Theresa May really wanted to make housing the “mission” of her Government, she would need the political and policy-making energies that are currently being devoted to the Irish border question and regulatory alignment.

Brexit: European Parliament threatens to veto deal over Theresa May ‘discrimination’ of EU citizens

Instead she delivered a speech of reheated Milibandism, all platitudes and exhortation, and shied away from the kind of statism offered by Corbyn. She may be right to do so, but in the absence of new thinking she is laying the Conservatives wide open to attack from Labour. The voters may decide that a massive council-house-building programme is better than milk-and-water planning reform.

It is the same with the health service. The media attention devoted to the NHS winter crisis has subsided. The flu season has passed without bringing the NHS to collapse. But that was partly achieved by cancelling operations and postponing the crunch, rather than tackling its causes. The indicators are all still moving in the wrong direction.

If it weren’t for Brexit, it might be possible for No 10, the Treasury and the Health Department to work together to try to solve the social care problem that was botched in the election, which would go a long way to easing the pressure on the NHS.

Even when Britain has left the EU in a year’s time, we will be in a state of limbo known as the transition period, still frantically trying to negotiate the future trading relationship.

When we emerge into the brave new world of Actual Brexit, probably on 1 January 2021, the housing market and the NHS are likely to be in a worse state than today. Theresa May is in danger of leaving a wasteland.

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