There's more to homes than ownership Let's look beyond the ownership dream Time to face the truth about ownership shj The ownership dream has ended

Conservative housing policy is bankrupt but Labour has little more to offer, argues Christian Wolmar

THE DIRE state of the housing market was powerfully illustrated last week when Lovell Homes, which built 500 homes last year, decided that it wasn't worth developing any more sites and pulled out altogether. That news came just after both the Halifax and the Nationwide building societies reported that house prices were continuing to fall despite earlier forecasts that they would start rising.

Meanwhile, the number of new homeless families remains at historically high levels. Last year local authorities took in 140,000 households, three times the level of the late Seventies when Margaret Thatcher was first elected.

Whisper it quietly, but there does seem to be something of a market failure here. And what is the Government's response? Unbeknown to most of the population whose attention was focused on the Tories' internal strife, 10 days ago John Gummer published his housing White Paper, Our Future Homes.

If one is seeking any illustration of just how much the Conservatives have lost their way since the heady days of Thatcher's drive for universal home ownership, it is this sad little document. No longer do we see the confidence of the Eighties when home ownership was the panacea. Instead, tacitly and modestly, the document recognises that ownership can go just so far and that there is a role for subsidised social housing.

Moreover, the long-term policy of pushing up rents for housing association and council tenants way beyond the level of inflation towards a supposed market rate has been ditched. The White Paper recognises that high rents create a poverty trap. Tenants feel discouraged from seeking work because they would lose more in housing benefit than they would earn. The document says that providing subsidised housing "can be cheaper over time than paying housing benefit on a market rent for several decades". That must have stuck in Mr Gummer's craw when he read his civil servants' draft but he let it through. Margaret Thatcher would not have.

There are obvious reasons why home ownership cannot rise much above its current level of around two-thirds of households. The reduction in mortgage interest tax relief makes it more expensive to become an owner now; the changes in the labour market have drastically reduced the number of people with stable incomes; the partial removal of the income support net makes people more wary of taking on a mortgage; and the overall absence of a "feel-good factor" means that fewer people will consider buying. Amazingly, the White Paper ignores these issues and the concomitant problems of arrears and negative equity which many home owners, the Tories' very own constituency, now have. Certainly it was lucky for Mr Gummer that the hounds of the Tory press were otherwise engaged. They would not have been pleased at his lack of help for these desperate people.

Not that the White Paper trumpets this new recognition that the push towards home ownership has run out of steam. Indeed, it was obfuscated by the accompanying press release which insisted that there would be 1.5 million extra home owners over the next decade, though it gave no indication of how the Government intended to bring this about. The figure is merely an extrapolation of previous trends of home ownership, a wish rather than a target.

There are a few desultory attempts in the White Paper to outline policies for getting more people into home ownership. Some housing association tenants are to be given the right to buy, but this will not be on the scale of council house sales. Housing associations, unlike councils, will have to agree to a sale. Moreover, the process will be cash-limited since the Government has promised to reimburse associations for losses arising from the discounts they will be expected to offer. And since housing association tenants tend to be poorer than their council-home counterparts, there will be fewer takers. The scheme will probably go the way of other much vaunted but quickly forgotten initiatives over the years intended to help council tenants, such as the right to convert rent into mortgage payments and the ludicrous and virtually never used option to choose a private landlord to buy your council house.

The very half-heartedness of the new right-to-buy measure is a recognition that the drive to home ownership has fizzled out. For 16 years, the Tories have been peddling a policy of changing the ownership structure of the housing stock rather than a housing policy and they have reached the end of the road. But instead of facing that issue, the White Paper simply side-steps it.

While the Tories have clearly lost interest in housing - the right to buy and its successors will hardly figure in the next election campaign - Labour has yet to produce an inspiring alternative. Chris Holmes, director of the housing charity Shelter, says that the over-riding problem is very simple, just as it was 30 years ago when the organisation was created: "There is a serious shortage of affordable housing for people on low incomes."

Constrained by its policy of making no spending commitments, Labour can no longer make promises about building thousands of homes. But it does not need to spend vast amounts of money.

A little bit of courage is needed. Steve Wilcox, who has just co-authored a pamphlet for the Institute of Housing called Challenging the conventions, argues that all that is needed is a little tinkering with the definition of the public sector borrowing requirement (PSBR). "No other country has a creature such as the PSBR," he says. "They have a measure which counts government spending but not borrowing by public corporations." His solution, therefore, is that councils should set up companies at arm's length which would take over their housing and which would then be free to borrow on the financial markets in order to invest in more housing. The borrowing would not be counted against the new measure of general government deficit which, incidentally, is the one specified in the Maastricht treaty and used throughout the European Union.

Sounds simple. They already do it in Sweden. But, according to Mr Wilcox, Labour's Treasury team "dismissed the idea as soon as they saw it. They are too busy showing that they are more orthodox than the Tories".

It may be different once a Labour government is in office. Labour will be under pressure to choose some areas of divergence from the policies of its predecessors and housing could be one such area. The White Paper has exposed the bankruptcy of Tory thinking, so it would need only the merest whiff of inspiration, just the shadow of a policy, for Labour to seize the initiative. But the depressing absence of radicalism on Labour's side and its mind-numbing caution offer little solace either for those home owners struggling with their mortgages or for the homeless who need a council home.