September 2nd, 2008
I am currently imagining the collective groans from those in the housing and house building industry as the details of the latest high publicity housing rescue plan were revealed today.
Housing rescue plan III was much more widely trumpeted than the first two (see comments on Part I, Part II). This probably is because the collapse of the housing market and house building industry is much more widely appreciated.
Leaving aside the many issues I have with the policy mix, I fear the Government still doesn’t get the scale of the problem.
I shall leave you to browse through the details of the plan, but for my money if you add all three sets of measures up it still seems hardly to amount to a total package that will rescue the house building industry. And I must make plain here I mean rescue the industry, not individual companies.
This is an industry that undertakes £24 billion of work a year and employs 300,000 or so people – that is, it used to. With talk that the industry will shrink by about 30 to 40% this year, that amounts to an £8 billion drop in work, much of that will be in wages.
There are clearly sound elements to the proposals, but unless I am missing something major, the Government’s efforts to date will have little impact given the scale of the problem. From all I can see we are about to see the destruction of a large slice of what, by the Government’s own definition, is a strategic industry.
This is all the more baffling given that late last year John Callcutt’s industry review was published. At that point the question was whether the industry could meet the challenge of producing 3 million homes by 2020. It was always going to be a tough struggle, even without axing 40% of the industry’s workforce.
So in five year’s time will we again be asking the same question of the industry? Probably, but we will also be asking why we allowed so much of it to disappear.