Afternoon summary
- Boris Johnson has raised the spectre of a 1970s-style “wage-price spiral” that could force the Bank of England to push up interest rates dramatically, if workers demand to be compensated for rocketing prices. The PM made the speech in a major speech in Blackpool on the cost of living and housing. See 3.33pm for a full summary.
- Charities and housing experts have criticised plans announced by Johnson to extend right to buy to housing association tenants. (See 12.01pm.) Labour criticised the plans too. Lisa Nandy, the shadow levelling up secretary, said:
This speech was yet more evidence that the prime minister and his tired government are out of ideas. You can’t solve a housing crisis with back of the envelope policies that have no realistic chance of success.
Every family deserves the security of their own home, but under the Conservatives housing has become more insecure and unaffordable. Homeownership rates have plummeted. Nearly 200,000 socially-rented homes have been sold off. The impractical proposals announced today will do nothing to fix that.
The Resolution Foundation thinktank has welcomed the fact that the housing plans announced by Boris Johnson today would address an anomaly in the benefits system. But only a small number of people are likely to benefit, it said. Lindsay Judge, a research director at the foundation, explained:
The prime minister has identified an anomaly within our benefits system, where renters are treated significantly more generously than homeowners on identical incomes. 5.4 million renters receive help with housing costs compared to fewer than 15,000 mortgagors. This is hard to defend in principle.
His proposal is to partially address this by allowing first-time buyers on benefits to keep receiving help with housing costs after they become an owner. This will be significant in cash terms for some – a typical renter on housing benefit currently receives £112 per week in housing support.
However, the number of people affected is likely to be small given that the deposit is the main barrier to home ownership. More than four-in-five families on means-tested benefits have no savings at all and high cost of living pressures means a second change that allows benefit recipients to save into certain savings accounts without seeing their benefits cut is unlikely to lead to a surge in savings. In reality, those most likely to benefit will be receiving support from elsewhere – be that via right to buy or financial support from family members.
