If elected, it has been announced that a Labour Government would build up to 150,000 new homes over the next Parliament by using a œ5bn ?future homes investment fund’ taken from savings held in the current Government’s new Help to Buy ISAs.
Speaking on BBC Breakfast on April 4, shadow housing minister Emma Reynolds outlined the opposition’s plans to stipulate to banks that savings placed in Help to Buy ISAs must be used for house-building instead of being invested elsewhere. Labour would still top up the ISAs by 25%- announced as part of George Osborne’s final Budget in the current Parliament – and would underwrite every pound of investment heading into residential construction.
Ms. Reynolds said:
“With the new ISA for first time buyers that will be topped up by the Government to help them save for a deposit, we’re simply saying that we should use that money to unlock the building of new homes so that we’re not only helping first time buyers save for a deposit, but we’re also boosting the supply of new homes to make sure those homes are available for young people to buy.”
Unveiling the scheme to an election rally in Warrington, also on April 4, party leader Ed Miliband said:
“There’s no bigger symbol that our country doesn’t work for working people than young people not being able to get a start with a home of their own.
“We’re going to turn it round and build the kind of country in which we can all be proud. Investing in our future, investing in the next generation, giving hope back to young people and restoring the promise of Britain.”
Labour’s plans are intended to tackle what the party calls the ?central flaw’ in Chancellor Osborne’s scheme, namely that it does nothing to boost the supply of new homes. The party says the Government has spent œ6.6bn on schemes to stoke housing demand while neglecting house-building. The new fund would aim to ?pump prime’ investment into the construction of new homes after figures showed that the gap between supply and demand is on course to reach 2m homes by 2020.
Ms. Reynolds said:
“The problem we have at the moment is this [Coalition] Government is very focused on the demand side and the risk of that is if all you do is stoke demand, there is a real risk that if there continues to be such a significant undersupply, that you actually make those homes more expensive for first time buyers.
“This undersupply – which is what we are trying to tackle, and is what we are saying the Government hasn’t done enough to tackle – is really at the heart of the problem.”
Labour claims that the scheme will only cost the Chancellor’s original estimate of œ5bn, but would ensure first-time buyers had greater access to new homes in established towns and cities – referred to as
“housing growth areas” – when they had finished saving for a deposit.
Conservative housing minister, Brandon Lewis, has hit back at the policy by claiming that a Labour Government would have no power to ensure banks took up the scheme.
Mr. Lewis said:
“Today’s (April 4) panicked announcement has already unravelled with Labour admitting banks and building societies can’t be forced to deliver the policy – and they won’t because this ill-thought through proposal from Ed Miliband will kill the Help to Buy ISA.
“[The] announcement would harm the first ti