The Conservatives are sowing the seeds of a new financial crisis through their failure to tackle the housing problem, Nick Clegg has said as he calls for the “muscle of the state” to be used to help build up to 300,000 homes a year.
In an attack on George Osborne’s Treasury and Eric Pickles’ Department for Communities, the deputy prime minister accused the Tories of having an ideological objection to intervening in the housing market to build more homes.
Clegg made the comments in a speech at the Bloomberg company in London on Monday as he came under pressure to change strategy and swing to the left after poor European and local election results.
He said Mark Carney, the Bank of England governor, and Christine Lagarde, the director of the International Monetary Fund, were right to warn about the need for more housing in the UK. The Conservatives’ failure to invest in housing was “unfair and economically unsustainable” and would create the seeds of the next financial crisis, he said.
“There are lots of very authoritative people saying you have got to deal with this issue of a lack of housing supply in this country. If you don’t, it’s not only unfair to future generations but it creates the seeds of the next crisis of financial volatility.
“If you accept that as the challenge, how do you do it? Unless someone comes up with a better idea, I just don’t see how you can do it without the muscle of the state … and if necessary, borrowing some public money in order to get that done. Just relying on private developers and just relying on reducing the red tape of planning is just not going to build a quarter of a million homes a year. It’s just not. We should be open about that.”
Clegg said he was frustrated that the Conservatives “talk the talk on housing but don’t walk the walk”. He said the Tories didn’t seem to acknowledge that building 250,000 homes a year required more than liberalising planning measures or giving extra tax incentives to local authorities: “To really crack it on that scale, that is a perfectly justifiable use of the muscle of the state to build the houses that we need”.
His emphasis on house building aligned the party more closely with Labour, which has set out plans for an extra 200,000 homes a year. But Clegg insisted he was in the middle of the two parties.
“The Conservatives seem to have some sort of ideological objection to doing what is necessary to get the job done and building homes on that scale,” he said. “And of course, the Labour party’s credibility on public finances is so shot to pieces I just don’t think it has the credibility to make those kind of commitments necessary.”
Clegg confirmed he was open to borrowing more to provide housing and other infrastructure once the country’s books had been balanced in 2018. Before then, capital investment could still be spent on housing or transferred from current spending to boost house building, Liberal Democrat aides said.
The deputy prime minister indicated he would like a housing pledge to be in the Lib Dems’ general election manifesto but that was ultimately decided by the wider party, not him.
Osborne is set to address the issue of house building in his Mansion House speech on Thursday amid warnings that house prices in London and the south-east are spiralling out of control because of a lack of new supply.