What will become of the government’s divisive housing scheme after the 2015 General Election?

Alastair Stewart

“If Christopher Columbus had been a Liberal Democrat, he’d have discovered the Mid-Atlantic”. Ho, ho, ho … a joke that was resuscitated today during the Lib Dem Conference. Funny, but outdated: the last place a Lib Dem is likely to occupy these days is the middle ground, or ocean. Coalition deputy Nick Clegg appears to be following Cap’n Cameron to the West Atlantic, while man-overboard Vince Cable is paddling eastwards. A khaki-clad Paddy Ashdown would presumably be at home defending our South Atlantic interests. And fellow ex-leader Charles Kennedy would, no doubt, be equally happy propping up the Atlantic Bar (or any other one).

For once, skirmishes among the UK’s third (or possibly fourth) party have a bearing on the construction and housebuilding industries. The spat over economic policy between the right of the party, represented by Clegg, and the left, led by Cable, hinges largely on views of whether the government’s Help to Buy scheme would lead to “a new housing bubble” and the extent to which councils could borrow to build homes for rent. Similar divisions have emerged over infrastructure spending and the party’s grudging acceptance of nuclear power.

Whether any of this will matter depends on the direction of the inter-party horse-trading that is likely to ensue before and after the 2015 General Election. This could involve five or six possible permutations, including the coalition splitting up in advance, Clegg re-joining Cameron afterwards or the party being trounced and shuffling off, led by Cable, to join forces with Labour.

Cameron and Clegg back together (if the Tories don’t hook up with UKIP) could, I suspect, see the extension of Help to Buy beyond its 2016 cut-off (since the housing market would likely collapse were this crutch suddenly withdrawn) but the austerity drive affecting all areas of public construction would undoubtedly come back with a vengeance. Ed Miliband and Cable would be faced with the problem of how to “taper” away the impact of Help to Buy while avoiding a crash, possibly by lowering the £600k upper threshold, while cutting councils more slack to borrow.

This all looks unnervingly like the German way of doing politics. At least we will be spared the prospect of hearing Angela Merkel crack jokes on the campaign trail.

Alastair Stewart is a construction analyst at Progressive Research

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