Paul Broadhead, BSA Head of Mortgages & Housing

With the general election fast approaching, I thought I would take this opportunity to outline what we would like to see in the new government’s manifesto – actions that will lead to:

• A properly functioning housing market – for today and tomorrow

• Initiatives that encourage a nation of savers – creating a save now, buy later culture

• An economic and industrial framework that values mutual and co-operative businesses – increasing competition and consumer choice

Housing

We haven’t had a properly functioning housing market for many years. Much has been written on the problems, but now it’s time to look forward. The best place to start to make a positive change would be through the speedy development of a comprehensive, long-term, cross-party housing strategy. 

Kicking off with an independent review that engages all stakeholders in the housing market, the new housing strategy will need to set out clear plans and initiatives to increase the number of first-time buyers, many of whom are now completely priced out of the market. The review must not only look at solutions for today's new homebuyers, but also the longer-term implications of any initiatives – they mustn’t compromise the prospects of future first-time buyers. It must also include a review of mortgage regulations to determine the costs and benefits of the stricter post-financial crisis regulatory environment versus the social benefits of higher rates of homeownership. 

The long-term housing strategy will also need to include a coherent plan to build more homes across all tenures, enabling a diversity of supply, including SME and self and custom builders – with the necessary infrastructure to support this. 

Looking at the existing housing stock, a clear approach to decarbonising housing must be defined and communicated, to enable businesses to invest in skills and training and to give homeowners the confidence to take action.

Finally on housing, whilst the Leasehold and Freehold Reform Bill went through parliament as part of the wash up, we still need the government to make a clear decision on the future of commonhold.

The appointment of a housing minister, with a seat in the cabinet, and who remains in post for several years rather than months, would be the best way to ensure government focus and delivery of the strategy.

Savings 

Having a savings nest egg to fall back, whether big or small, can provide better financial resilience, boost mental wellbeing and open up a world of opportunities. However, around 8 million people in the UK have no savings at all, and there is a strong culture of ‘buy now, pay later’.  

There are measures the new government can take to help encourage people to save, starting with an increase in the Personal Savings Allowance (PSA).  When the PSA was introduced in 2016 the Bank Rate was 0.5% meaning a basic rate taxpayer could have around £75,000 in savings tax-free. Today, because of higher interest rates, the benefit has dropped to around £20,000. Increasing the PSA to £3,000 for basic rate taxpayers would ensure it delivers the benefit it originally intended to.

Similarly simplifying savings schemes could help encourage take-up. Reducing the Lifetime ISA penalty and raising the Lifetime ISA and Help to Buy ISA property thresholds, would ensure these remain fit for purpose.

However, the biggest change in savings behaviours could come from workplace savings, where individuals save a little each month directly from their salary.  We would like to see the next government enabling auto-enrolment into workplace saving schemes for organisations with 250+ employees. This could lead to a huge increase in the availability of workplace savings schemes.  Recent research for UK Savings Week shows that around half (47%) of those who save do so on an ad-hoc basis, with 56% just saving what they have left at the end of the month. Changing habits to saving at the start of the month could make a big difference.

Mutual and co-operative sector

Mutual and co-operative organisations offer a competitive and purpose-driven alternative to shareholder-owned businesses. There are over 9,000 mutual and co-operatives in the UK with annual revenues of £87.9 billion. They have around 75 million members and employ more than 400,000 people.

The culture, behaviours and decisions at mutuals and co-operatives differ because of their ownership model. With no external shareholders to satisfy, they can take a long-term view which can be reflected in their prices, products and services, which in turn increases product innovation and choice. 

We want the government and regulators to recognise the member-owned sector's value and take a ‘mutuals first’ approach to policy development, rather than considering them as an after-thought. Ensuring legislation is regularly reviewed, updated and proportionate is essential to ensure mutuals have a level playing field with their PLC competitors. 

The appointment of a Minister for Mutuals, with responsibility for keeping the member and customer-owned business models at the heart of economic and industrial strategies, would ensure consumers continue to benefit from the diversity and competitiveness offered by the mutuals and co-operatives sector.

We hope that whichever party is appointed to govern us on 4th July will spend some initial time in listening mode - and we are certainly ready to talk!

This article was first published in Mortgage Finance Gazette