The Prime Minister kicked off the Conservative Party’s annual conference in Manchester with major policy announcements aimed at helping young people. She admitted that her party needs to ‘look again’ at tuition fees and said they will stay at £9,250 for the foreseeable and, crucially, pledged that the repayment thresholds will rise, so graduates will start paying back loans once they earn £25,000, rather than £21,000. She then announced that she will be extending the Help to Buy scheme aimed at first-time buyers.
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Calling the announcement that tuition fees will stay the same ‘a freeze’ is a bit misleading but, then again, ‘Theresa May says tuition fees are going to stay the same’ isn’t quite as good a headline, is it? Indeed, it certainly has nothing on Labour’s policy of ‘scrapping tuition fees’ altogether. The announcement probably isn’t enough to get the attention of any young people, unless, of course, they happen to be Sunday Telegraph readers who caught Theresa May’s exclusive interview on the subject.
The very good part about her announcement is the news that the repayment threshold is going to rise. This will mean that graduates on less than £25k are actually better off. However, it’s worth noting that the repayment threshold was always supposed to rise in this way but Cameron’s government did a U-turn on the promise because graduate wages weren’t rising fast enough, meaning if they did raise the threshold fewer people would be paying their loans back.
This is something Money Saving Expert Martin Lewis has repeatedly pointed out and campaigned for change on. Writing on his Facebook page, he said ‘every single graduate earning over £21,000 a year will pay less’. He added ‘and it has a long-term progressive benefit too…as most graduates won't clear their loans in full before it's wiped - by reducing what they repay each year, you reduce what they repay in total too.’
In a nutshell, May has made good on a broken promise here and done the right thing.
Renting Reform
The measures announced by Sajid Javid in Manchester are, undeniably, good. Giving renters more rights is much needed and long overdue. Forcing all landlords to join an ombudsman redress scheme, meaning that renters can report and challenge bad treatment should have happened years ago. Ditto the new laws which will require all letting agents to be registered and have professional qualifications.
‘For too long, tenants have felt unable to resolve the issues they’ve faced, be it insecure tenure, unfair letting agents’ fees or poor treatment by their landlord with little or no means of redress. We’re going to change that’, Javid said.
Javid also said that ‘incentives’ will be unveiled to encourage landlords to offer tenancies of at least 12 months. This too sounds good, but some are wondering whether it will be strict enough.
Polly Neate, CEO of Shelter told The Debrief why these policy announcements are a mixed bag: ‘while we welcome the fact that Sajid Javid has recognised the problem of instability for families who rent privately, we're sorely disappointed that he is talking about encouraging 12 month tenancies when half of all tenancies are already a year or more. For the millions of families moved from pillar to post at the whim of a landlord, 5-year contracts are the only way to ensure a stable future for those who need it most.’
Reforming the private rental sector, which now provides housing for 4.5million households and counting, is no mean feat. This is a good start but, we won’t be able to move on from the housing crisis until we have more affordable housing meaning that fewer people are renting and relying on landlords who know that buy-to-let is a license to print money.
Help To Buy
Extending Help To Buy and pumping £10bn into it only really serves to further inflate the housing market and offer a life raft where entry is guaranteed by having parents who can help with a deposit. The scheme also implicitly condones this country’s out of control house prices by giving a Government seal of approval to a 5% deposit mortgage on an already overpriced property.
We need more innovation, investment in schemes which will actually disrupt the market as well as more state-built social housing but that’s definitely not something you’d want to say out loud here.
Neate also explained why this announcement is somewhat problematic, ‘extending Help to Buy is the wrong priority at a time when over a million renters are struggling with crippling housing costs’ she told The Debrief. ‘Help to Buy has barely helped the first-time buyers it is targeted at and has done nothing to help those worst affected by our broken housing market and those at risk of homelessness. Moreover, it has increased house prices and propped up a speculative development model in need of reform.’
Indeed, it has been reported that developers are clocking up whopping bonuses for offering Help to Buy on their new builds, which does raise questions about who the real winners of this policy actually are…
The Adam Smith Institute described the move as being 'like throwing petrol on a bonfire'.
All of these announcements came as party delegates gathered in two large hotels in the centre of town. Political players, commentators and hardcore Tories have gathered to profess their love of free markets, fight it out over Brexit, rubberneck over both Theresa May and Boris Johnson’s future and, above all, work out how the hell the party comes back from an embarrassing election result earlier this year.
Following in ‘Oh Jeremy The Boy Corbyn’s’ wake, the Tories knew they had to pull some sort of rabbit out of a hat here. The Labour leader talked about rent controls in Brighton, putting housing front and centre of his party’s policy announcements, as well as a free National Education System. Cue wild celebration from millennials everywhere.
The Tories are spooked. Corbynmania may not have been enough to win the election for Labour but the Conservative’s are acutely aware of the need to appeal to future generations to shore up their immediate and long-term electoral future. The Government is aware that younger voters, who paid tuition fees of £3,000 or £9,000 if they entered higher education, are more likely than rent than own a home and, if they voted in the EU referendum, less likely to be pro-Brexit than in favour of remaining in the EU are not their natural support base.
The fact that both Labour and the Conservatives have put housing and tuition fees front and centre of their offering is no coincidence. On housing specifically, while it’s undoubtedly good that the nationwide crisis is being addressed, neither party has quite managed to set out exactly how they’re going to fix it once and for all.
In short, some very good (rental reform), some alright (tuition fees) and some pretty crap (Help to Buy) news from the first day of Conservative conference. The government have done a good job of appearing to be talking about and making policy for young people but the reality is that it isn’t quite ambitious enough and will barely scratch the surface for many. Why? See depressing chart below:
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This article originally appeared on The Debrief.