Speech by the Rt Hon Gordon Brown MP, Chancellor of the Exchequer at the launch of the government’s consultation document on housing - ‘Homebuy: Expanding the opportunity to own’

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The next five years can move Britain closer than ever to a home owning, wealth owning, asset owning democracy.

Under plans announced by John Prescott and the Treasury today, we aim to expand the number of homeowners from the first million new homeowners since 1997 to a second million homeowners.

And we will do so with plans to:

Introduce a new shared equity offer for thousands of new homebuyers;
Help more key workers to acquire homes;
Release new land for housing development, as John Prescott has done today;
And create mixed tenure communities in former council house estates.
Backed up by the essential elements of our policy - interest rates as low as possible and public investments to back homeownership, measures that our opponents would put at risk.

Before explaining our detailed plans let me set out the context.

The Britain we believe in is a Britain of ambition and aspiration where there is no ceiling on talent, no cap on potential, and no limit to opportunity.

And as we build this opportunity economy I want more and more people to have more and more chances to make the most of their potential.

This Britain of ambition is a Britain where more and more people will have to acquire skills for the new economy. And from being one of the least skilled nations of Europe I want us to become, with qualifications from a large expansion of apprenticeships to university science post-graduate degrees, the best educated and best trained workforce.

This Britain of ambition and aspiration is a Britain where more and more people will be self-employed and start their own businesses - from being a Britain where high unemployment communities were once a no go area for enterprise, in all areas of Britain 150,000 more have become self employed and 300,000 new businesses have started since 1997.

This is not just a Britain of social mobility for some; it is a Britain where opportunity is open to all who are prepared to work hard, make the effort, show energy and initiative and play by the rules.

And this Britain of ambition and aspiration is a Britain where more and more people must and will have the chance to own their own homes.

In the 1950s Harold Macmillan talked of a property owning democracy.

And now - in 2005 - it is time to see the future of Britain as a wealth owning democracy where all have a stake in our future - making Britain a beacon for the world.

In the 1950s, only 30 per cent of British people owned their own homes.

Today 70 per cent of people own their own homes – and there are 18 million owner occupied houses. Since 1997 there has been a 9 per cent rise in the numbers of homes owned. And it is in the least prosperous regions and nations that the rise has been greatest.

The foundation must be continued British economic stability - with low and stable interest rates for Britain’s home owners and aspiring home owners.

And we are determined to lock in that stability and never to put it at risk.

Contrast this with previous years - in the eighteen years from 1979 to 1997 inflation averaged 6 per cent. In the last eight years inflation has been 2.4 per cent – half as much.

In the eighteen years from 1979 to 1997 interest rates averaged 10.4 per cent. In the last eight years interest rates have averaged 5.3 per cent - half as much.

And one fact tells the story of progress since the days of mortgage repossessions and negative equity: in the eighteen years to 1997, mortgages rates averaged 11.5 per cent, in the last eight years just 6.1 per cent – half as much.

All the decisions we made to create that stability – Bank independence, new fiscal rules, a symmetrical inflation target, the new deal, the public spending plans of 2000, 2002 and 2004 - were opposed by our main opponents.

But while they take risks with stability, nothing we will do will take any risks with the stability we have created.

Building on that foundation of stability, we will continue to take the prudent decisions to make long term investments in building more new housing, bringing social housing up to decent standards, and regenerating deprived communities.

Following Kate Barker’s review of housing supply:

We are from 2007-8 investing £430 million more to deliver an extra 10,000 new social homes a year;
We have put in place a £150 million community infrastructure fund for development in growth areas;
And we will reform the planning system to make it more flexible.
All of this while protecting the environment – with 67% of new build on brownfield land, up by more than 10% since 1997, and higher density developments using less land.

And because - as John Prescott rightly argues - sustainable communities are much more than bricks and mortar, we are investing in regeneration to tackle concentrations of deprivation.

Contrast this new investment with decades of underinvestment under the previous Government who:

Neglected investment in housing;
Left a large rise in the number of rough sleepers;
Had no regeneration policy;
By 1997 had built up a £19 billion backlog of repairs to social housing;
And had interest rates which averaged 10.4 per cent and went as high as 15 per cent.

Instead, as the Deputy Prime Minister has set out, we are today building on the investment and proposing a major extension of Britain’s home owning, asset owning, property owning democracy.

In the Deputy Prime Minister’s consultation document launched today he sets out our proposals for extending simpler, fairer low cost home ownership opportunities to several hundred thousand new homebuyers.

Through shared equity, this scheme will give people the chance to buy as large a share of their home as they can afford – with the rest being held by the council, housing association, or a private lender.

As part of this approach, for houses bought on the open market, we are forging a new partnership with the council of mortgage lenders to offer equity loans – jointly provided by the Government and a private lender.

And we are today announcing that English Partnerships are now completing a groundbreaking deal with the department of health to acquire 100 redundant NHS sites over the next two years to build 15,000 houses, including 5,000 affordable homes.

Our announcements today will help to deliver the mixed tenure communities of new homeowners as well as tenants that we want to create from existing council estates. We will pilot a radical new approach to deliver mixed tenure communities in severely deprived estates in Manchester, Leeds and London with invitations now to six further areas to participate. And to back this up I announced in the Budget a new local enterprise growth fund of £150m for deprived areas.

And as part of our approach to driving down construction costs, English Partnerships’ Design for Manufacture competition will demonstrate that it is possible to build a home that reaches good standards of design and environmental performance for £60,000. And today John Prescott is announcing the first four sites will be in Leeds, Milton Keynes, Aylesbury Vale and Northampton, with space for 474 houses to be built by the winning companies, with construction starting by march next year.

In addition to these measures, the Budget introduced further help for first time buyers by doubling the zero-rate threshold for stamp duty to £120,000 – exempting an extra 300,000 home buyers every year, and focusing in particular on first time buyers.

So we have put in place record public investment in housing, more than doubling total spending since 1997 from £3.1 billion to over £7.2 billion by 2007-08 - in contrast to those who have pledged to scrap the sustainable communities plan and cut £1 billion from the housing budget.

Our long-term aim is to enable more people to share in and have a stake in the wealth of our country.

Homes are not just places to live. They are also assets - and for many people their most important asset – and with more and more people owning their homes – homes now account for over 40 per cent of wealth.

And so to build for the future the Government is committed to helping individuals to save and invest in the ways that meet their needs throughout their life.

Already we are putting in place measures for the next generation of homeowners, measures for young people to save from childhood through to their adult life to help them towards home buying.

Our child trust fund is already offering wealth to every child at birth – with £250 and £500 down payments to families;
The new £15 million savings gateway is opening up new opportunities to men and women who have never saved;
And already today 16 millions now have individual savings accounts and by 2010 we will raise the cumulative total that can be saved tax free to over £100,000.

So with continued help for savers, and with home ownership expanding into new areas and new groups, today I see Britain as one of the world’s greatest wealth owning democracies where the chance is there not just for some but for all to own assets.

In this way we can create a Britain of ambition and aspiration - a Britain where more and more people must and will have the chance to own their own homes – homes for all, enabling opportunity for all.

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