Photographer: Simon Dawson/Bloomberg
Hammond Pledges ‘Fix’ for UK Housing Market Gone WrongBy
Chancellor concedes young people losing faith in free market
Hammond constrained by Brexit effect on economic outlook
Chancellor of the Exchequer Philip Hammond said something has gone "wrong" with the U.K. housing market as his government pledges to tackle the issue of fairness between generations.
"In my view, two people living together on average incomes ought to be able to buy a house within commuting distance and if they can’t something has gone wrong and we have to fix it," he said in comments to Bloomberg in New York on Monday.
Hammond, who at the Conservative Party conference this month warned that opposition Labour leader Jeremy Corbyn would take Britain back to 1970s-style command-and-control socialism, acknowledged that the Tories must do more to restore the younger generation’s trust in free markets.
"We have to address this issue," Hammond said. "If we want to sell the benefits of a market economy we have to have capitalists."
Some in the party have called for him to deliver a more radical budget on Nov. 22 after Corbyn’s appeal to young people helped cost the Conservatives their parliamentary majority in June’s general election. But room for giveaways is limited, with revisions to productivity growth expected to leave Hammond with a smaller fiscal margin to cushion the economy against Brexit.
Housing is one of the hottest political issues in the U.K., with the Conservatives and Labour offering rivals visions of how to make homes for affordable after years of rocketing prices. Prime Minister Theresa May this month pledged 2 billion pounds ($2.6 billion) to build an extra 25,000 homes for social rent, but critics said the proposal did not go nearly far enough.
The housing crisis is particularly acute in London, where prices are more than double the national average at almost 600,000 pounds ($795,000). Young people forced to rent are paying more of their income for less space, and first-time buyers are having to wait well into their 30s to get onto the housing ladder.
Hammond reiterated that Brexit uncertainty had caused a temporary slowdown in the economy, but said the “logjam’ in talks was not due to fundamental disagreements about Britain’s future relationship with the EU. May made an unscheduled visit to Brussels today to try to resolve the impasse.
"It’s about process. We just want to get on with it,” he said.