Lessons from Ireland
The Irish Election has been a shock to the previous two party system. The former political wing of the IRA (Sinn Fein) secured 24.5 percent of first preferences in Ireland’s system of single transferable votes with Fianna Fáil on 22.2 percent and Fine Gael on 20.9 percent. Sinn Féin registers as the most popular among all but the over-65 age group (those who lived through the brunt of the Troubles). This is up from 13.8% of the vote and only 23 seats in the 157 seat lower house.
The former political wing of the IRA put housing at the centre of their campaign and manifesto - aiming for younger votes part of Generation Rent. They promised a three-year rent freeze, tax credits worth an average one month’s rent and a large state-led building project through local authorities. As the polls showed, it worked and—according to some—almost all roads currently lead to them eventually participating in government.
While it gives warning about how Brexit can quickly drop from the mind of the electorate the key lesson coming from the election is that housing and the desire for change are top priorities for the young (and also bottom end of the middle aged). Housing came in as top priority for 42 percent of 18-24 year olds and 51 percent for 25-34 year olds. The socially liberal policies of Fine Gael - from gay marriage to legalising abortion - have either been forgotten or matters little compared to the state of their material wealth.
Like the UK, the Irish government has primarily used demand side interventions and state-led building efforts. Their Help to Buy initiative may have looked good on paper, but pumped up demand and failed to address underlying supply issues in areas where the housing crisis actually is. Their pledge to build 25,000 new homes each year also sounds like a similar promise -- both failed. These policies not only require vast sums of money but also struggle to deliver.
Now Ireland faces even worse policies from Sinn Fein, with more restrictions on the percentage of social and affordable housing in developments. Of course, it is easier to make the case for further government intervention if you tie private developers arms behind their backs. Complex planning bureaucracy reduces the amount of development, further limiting expansions on supply that is needed to deliver wide ranging real affordable housing for all.
Along with this is the tragic irony that young voters will be shifting the cost of their rent onto those younger than them - as rent controls benefit those already renting at the cost of those trying to get into the market.
So what can we learn from this? Help to buy and government-led building are expensive failures; lifting restrictions on building new homes and extending existing ones are far better. Not only do these changes not cost as much, but they are policies that will deliver far superior results.
The Conservatives cannot rely upon younger voters turning conservative as they grow older if they are still renting (at astronomical prices) aged 45. Thatcher’s dream of creating a nation of homeowners kept the Conservatives in power for years. Pushing forward and going further on efforts to streamline the planning system is the correct solution to the problem and one that will look good not only on the balance sheet but also at the ballot box.