The Conservatives’ economic record is not a proud one. Even before the Covid-19 crisis, average real wages remained below their 2008 level. Over the last decade, productivity and investment have been similarly stagnant. Though the employment rate reached a record high, two-thirds of the growth in jobs was accounted for by self-employment, zero-hours contracts and agency work.
But the Tories’ political record is one of stunning success. The party has increased its vote share at six consecutive general elections and won its highest parliamentary majority since 1987 at the last election (80 seats). In Hartlepool on 7 May it became only the third governing party in the past 50 years to gain a seat at a by-election. The Conservatives have achieved all this despite imposing one of the harshest austerity programmes in postwar history. What explains this disjuncture?
The Tories have been aided by Labour’s enduring woes and the adrenaline shot that Brexit has given the right. But there is another lens through which to view their advance: the housing market. Since 2010, as wage growth has remained anaemic, average UK house prices have increased by 49.5 per cent (from £167,469 to £250,341). In an era of ultra-low interest rates – the base rate has been 0.5 per cent for most of the last decade – those with tracker mortgages have enjoyed a windfall.
Homeowners have, in turn, rewarded the Conservatives. In 2019, 57 per cent of owner-occupiers and 43 per cent of mortgage-holders voted Tory (against just 22 per cent and 33 per cent for Labour). Of the 365 seats won by the Conservatives, 315 have home ownership levels above the UK average of 64 per cent, compared with just 53 of the 202 won by Labour.
Only three Tory constituencies – Chelsea and Fulham, Kensington and Cities of London and Westminster – have home ownership rates below 50 per cent. In the northern “Red Wall”, as in southern England, the Conservatives benefit from the support of elderly owner-occupiers.
As young voters leave their hometowns to study or work in metropolitan cities, their elders wield increasing electoral influence. Hartlepool, which the Tories won with a majority of 6,940, has a home ownership rate of 59.8 per cent.
Although Labour holds a cluster of seats with high levels of home ownership (of more than 70 per cent), these are concentrated in Merseyside and South Wales, areas that have long been culturally inoculated against voting Conservative.
With mediocre economic growth since 2008, the Tories have consciously stoked the housing market to recreate the feel-good factor once associated with rising wages. The Help to Buy scheme, introduced by the Cameron government in 2013, was presented as a means to “help young people get on the ladder” by subsidising mortgages and stimulating housebuilding. But at a cabinet meeting shortly after the launch of the scheme, the then chancellor, George Osborne, revealed the true motivation for the policy: “Hopefully we will get a little housing boom and everyone will be happy as property values go up.”
[see also: Without radical action on housing and inequality, a bitter generation war looms]
More recent government interventions such as the stamp duty holiday – which exempts purchases up to £500,000 – have continued this pattern of subsidising housing demand, rather than expanding supply (house prices rose by 7.5 per cent in 2020).
The flipside of such asset inflation, however, is the Tories’ parlous performance among non-homeowners. In 2019, 46 per cent of private renters and 45 per cent of social renters voted for Labour (against just 31 per cent and 33 per cent for the Conservatives).
London, where real-terms house prices have increased by 513 per cent since the 1970s (compared to 166 per cent in the rest of the UK), was once a Conservative city. At the 1987 and 1992 general elections, the Tories finished further ahead of Labour in the capital than they did nationwide. But in a city where home ownership has fallen below 50 per cent and where the average house price is £496,269 – 13 times the median full-time London salary of £38,000 – the Conservatives have been marginalised. They now hold just 21 of the capital’s 73 parliamentary seats. In the recent London mayoral election, Sadiq Khan – who endorsed rent controls – defeated his Tory opponent Shaun Bailey by 55 per cent to 45 per cent.
The “property-owning democracy” that Conservative prime ministers from Harold Macmillan to Margaret Thatcher sought to cultivate is wilting. More than four in ten of the council properties sold under Thatcher’s Right to Buy scheme are now owned by private landlords, with tenants paying more than twice as much as when the homes were in public hands.
As the Conservatives are discovering in London, it is hard to sell capitalism to those with no capital (the party trailed Labour among voters aged below 44 in 2019). The risk for the Tories is that Labour will become the party of choice for Generation Rent in “Blue Wall” areas such as Surrey, Sussex and Kent (where the opposition made gains at the local elections).
Mindful of this, the government’s new planning bill is aimed at increasing housebuilding by making it more difficult for homeowners to block new schemes. Ministers are reportedly considering introducing a new “use it or lose it” tax on developers who fail to build houses for which they have planning permission (a policy which Boris Johnson dismissed as “Mugabe-style expropriations” when Ed Miliband proposed it in 2013).
Rather than austerity as such, it is selective austerity that has defined the Conservatives’ approach over the past decade: key voter groups such as pensioners and asset-owners have been shielded as others (public sector workers, benefit claimants, renters) have been squeezed.
This is nowhere more true than in the housing market. But just as the expansion of home ownership has been central to Tory hegemony, so its decline risks eroding its foundations.
[see also: New homes alone won’t solve the housing crisis]
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This article appears in the 12 May 2021 issue of the New Statesman, Without total change Labour will die