Welcome rhetoric from PM, but policies fail to meet the challenge
9 June 2022
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Commenting on the announcements made today by the Prime Minister on the cost of living, Matthew Lesh, Head of Public Policy at free market think tank the Institute of Economic Affairs, said:
“Boris Johnson has rightly highlighted that you cannot spend your way out of inflation or tax your way to growth. The cost of living crisis can only be solved long term by a programme of supply-side regulatory reform, including measures that lower the cost of housing, energy, food, childcare and transport. Sadly, the policy solutions from the government so far fail to live up to the Prime Minister’s pro free market rhetoric.”
On housing reforms, Lesh said:“The focus on the mortgage market is misguided. The reason people cannot afford homes is because of a fundamental lack of supply, which has driven up prices in places people want to live. Low-deposit mortgages risk creating a sub-prime crisis.
“Extending ‘right to buy’ to housing association tenants and benefit recipients will help boost ownership, and in the longer run, may provide a more dynamic housing market.
“But, it risks merely shuffling around who happens to own homes, rather than lowering prices for those looking to get on the housing ladder. Ultimately, the only real solution to the housing crisis is planning reform, which would allow more houses to be built in areas where there is demand.”
ENDSNotes to editorsContact: media@iea.org.uk / 07763 365 520IEA spokespeople are available for interview and further comment.
“Boris Johnson has rightly highlighted that you cannot spend your way out of inflation or tax your way to growth. The cost of living crisis can only be solved long term by a programme of supply-side regulatory reform, including measures that lower the cost of housing, energy, food, childcare and transport. Sadly, the policy solutions from the government so far fail to live up to the Prime Minister’s pro free market rhetoric.”
On housing reforms, Lesh said:“The focus on the mortgage market is misguided. The reason people cannot afford homes is because of a fundamental lack of supply, which has driven up prices in places people want to live. Low-deposit mortgages risk creating a sub-prime crisis.
“Extending ‘right to buy’ to housing association tenants and benefit recipients will help boost ownership, and in the longer run, may provide a more dynamic housing market.
“But, it risks merely shuffling around who happens to own homes, rather than lowering prices for those looking to get on the housing ladder. Ultimately, the only real solution to the housing crisis is planning reform, which would allow more houses to be built in areas where there is demand.”
ENDSNotes to editorsContact: media@iea.org.uk / 07763 365 520IEA spokespeople are available for interview and further comment.
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