Commentators are forever searching for neat ways to carve up the political universe. Towns vs cities; Remainers vs Leavers; North vs South. Such binary narratives should always come with a health warning: our society is rarely so straightforward.
That said, here’s another dividing line that deserves more attention: homeowners vs renters. Tenure type is a helpful indicator of voter behaviour. This is something that pundits on both the left and right largely agree on. As George Eaton has recently pointed out in the New Statesman, only three Conservative constituencies have home ownership rates below 50%. Of the 202 seats won by Labour in the 2019 general election, just 53 had home ownership levels above the UK average (64%). The Spectator’s James Forsyth has put it even more bluntly: “Conservatives who help more people own their homes win elections”.
As with anything these days, we can map this debate onto the Red Wall.
The strategy here for the Government is, in principle, straightforward: prove to voters in key Northern marginals that you are up to the task by getting capital (i.e. houses) into their hands. That means increasing the housing supply in those areas and making it easier for people to purchase a home, especially their first one. This explains the motivation behind the Government’s planning white paper and interventions such as the (re)introduction of Treasury-backed 95% loan-to-value mortgages and First Home Scheme.
The North East is a key target for this strategy and the expansion of what has recently been dubbed “Barratt Britain”. For example, 61% of households in the region are thought to be eligible for the First Home Scheme (which allows first-time buyers under an £80,000 household income threshold to benefit from up to a 50% discount on a new build home, provided they have a local connection) compared to only 12% in London. Buying a home is important to the archetypal voter some have called Geordie Tory, the view goes. And as the two charts below show, housing costs in the North East are amongst the lowest in the UK, whilst rates of home ownership are below average in England (excluding London in this average).
As more and more homes pop up and are sold – and the North East has become a new-build hot spot – it is not implausible to imagine that even a small shift in the percentage of homeowners in Labour-held seats such as Wansbeck and Stockton North could help tip the balance in favour of Conservative candidates who persuade voters that the Conservative government in London is the reason more of them own their own homes. “Every humble home will bless my name, if I succeed”, Harold MacMillan wrote in his diary when tasked with delivering a post-war homeownership boom by Churchill.
But to flip the former Prime Minister’s quote on its head, every household could curse the government of the day if experiences of the housing market become less positive. Recent research from the SMF has tried to understand the potentially precarious situation facing some mortgage-holders in the wake of COVID-19. Our headline finding was that close to 800,000 mortgage holders were in a financial position that would leave them vulnerable to repossession in the event of a loss of income.
That’s a nationwide figure. But there is something unique about owning a home in the North East. Of all the mortgage-holders in the region, more than 15% would struggle to pay their mortgage for more than three months in the event of a significant shock to their income – easily the highest percentage of any region. Put another way, that is an estimated 50,000 households in the North East at risk of repossession if their income dried up.
In what remains an uncertain pandemic labour market, the Government ought to be as concerned about those at risk of losing their home as they are about trying to help people in the Red Wall onto the housing ladder. This is especially pertinent when we consider that 46% of low-income mortgage-holding households in our Safe as Houses survey data said that their savings had declined during the pandemic.
Voters who end up losing their home – or just worrying that they will do so – in a new economic environment of higher inflation and, perhaps, borrowing costs might not feel quite so warmly about the government as they once did. The Barratt Britain agenda might have given rise to Geordie Tory, but a change in the macroeconomic weather could see new blues fading away in the north.