FT.com / World - PM urged to take control of builders

FT.com / World - PM urged to take control of builders

Gordon Brown has been urged by senior Labour MPs to nationalise parts of the housebuilding industry in the wake of this week’s rescue of the big banks.
Jon Cruddas, who recently declined the post of housing minister, pushed for state intervention in the housing industry, arguing there was a case for wholesale nationalisation.

Backbenchers, former ministers and left-wing pressure groups have told the Financial Times that the time has come for the prime minister to seize housebuilders, a move that only a year ago would have been inconceivable.
Share prices of companies such as Barratt Developments and Persimmon have plunged in the past year amid a dramatic slide in sales and prices of new homes. Taylor Wimpey traded as low as 11p this week, down from 518p in early 2007.
Many influential Labour voices believe the government could benefit from taking a greater role in the industry. This could save thousands of jobs and solve the shortage of social housing at a relatively low cost.
It would also enable the government to hit its aim of 3m new homes by 2020, a target that is looking increasingly precarious. Builders are set to erect 75,000 homes this year, a fraction of the 240,000 annual target.
Mr Cruddas is one of Labour’s most powerful backbenchers, having come third in the race for the deputy leadership where he was backed by the unions.
With housebuilder share prices disintegrating and the price of land collapsing it was time to consider radical policy decisions, he said.
“There’s a danger that we look reactive. Now is the time to get ahead of the curve. All the indicators are going one way. We need to reintroduce a mixed economy in terms of supply. The question is the political will.”
Frank Dobson, former health secretary, backed the nationalisation of housebuilders to increase the level of social housing. Mr Dobson said this move would be an effective way to reduce the impact of recession.
“I think he [Mr Brown] has got an appetite for this. He is attempting to minimise the impact on everyone else from banking lunacy and he’ll be looking for anything practical. It is back to Keynes, spending money in a way that creates useful wealth.”
The view was backed by Peter Hain, former cabinet minister, who called on Mr Brown to legislate to enable reserve powers over infrastructure such as rail or property. The powers could involve “stakeholdings, recapitalisation and other matters”, he said.
Austin Mitchell, MP for Great Grimsby, said the government should act swiftly to nationalise the builders and “put them to work” making council homes.
The prospect of nationalisation could seem like anathema for the building industry. But for some heavily indebted companies facing brutal workouts with lenders the prospect of selling a stake to the government could be better than total collapse.
Mr Cruddas said: “What seemed off-piste a few months ago should now be centre stage in terms of policy options.”

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