The Guardian view on the housing crisis: Fiscal Phil’s last chance

The chancellor approaches his second budget on Wednesday from a position of vulnerability. A little like the polar bear on the thawing iceberg, but less cuddly, he is a lonely figure marooned in a shrinking world, the political climate set against him, fundamentally ill-equipped to change it. His unsuitability for the political times in which he finds himself was advertised again on the BBC’s Andrew Marr show on Sunday morning, when he declared that there were no unemployed. No matter that he was trying to make a point about the historic capacity of a growing economy to absorb workers with outdated skills. His single task this week was to give substance to the Tory claim to be the party of the just-managing; instead he accidentally wrote 1.4m people who are looking for work out of the economic picture.

Whatever he now says on Wednesday, those four words, “there are no unemployed”, will hang in the air. They give the lie to the claim that his is a government that intends to change people’s lives for the better. They will – despite the confidence in the future that they imply – empower his critics among the hardline Brexiters who accuse him of broadcasting gloom; and they will reinforce the lack of confidence in Fiscal Phil that emanates from No 10, where the spring budget shambles that led to a U-turn over national insurance contributions will not have been forgotten. This is a chancellor who can’t see the politics in the Treasury spreadsheet.

Nor have the weekend’s pre-budget leaks created the impression of a chancellor who expects to create a stir with a bold initiative on what the prime minister wants to be the measure by which her government is judged. Last week Theresa May promised again to fix the broken housing market. But it will take more than the kind of tinkering Tory chancellors have managed so far to calm the perfect storm where shortage of supply, cheap money, the popularity of buy to let and the growing numbers of households have made house prices unaffordable for most people.

The communities minister, Sajid Javid, has been talking Labour’s language of taking advantage of low interest rates to borrow to invest. He’s said to be trying to persuade the chancellor to loosen the purse strings to the tune of £50bn and to build more social housing. In a newspaper interview this weekend, Philip Hammond set out a series of initiatives. But, like an earlier leak of a cut on stamp duty for first-time buyers, they felt like fiddles, not fixes – a bit like help to buy, the George Osborne wheeze from 2013 whose singular achievement has been to inflate house prices, salaries of chief executives of the big builders, and their dividends, up by 190%, according to the Financial Times. The share price of Barratt Developments, the UK’s biggest builder, is up 30% this year alone. Marching in bleak lockstep with inflated profits for the asset-rich comes rising homelessness and more at-risk families. The housing charity Shelter estimates that 1.2m households are waiting for council homes, and 250,000 are homeless.

The chancellor will point to the 217,000 new homes built in the past year. But just to keep pace with demand needs 300,000. The biggest signal this government could send to show it means to do things differently would be to take on the volume housebuilders’ business model of restricting supply of new homes, and to acknowledge that even Tory voters realise house prices cannot stay so high. That means empowering and incentivising local councils to return to volume building. Mr Javid hinted as much in the housing white paper earlier this year. There is a working model in Sheffield, which has a scheme where private builders build a mix of homes for sale and affordable rent on former council land. It might be too late to save Mr Hammond’s Treasury career. But it would allow this beleaguered government to move the conversation away from the floundering EU negotiations. It could even be the signal that the Tories have a plan for the future.