Whatever the character of the government Britain elects on Thursday, the Prime Minister and his cabinet colleagues are little more than spectators to the challenges of globalisation and financialisation, the strains within the Eurozone, and the rise of Islamic militancy and Russian expansionism.

But housing is an issue which directly affects every citizen, and in which government policies have large and immediate effects. And British housing policy is a story of disaster. In 1968, 425,000 houses were built in Britain.  By 2013, that number had fallen by two thirds, to 137,000 – a rate which would imply a two hundred year cycle for renewal of the existing housing stock, even if population remained unchanged in size and location

        How did this come about? The economic travails of the 1970s checked real income growth, and led to rapid inflation. By 1980, short term interest rates of 17% crippled house builders and made mortgages unaffordable. With public expenditure under pressure for the first time in two decades, capital spending bore, as always, the brunt of the cuts.

In 1968, house completions were almost equally divided between government – mostly local authority – and private construction. But public sector housing declined steadily thereafter.  This trend accelerated under the Thatcher administration, and by 1997 municipal house building had virtually ceased.

The gap in the provision of new affordable homes was not filled by the growth of housing associations, which have never built more than 40,000 houses in a year.  With ‘right to buy’ legislation introduced at the same time, the proportion of families in social housing has fallen from 31% in 1980 to around 17% today.

Nor did private sector building compensate. Construction for owner-occupation did expand as interest rates began to decline, but the highest level of private sector completions achieved since 1980 – 207,000 in 1988 – was still below that of twenty years earlier. In 2007 private householders again built almost 200,000 houses, but that figure collapsed after the global financial crisis,.

These trends are almost entirely explicable by reference to changes in public policy – the withdrawal of funding for local authority construction, the sale of council houses to their tenants, changes in public expenditure priorities, extreme variations in interest rates, and the malign effects of planning controls to which Martin Wolf has repeatedly drawn attention

House prices have risen by a factor of 50 since 1968 – and this is the actual experience of many retirees who bought their first house when the Beatles were topping the charts. Even after inflation the increase in real terms is almost fourfold.  

      The consequences are social and political as well as economic. While owner-occupation reached almost 70% of the housing stock at the beginning of the century, that figure has since declined as young people find it increasingly hard to get on the housing ladder. With social housing in extremely limited supply, new household formation –  young people leaving their parental home – has been checked. 

       Differences in housing experience and opportunities have major effects on relative living standards which are transmitted through generations:  policies for social care and inheritance tax are driven by the recognition that housing has become the principal source of personal wealth – and of differentials in personal wealth.  Dissatisfaction with the outcomes of housing policy spills over into resentment of immigrants 

The policy proposals of the parties – help to buy schemes on one side, rent controls on the other – are inconsequential and undesirable responses to superficial symptoms.  We need relaxation of planning controls, aggressive funding of social housing, and a willingness to use the housing sector as an instrument of counter cyclical policy rather than to allow it be a prime source of instability.  There is, or should be, nothing partisan about this agenda for tackling the key political question of the day.