Can Tories increase supply of affordable housing?

As the election looms, David Cameron - who in his early leadership days seemed to present himself as more the heir to Blair than Thatcher - wants a bit of Margaret Thatcher's election-winning magic dust.

So he has nicked and reworked her totemic policy of flogging council houses to their working-class tenants - some of whom redefined themselves as a new generation of aspirant Tories.

He, therefore, hopes that he will win a few supporters among the 1.3 million tenants of housing associations who would be given the right to buy their properties on the same generous terms available to council house tenants - namely maximum discounts of 70% based on length of occupancy.

But although the electoral politics are about whether it makes sense to turn renters into owners, the economics and social policy are largely about something different - they are all about what impact the policy would have on a nation chronically short of housing, especially affordable housing.

Therefore, the more interesting aspect of the manifesto pledge is that local authorities will be forced to sell their most expensive housing stock - properties judged as the third most pricey of all properties in an area - as and when those properties become vacant, to raise an estimated £4.5bn a year.

The £4.5bn putative proceeds would be used for four purposes: to pay for the housing association sale discounts (of course); to clean up poisoned brownfield land for housing development; and to provide the funds for housing associations and local authorities to replace sold housing on a one-for-one basis.

It is that very last point, the replacement of the sold stock, which matters most - in that if the sold housing were replaced precisely by new building, this policy would have a significant positive impact on the supply of new affordable housing, in a country desperate for such construction.

Now the Tories admit that they can't force the housing associations - who hate being forced to sell their properties - to replace the sold homes. But they insist that if the associations chose to shrink and shrivel, the funds will be directed to the construction of starter homes in other ways.

In other words, there is a risk that - for a few years at least - the policy would lead to a contraction in the supply of affordable rented housing.

As for local authorities, the Tories say they will legislate to force them to replace the expensive properties being sold with cheaper ones. So in that sense they would address the concern raised by Shelter that local authorities' record of replacing sold housing is truly lamentable.

Campaigners for affordable housing, like Shelter, will, therefore, judge this policy on whether local authorities can really be forced in a timely way to build new social housing to replace what would be sold.