Housing stagnation is hardly a surprise

We need to change our housing policy to improve the quality and quantity of what is built.

The release of the 2011 figures showing stagnation in housing construction is unsurprising. Since the mid-Nineties, house prices have tripled but the number of new homes being built has fallen. This is seriously dysfunctional and is primarily due to a series of overlapping policy failures.

Firstly, there is our planning system. We release too little land for new homes: the amount of homes we built in the 2000s was the fewest since the war, and less than half of what we built in the 1960s. We preserve giant fields of wheat or low grade farmland, yet only 10 per cent of England is built on. We destroy gardens and build tiny homes, and then complain that this country is too cramped.

Our planning system also leads to poor quality housing, creating understandable NIMBYism. The current plan-led system of allocating land and housing has reams of quality control dictating what new development must look like. It fails. Almost everyone would rather live in a building built before our 1947 Town and Country Planning Act than after it. We have created a system where once developers have paid for land and made a payment to the council to obtain planning permission (entitled Section 106), they are probably out of pocket to the tune of £50,000 to £100,000. On top of that, people are so desperate for a home you can put up almost anything and make a profit. And instead of homes being what people want, they must satisfy council planners.

Allied to planning is the bubble created by our banking and finance system. By the peak of the bubble in 2007 around 75 per cent of all bank lending was going to property, almost all speculation. The only parts of the world that didn't see a property bubble were outside the euro and released enough land to keep housing costs close to construction (largely in the Southern US)." Banks funded a self-perpetuating bubble on the back of inelastic land supply.

Currently, our planning system allows developers to make abnormally high profits, which they choose over better homes or increased supply. Mortgage lending is up, while business lending falls. Land is still too expensive. Meanwhile nearly 10 per cent of mortgages are in forebearance even with interest rates at 0 per cent -- but everyone pretends the show must (and can) go on. We are repeating past mistakes.

In the last couple of years Policy Exchange has argued for a series of changes to accelerate the provision of new housing, from converting derelict office and retail space to allowing new large-scale suburbs and new Garden Cities supported by local people. We support a move away from the top down council-led planning system. Instead, we propose that local people can block development if 50 per cent vote against it. We also propose compensation for green field development along with parks and more green spaces attached to new development. We need fewer 500-page, incomprehensible council plans and more land released for attractive development with attractive green space attached.

This could be a key plank of the growth strategy that the government urgently needs; particularly as it would see construction accelerate most around the future growth hubs like Oxford, Cambridge, Leeds, York and London. We pretend we are desperate for growth but refuse to allow it where business needs it -- accelerating the shift of economic power to Asia.

Nothing that the government has proposed so far will shift the essential fundamentals. Unless the relevant Ministers, Greg Clark and Grant Shapps, are preparing models that will change things (that won't blow up when interest rates normalise), we can expect this situation to continue.

Alex Morton is a senior research fellow at Policy Exchange

 

Alex Morton is a senior research fellow at Policy Exchange

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
Show Hide image

Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

0800 7318496