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

Photo: Getty
Show Hide image

Corbyn is personally fireproof, but his manifesto could be torched by the Brexit blaze

There is no evidence that EU migration has depressed wages – but most Labour MPs believe it has.

News, like gas, expands to fill the space available to it. That’s why the summer recess can so often be a time of political discomfort for one party or another. Without the daily grind of life at Westminster, difficult moments can linger. Minor rows become front-page news.

There are many reasons why Theresa May is spending three weeks hiking in northern Italy and Switzerland, and one of them is that it is hard to have a leadership crisis if your leader is elsewhere. That makes the summer particularly dangerous for Labour. The danger is heightened as the majority of the press is unsympathetic to the party and the remainder is simply bored. Even a minor crisis could turn into a catastrophe.

Jeremy Corbyn’s interview on BBC1’s The Andrew Marr Show on 23 July, therefore, carried the same risks as juggling lit matches in a dry forest. The Labour leader ruled out continuing participation in the single market after Britain leaves the political structures of the European Union. For good measure, he added that the “wholesale importation” of people from eastern and central Europe had been used to undermine pay and conditions for British workers. Both statements only aggravate the stress fractures in the Labour movement and in its electoral coalition.

The good news for the Labour leader is that he is fireproof. Only God or Corbyn himself can prevent him from leading the party into the next election, whenever it comes, and no one will be foolish enough to try to remove him, even if they had the inclination. Also, while the question of what flavour of Brexit to pursue divides Labour in the country, it doesn’t divide Labour at Westminster. Most Labour MPs nodded along in agreement with Corbyn during the Marr interview. They believe – as the shadow international trade secretary, Barry Gardiner, outlined a day later – that remaining in the customs union and the single market would be a betrayal of the wishes of Leave voters, who want full control over Britain’s borders and laws.

There is no evidence that migration from the eastern bloc has depressed wages. But most Labour MPs believe that it has. “I am convinced,” one formerly pro-European MP told me, “that no matter what the studies say, immigration has reduced wages.”

Most of the Labour people who are willing to kick up a fuss about “hard” Brexit are outside parliament. These include the Welsh First Minister, Carwyn Jones, who wants Britain to remain in the single market; the general secretary of the TSSA union, Manuel Cortes, who recently used the New Statesman website to urge the party to keep all of its options open, including a second referendum to keep Britain in the EU; and the rapper Akala, who lambasted Corbyn’s interview on Twitter. While a large minority of Labour MPs back a softer version of Brexit, they are a minority, and not a large enough one to combine with Tory dissidents to make a Commons majority, even when the votes of the SNP, Plaid Cymru and the Green MP Caroline Lucas are taken into account.

This increases the party’s dependence on Jeremy Corbyn. As the leader’s aides observe, even among the quarter of the country that believes the government should simply overturn the referendum result, only a quarter of that quarter do so because they have a particular affection for the institutions of the European Union.

For the majority of hard Remainers, Brexit is a significant battleground in a larger culture war, one in which Corbyn is otherwise in perfect alignment with their values. His electoral appeal to Labour MPs is that he is someone who can say the same things on Brexit and migration as Yvette Cooper or Stephen Kinnock previously did, but without losing votes in England’s great cities.

The electoral threat to Labour from backing a harder form of exit is, in any case, often overstated. The first-past-the-post system makes the Liberal Democrats an inadequate refuge for anguished Remainers in England, while the SNP’s support for Scottish independence makes it an unsuitable home for Labour refugees in Scotland. Team Corbyn feels that Vince Cable, the Liberal Democrats’ new leader, will struggle to convince Labour voters that he can be trusted because of the role he played in designing the new system of tuition fees (having previously pledged to vote against them). In any case, the risk of letting in a Conservative prime minister – probably one committed to a version of Brexit even harder than Labour’s – further locks Remainers in Labour’s corner.

That leaves Labour in Westminster free to pursue a version of Brexit that meets the needs of both the leadership, which relishes the freedom to pursue a more radical economic policy unconstrained by the European Union, and Labour MPs, particularly those with seats in Yorkshire and the Midlands, who are concerned about opposition to immigration in their constituencies. This has the happy side effect of forcing the Conservatives to take the blame for delivering any Brexit deal that falls short of the promises made by Vote Leave during the referendum and in the high-blown rhetoric used by Theresa May during the election campaign.

However, all is not rosy. What most Labour MPs seem to have forgotten is that Brexit is not simply a political battleground – something to be leveraged to reduce the number of complaints about migration and to hasten the Tory government into an early grave. There is a political victory to be had by using the Brexit process to clobber the government. But there is also a far bigger defeat in store for the left if leaving the EU makes Britain poorer and more vulnerable to the caprice of international finance. That Jeremy Corbyn is personally fireproof doesn’t mean that his manifesto can’t be torched by the Brexit blaze. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue