To fix the housing market, the government needs to do nothing at all

Just stop trying.

In November, planning minister Nick Boles tackled the country's housing crisis — caused, he said, by a decade-long invasion of propertyless aliens — head-on, announcing he would seek powers to build 100,000 homes a year on Green Belt land. Shortly afterwards, Theresa May, the Home Secretary, reinforced this message, warning us of the imminent danger that migrant homebuyers pose to the “national interest” – "without the demand caused by mass immigration," she said, "house prices could be ten per cent lower over a twenty year period."

The Conservative grassroots, mortified at what they apparently see as the sheer illiberality of building on the Green Belt, moved swiftly to an ostrich position to undermine the proposal.

"The notion of a housing shortage in London… is, and always has been, a myth," read Andrew Lilico's riposte. "Surpluses of dwellings over households actually increased everywhere".

It is almost impossible to be more wrong. The immigration argument has been debunked so comprehensively that, in its 2012 report on the housing shortage (pdf), the IEA casually dismisses it as an "oft-repeated non-issue". Similarly, the effort to use simple mathematics to describe a notoriously variegated and illiquid asset class ignores the fact that neither property nor its occupants are homogenous and freely exchangeable: an abundance of one- or two-bedroom flats in a given area at a range of prices, for example, is useless if the majority of demand is for family homes (pdf).

There is, in fact, a fairly robust consensus across the political spectrum that the United Kingdom is in the grip of an acute housing supply shortage with many causes, among them NIMBYism, speculation, capital flight from southern Europe, over-taxation, land use controls, and failure to implement comprehensive welfare reform. In the absence of a credible policy proposal from the Coalition, however, the left has assumed the mantle of leadership on the issue by setting itself in diametrical opposition to austerity, demanding more central government funding for affordable housing – and lots of it.

Unquestionably, the money could be put to good use. Shelter, the housing charity, predicted in 2010 that (pdf):

"cuts to housing benefit and the slashing of the affordable house building subsidy will be devastating for the housing aspirations of thousands of young people consigned to increasing costs."

Those costs are the third-highest in Europe, 40 per cent of net income for over 15 per cent of the population. Sensing the undercurrent of popular anger, Labour has promised funding for the same 100,000 homes a year as Nick Boles – except these are “affordable” ones. Unfortunately, these counterproposals only draw battle-lines for the next election. They address the question of how taxpayers should step in to reinforce the safety net, but do nothing to tell us how to rein in the cost of the safety net itself.

The key question is this: would building more “affordable housing”, either in the Green Belt or in our cities, actually end the housing crisis? In my view, probably not. Housing was a risky enough business before the recession; today, with scarce financing, high material costs, narrow profit margins, and downward pressure on public finances for the next decade at least (£), developers face additional disincentives. If anything, affordable housing prevents developers from meeting market demand while concurrently increasing their costs — and as such it has become a significant part of the supply problem.

Many English councils mandate that developers designate a certain proportion of units in any new construction as "affordable," i.e. earmarked for social tenants or a social housing provider. Taking the London borough of Newham as an example, that locality aims to provide "the maximum reasonable amount of affordable housing when negotiating on (the approval of) individual private residential and mixed use schemes". By “reasonable,” however, Newham means 50 per cent of the total, with the affordable component supported mostly by government subsidies.

This has serious implications on any proposed scheme's economic viability. Without government grants, affordable housing in Newham is completely uneconomic at the 50 per cent target (pdf) and remains so even at lower targets, for example with 35 per cent or 25 per cent provision. Viability is further impaired where build cost per square metre rises (as occurs when a development is denser) or sale price per square metre falls (meaning the proposed unit would be affordable in a free market). To wit, the economic viability of housing schemes in England is low if you intend to build units that constitute ordinary working- and middle-class housing in most of the English-speaking world, because local planning policies force developers to only embark on those projects which realise relatively higher marginal returns and command a higher market price.

This is a fact of which local governments around the country are aware (pdf); Newham's viability assessment, for example, points out that "50% affordable housing is unlikely to be viable in all market conditions", and that "in some circumstances... sales values would need to increase beyond the 2007 peak for 50% affordable housing to be achievable."

But this is not 2007, and we would be mistaken to believe that the social housing crisis is separable from the supply problem in the wider private markets. British social housing policy is itself heavily reliant on private sector provision; a crisis in one begets a crisis in the other, or as put by the IEA (pdf):

If social housing in Britain is under strain – and it clearly is – it is because the housing market as a whole is under strain.

When we consider that fully 20 per cent of the nation's residential property is directly or indirectly supported by the state and virtually the entire private sector housing supply process — design, location, construction, profit margin, and post-completion tenant allocation — is regulated and made more burdensome by the state, it does not take much to see that virtually all state intervention in the UK housing market should in theory, and does in fact, constrain supply or inflate demand. Certain aspects of the problem arise from pet policies of the right; others, of the left. What they have in common is that they disincentivise new housebuilding while making existing housing more expensive at the same time, to the detriment of low- and middle-income earners, the propertyless and the young.

Neither redistributive taxation nor piecemeal tinkering are well-suited to solve this problem. An iconoclastic, no-holds-barred programme of liberalisation, however, is. Like fuel shortages in the America of the seventies or bread shortages in the USSR of the eighties, the British housing crisis is government-led. If the government is serious about solving it, the first thing it should do is get out of the way.

The Carpenters estate in Newham, London. Photograph: Getty Images

Preston Byrne is a fellow at the Adam Smith Institute.

Photo: Getty
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Rising crime and fewer police show the most damaging impacts of austerity

We need to protect those who protect us.

Today’s revelation that police-recorded crime has risen by 10 per cent across England and Wales shows one of the most damaging impacts of austerity. Behind the cold figures are countless stories of personal misery; 723 homicides, 466,018 crimes with violence resulting in injury, and 205,869 domestic burglaries to take just a few examples.

It is crucial that politicians of all parties seek to address this rising level of violence and offer solutions to halt the increase in violent crime. I challenge any Tory to defend the idea that their constituents are best served by a continued squeeze on police budgets, when the number of officers is already at the lowest level for more than 30 years.

This week saw the launch Chris Bryant's Protect The Protectors Private Member’s Bill, which aims to secure greater protections for emergency service workers. It carries on where my attempts in the last parliament left off, and could not come at a more important time. Cuts to the number of police officers on our streets have not only left our communities less safe, but officers themselves are now more vulnerable as well.

As an MP I work closely with the local neighbourhood policing teams in my constituency of Halifax. There is some outstanding work going on to address the underlying causes of crime, to tackle antisocial behaviour, and to build trust and engagement across communities. I am always amazed that neighbourhood police officers seem to know the name of every kid in their patch. However cuts to West Yorkshire Police, which have totalled more than £160m since 2010, have meant that the number of neighbourhood officers in my district has been cut by half in the last year, as the budget squeeze continues and more resources are drawn into counter-terrorism and other specialisms .

Overall, West Yorkshire Police have seen a loss of around 1,200 officers. West Yorkshire Police Federation chairman Nick Smart is clear about the result: "To say it’s had no effect on frontline policing is just a nonsense.” Yet for years the Conservatives have argued just this, with the Prime Minister recently telling MPs that crime was at a record low, and ministers frequently arguing that the changing nature of crime means that the number of officers is a poor measure of police effectiveness. These figures today completely debunk that myth.

Constituents are also increasingly coming to me with concerns that crimes are not investigated once they are reported. Where the police simply do not have the resources to follow-up and attend or investigate crimes, communities lose faith and the criminals grow in confidence.

A frequently overlooked part of this discussion is that the demands on police have increased hugely, often in some unexpected ways. A clear example of this is that cuts in our mental health services have resulted in police officers having to deal with mental health issues in the custody suite. While on shift with the police last year, I saw how an average night included a series of people detained under the Mental Health Act. Due to a lack of specialist beds, vulnerable patients were held in a police cell, or even in the back of a police car, for their own safety. We should all be concerned that the police are becoming a catch-all for the state’s failures.

While the politically charged campaign to restore police numbers is ongoing, Protect The Protectors is seeking to build cross-party support for measures that would offer greater protections to officers immediately. In February, the Police Federation of England and Wales released the results of its latest welfare survey data which suggest that there were more than two million unarmed physical assaults on officers over a 12-month period, and a further 302,842 assaults using a deadly weapon.

This is partly due to an increase in single crewing, which sees officers sent out on their own into often hostile circumstances. Morale in the police has suffered hugely in recent years and almost every front-line officer will be able to recall a time when they were recently assaulted.

If we want to tackle this undeniable rise in violent crime, then a large part of the solution is protecting those who protect us; strengthening the law to keep them from harm where possible, restoring morale by removing the pay cap, and most importantly, increasing their numbers.

Holly Lynch is the MP for Halifax. The Protect the Protectors bill will get its second reading on the Friday 20th October. 

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