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.

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"We repealed, then forgot": the long shadow of Section 28 homophobia

Why are deeply conservative views about the "promotion" of homosexuality still being reiterated to Scottish school pupils? 

Grim stories of LGBTI children being bullied in school are all too common. But one which emerged over the weekend garnered particular attention - because of the echoes of the infamous Section 28, nearly two decades after it was scrapped.

A 16-year-old pupil of a West Lothian school, who does not wish to be named, told Pink News that staff asked him to remove his small rainbow pride badge because, though they had "no problem" with his sexuality, it was not appropriate to "promote it" in school. It's a blast from the past - the rules against "promoting" homosexuality were repealed in 2000 in Scotland, but the long legacy of Section 28 seems hard to shake off. 

The local authority responsible said in a statement that non-school related badges are not permitted on uniforms, and says it is "committed to equal rights for LGBT people". 

The small badge depicted a rainbow-striped heart, which the pupil said he had brought back from the Edinburgh Pride march the previous weekend. He reportedly "no longer feels comfortable going to school", and said homophobia from staff members felt "much more scar[y] than when I encountered the same from other pupils". 

At a time when four Scottish party leaders are gay, and the new Westminster parliament included a record number of LGBTQ MPs, the political world is making progress in promoting equality. But education, it seems, has not kept up. According to research from LGBT rights campaigners Stonewall, 40 per cent of LGBT pupils across the UK reported being taught nothing about LGBT issues at school. Among trans students, 44 per cent said school staff didn’t know what "trans" even means.

The need for teacher training and curriculum reform is at the top of campaigners' agendas. "We're disappointed but not surprised by this example," says Jordan Daly, the co-founder of Time for Inclusive Education [TIE]. His grassroots campaign focuses on making politicians and wider society aware of the reality LGBTI school students in Scotland face. "We're in schools on a monthly basis, so we know this is by no means an isolated incident." 

Studies have repeatedly shown a startling level of self-harm and mental illness reported by LGBTI school students. Trans students are particularly at risk. In 2015, Daly and colleagues began a tour of schools. Shocking stories included one in which a teacher singled out a trans pupils for ridicule in front of the class. More commonly, though, staff told them the same story: we just don't know what we're allowed to say about gay relationships. 

This is the point, according to Daly - retraining, or rather the lack of it. For some of those teachers trained during the 1980s and 1990s, when Section 28 prevented local authorities from "promoting homosexuality", confusion still reigns about what they can and cannot teach - or even mention in front of their pupils. 

The infamous clause was specific in its homophobia: the "acceptability of homosexuality as a pretended family relationship" could not be mentioned in schools. But it's been 17 years since the clause was repealed in Scotland - indeed, it was one of the very first acts of the new Scottish Parliament (the rest of the UK followed suit three years later). Why are we still hearing this archaic language? 

"We repealed, we clapped and cheered, and then we just forgot," Daly says. After the bitter campaign in Scotland, in which an alliance of churches led by millionaire businessman Brian Souter poured money into "Keeping the Clause", the government was pleased with its victory, which seemed to establish Holyrood as a progressive political space early on in the life of the parliament. But without updating the curriculum or retraining teaching staff, Daly argues, it left a "massive vacuum" of uncertainty. 

The Stonewall research suggests a similar confusion is likely across the UK. Daly doesn't believe the situation in Scotland is notably worse than in England, and disputes the oft-cited allegation that the issue is somehow worse in Scotland's denominational schools. Homophobia may be "wrapped up in the language of religious belief" in certain schools, he says, but it's "just as much of a problem elsewhere. The TIE campaign doesn't have different strategies for different schools." 

After initial disappointments - their thousands-strong petition to change the curriculum was thrown out by parliament in 2016 - the campaign has won the support of leaders such as Nicola Sturgeon and Kezia Dugdale, and recently, the backing of a majority of MSPs. The Scottish government has set up a working group, and promised a national strategy. 

But for Daly, who himself struggled at a young age with his sexuality and society's failure to accept it, the matter remains an urgent one.  At just 21, he can reel off countless painful stories of young LGBTI students - some of which end in tragedy. One of the saddest elements of the story from St Kentigern's is that the pupil claimed his school was the safest place he had to express his identity, because he was not out at home. Perhaps for a gay pupil in ten years time, that will be a guarantee. 

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