There was much to admire in the prime minister’s recent speech on housing. Theresa May called homelessness in our rich country “a source of national shame” and she is right. She pledged to increase house building, but to do so without “destroying the country we love”. And she attacked big developers for gaming the system and putting dividends and executive pay before building more homes. As I read the speech, I mentally ticked off many of the arguments I have made in How to build houses and save the countryside.
As a country, we have managed to pull off the difficult trick of building too few homes while still losing too much countryside. Unfortunately, the policy changes announced by the prime minister are unlikely to change this. They are well intentioned, but they do not go far enough.
Planning isn’t to blame
For years, debates on housing and planning were largely shaped by free market think tanks arguing for planning liberalisation: ‘Free up the Green Belt, let builders build, and the houses will come.’ Planning was progressively weakened, but successive reforms had little impact on housing supply. That is because the principal cause of our failure to build enough new homes was not planning restrictions, but the fact that the state more or less stopped building houses 40 years ago. It is extraordinary that people could look at our failure to build enough homes and conclude that planning, rather than the collapse in public house building, must be to blame.
The advocates of planning liberalisation have ignored the fact that for 30 years after the Second World War, when more than 200,000 homes were built every year in the UK, local authorities built at least 100,000 of them. Between 1951 and 1979, 48 per cent of new homes were built for social rent. After 1979, local authorities virtually ceased building and neither the private nor housing association sectors increased their output enough to make up the shortfall. Thus, the housing crisis.
Where the planning system can be blamed for our failure to build enough houses is in its failure to control rising land prices. Planning has not been too restrictive, it has been too weak. The 1947 planning settlement had two sides. Its role in constraining development is well known and explains why it is under attack in some quarters. But it also ensured a plentiful supply of development land at reasonable prices.
Between 1946 and 1970, work started on 32 new towns, which are now home to 2.76 million people, 4.3 per cent of UK households. New town development corporations bought land at agricultural prices and used the uplift in value that came with planning permission to fund the development. When work started on developing Milton Keynes, land contributed only around one per cent of the cost of a new home. It now accounts for over half the cost of most new homes. The same principle of capturing the uplift in land value can, of course, be used for sustainable urban extensions and brownfield urban developments.
We should use suitable brownfield land to save the countryside
There is enough suitable brownfield land in England to build at least a million new homes, and the supply is constantly replenished. We should use it to save the countryside, improve urban areas and save carbon. But developers prefer to build on virgin green field sites as they are easier to develop and more lucrative, and the current system allows them to do so.
Sajid Javid, the housing minister, has promised a more ‘muscular’ state, but he appears to be more eager to take on ‘nimby’ protestors than to foster serious competition to the few volume house builders who currently dominate the market.
What is needed is new housing providers, and the state – what Mariana Mazzucato calls the ‘entrepreneurial state’ – should be fostering them. Regardless of how much the government pokes and cajoles them, big builders have neither the means nor desire to build on the scale needed. We need new private sector providers – SMEs, custom builders, factory built homes – and encouraging them to build will take concerted government action.
A Conservative programme
The government should fund housing associations to build social housing and also support a serious programme of council house building. Many Conservative councils are calling for the right to build. There is nothing un-conservative about this programme: Conservative governments built plenty of houses before 1979. If we could combine Harold Macmillan’s commitment to quantity and Nye Bevan’s concern about quality and place we would go a long way to solving the housing crisis and taking the sting out of development battles.
As for those fighting to protect the countryside from more executive homes and anodyne, anywhere-housing estates, they have nothing to apologise for. I do make the case for some new housing on greenfield sites but, if we must lose some countryside, let’s make sure we lose it to attractive, well-thought out, energy efficient developments that do something to help those in housing need. That should not be too much to ask, should it?
How to build houses and save the countryside was published today by Policy Press