Monday, 19 October 2015

Britain's housing crisis: we need new ideas


If you're a regular reader of Public Policy and the Past, you'll know that we think Britain faces a housing emergency. It doesn't build nearly enough dwellings to meet demand: it's that simple, and that clear. Everything else - high prices, higher and higher rents, homelessness, the UK's long hours and hardscrabble pay culture, even the inequity of vast inheritances that have nothing to do with skill or effort - stem from this one brute fact. The value of the UK's housing stock? Oh, only £5.75 trillion, a figure probably about four times larger than its mere Gross Domestic Product.

That's why we see rents, now, following prices and spiraling out of control - at least in London and the South East, and a few other attractive and desirable southern cities. That's why footballers have to allow squatters to stay in their properties for the winter. That's why the number of rough sleepers is mounting, after years in abeyance as a widespread, acute social problem. That's why young people are crushed in with their parents, and one of the reasons wealth inequality (if not income inequality) is growing. 

It's housing. It's always been housing, of course, in the property-obsessed badlands of England's vast suburbs, quiet terraces and airless cul-de-sacs. Who expects anything else in an English conversation - at the school gate, at the dinner table, in the pub? For a people with no religion but a rather watery and declining Anglicanism, no politics beyond 'the Conservatives are businessmen, Labour will blow my money and muck everything up', and no ambition beyond making their fortress homes ever more secure, what else could there be?

So we've said, again and again and again. What we really need is a wartime sense of fair shares and joint endeavour, all the better to help everyone's children. What we need is a tough, energetic, ambitious (and perhaps cynical and self-interested) Minister such as Harold Macmillan, willing to smash through any and all obstacles to just get the damn things built. In their hundreds of thousands. What we require is the spirit of the Victorians, not to say 'no, we can't', but 'yes we can', every single time there's a planning objection or a not-in-my-back-yard hand stuck up in objection from some older citizen with a one million pound property that might be threatened. We need entirely new cities and towns, along the lines of the Edwardian garden cities and the post-Second World War New Towns, with freestanding Corporations set up on green field sites to bulldoze opposition out of the way.

All this we know. It's as plain as Britain's desperate need for better labour productivity, an infrastructure strategy, a proper immigration policy (that leaves students out of the numbers), more help for the young rather than the old, a more confident sense of the UK's place in Europe and the world, and above all a feeling of purpose beyond just cutting the deficit - a grey, tired old target that probably isn't going to be reached, and hasn't in the past been reached, on time anyway. 

But that's the macroscope. The big picture. How will the extra homes be delivered in detail? It's a given that we probably need to double our housing output, after a long recession which laid off many building workers, burdened by volume housebuilders who aren't particularly efficient or vigorous, soaring land prices where we need the homes, and a lack of skills and imagination in the construction industry, All of that holds back many new or innovative solutions.

So it's going to be tough. We're burdened at the moment by two main political parties who are particularly hard of thinking. The Conservatives in office are forcing local authorities to sell off their 'high value' properties without adequate compensation to councils themselves, further restricting the supply of social housing. At the same time, they have bullied Housing Associations into a 'right to buy' scheme that may be a little less crazed than the original series of threats issued during the General Election, but which nonetheless will make it more difficult for Associations to borrow money and build (since their stock and capital is now probably going to leak away). On the Labour side, the new Corbynite leadership of the Opposition has so far promised only private-sector rent controls - which, if implemented in any crude form, would probably dry up housing supply in a private rental market the lack of which was a missing fourth leg of housing supply throughout the post-Second World War era. It's a popular idea, as rents skyrocket. It's also a terrible one, much better supplanted in practice for the more Milibandite concept of granting more rights to existing tenants - a compromise that would slow and regulate, but not calcify, the movement of rental prices.

Anyway. So much for our little-vaunted and (let's face it) pitiful leaders. Public policy experts are on our own. And here there are some new ideas, for instance floated by Andrew Adonis, who recently decided to sit as a crossbencher in the House and Lords and to take up the chair of the Government's new-old Infrastructure Commission. As Adonis points out, there are plenty of landowners in the state and third sectors who could be encouraged or cajoled to open up sites for development. Take London. Transport for London owns perhaps 5,800 acres of that city, a larger resource than the entire surface area of the Borough of Camden. Much of that's in use as tracks or the like, of course, but much of it is not - and, although there is no central register of London land owned by Network Rail, they are probably in possession of just as much land themselves. Why not allow them to borrow to build on that land? Above stations, sinking platforms underground? At their termini? Allowing them to float bonds or to borrow specifically for housing, then ploughing back the profits into operations? It's a thought, and a start. 

Next up: why don't we reform or abolish Stamp Duty, levied on house sales, and Council Tax, raised on housing value but with bands that stop at an absurdly low level? If we abolished the former, and announced a whole load of new bands on top of the latter to help pay for the change, we could make sure that they didn't encourage people to stay in their big houses as they age, or their children leave. That'd help pass houses down the chain of owners and ages much more quickly than they can be sold and bought today.

And then there's the vexed question of the Green Belt. Much of this land is not green, not used for amenity, and not even that useful for farming. It's just sitting there, idle, pushing up weeds. We could push great big wedges of development into our big cities on that territory, as some of the most successful cities in the world have in fact done (hello, Copenhagen). We could allow the new devolved city governments of (say) South Yorkshire and Manchester to marshal and profit from those changes. Central government could announce these new housing zones zero-rated for Capital Gains Tax, or pay the council tax there for a period, or introduce special infrastructure incentives in those areas. It's eventually worked in East London and at Canary Wharf. It could unleash the potential in our cities starting right now, if it's just all given a chance. It'd be popular (opens as PDF), overall. But - and this is still more important - it'd be right.

Britain's housing market is swallowing hopes, dreams, cash and energy. If we let it, it could swallow our economy too, in yet another credit-filled binge on bricks and mortar. Our political parties have abdicated from real leadership in this field as in so many others, perhaps for some years to come. We're going to have to press for change ourselves. City governments, academics, planners, homeowners, citizens: we're on our own. Are you up for it?

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