Politics

Housing: politicians won't build it like they used to

Labour's proposals for the "renty-something" generation are eyecatching, but the main parties' plans remain vague

March 10, 2015
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"The next Labour government will recapture the post-war spirit for building new homes."

Shadow housing minister Emma Reynolds is expected to make this rousing pledge in a speech tonight unveiling how Labour will build 200,000 homes a year by 2020. But for many in the audience at the Town and Country Planning Association’s Annual Sir Frederic Osborn Lecture, eyes will collectively roll.

This is partly because most of these policies have been unveiled many times over. And partly because wrapping a suitably seductive home-building target with post-war nostalgia is hardly a new trick.

Countless politicians over the years have made similar gestures harking back to this golden age in which the two main parties competed to out-build each other.

Within five years of the end of the Second World War, Clement Atlee’s Labour government was building 205,000 homes a year in the UK. By 1954, the Conservative housing minister Harold Macmillan oversaw over 350,000 new homes—of which around two thirds were council houses. Not to be beaten, Harold Wilson’s Labour government set a 1964 manifesto goal of 400,000 homes as a "reasonable target" and bettered it, building a UK record 425,830 homes in 1968. To appreciate how impressive a feat that is, fast forward to the present reality: official figures this month show a mere 137,010 homes were started in 2014. Woeful stuff given the country is mired in a housing crisis.

It is therefore no accident that Labour’s 200,000 target mirrors Clement Altlee’s standing start post-war achievement.









It is also no accident that the Tories have, in the past two weeks, made the same pledge. At the Conservative Party conference in October, David Cameron proposed building 100,000 "starter homes" that would be sold to first time buyers at a 20 per cent discount. The idea was that this price cut would be achieved largely by cutting "red tape" that forces developers to fund affordable housing. This plan seemed—at best—short-termist. Two weeks ago, without any real explanation of how it would be achieved, Cameron doubled the target figure to 200,000 starter homes. This makes for an attractive, aspirational pre-election bribe to the frustrated first time buyer.

Reynolds will attack this Tory plan as being a "pie-in-the-sky scheme" with no detail on how the £8.6bn cost of the discounts would be met. She is right—there is zero detail on how this might work or how it would be funded.

But the problem is, Labour’s policies are similarly lacking in detail.

Labour—whose plans were trailed in last summer's "Lyons review"—is confident it has a more comprehensive strategy than the Tories. And, on balance, it probably does. Labour’s ideas revolve around empowering councils and local communities to lead a new wave of development. They include setting up "Housing Growth Areas" in which local authorities will have land assembly powers and first time buyers will be given priority for new homes; the introduction of New Homes Corporations to drive development at pace, pushing housebuilders to build more affordable homes; and measures to increase competition among developers. Labour have also tabled a series of proposals intended to win the "renty-something" vote by introducing some modest reforms to the private rented sector. These include tackling letting fees and introducing three year tenancies. These policies do contrast with the Tories' free-market approach—and would appear broadly sensible.
In 1945, Labour led the way in building homes. We’ll recapture that spirit: http://t.co/k8OTWyaI6kpic.twitter.com/QkvriQsE6n

— The Labour Party (@UKLabour) March 10, 2015


But there is no major game-changer here. It is true that most of the coalition’s policies over the past five years have been piecemeal and focused on stoking demand, rather than increasing supply. But it is far from clear whether Labour’s idea of government intervention would be much better. Given the coalition stopped funding the development of social rented housing in 2010, also slashing the affordable housing budget, it is difficult to make the case that it has demonstrated anything near a "post-war house building spirit". But, equally, there is no sense that Labour will reverse the coalition cuts. Nor is there any sense that, like Atlee, Macmillan and Wilson before her, Reynolds will back a major state-funded council house building programme.

There are some promising noises—Reynolds promises to make housing a "capital spending priority" and pledges to build "more affordable homes"—but there is no detail on what this actually means. For instance, what is an affordable home? Affordable rent, a type of housing rolled out by the coalition that charges social tenants rents of up to 80 per cent of the market rate, is proving unaffordable to many—and Labour has often criticised it accordingly, also arguing that it is pushing up the cost of the housing benefit bill. Yet it seems extremely likely that the next Labour government will continue to sanction such homes. Both Labour and the Conservatives have ruled out allowing councils to shrug off caps on their borrowing powers (on any meaningful scale) so that local authorities can fund a large scale housebuilding programme.

Tackling the housing crisis is, of course, bigger than just hitting numerical targets. But as pre-election noise starts to drown out common sense, it is worth noting that 200,000 homes a year is half what was achieved by Harold Wilson in 1968, and even if this target is hit, it will remain 50,000 homes per year fewer than is needed to catch up with demand. So unless Labour puts numbers behind its capital spending priority rhetoric, its promise to "make tackling the housing crisis a national priority," is meaningless.