The PM's speech on Monday served only to expose the confusionby John McTernan / March 6, 2018 / Leave a comment
The one thing we know for sure about Theresa May’s housing policy, the subject of her speech to the National Planning Conference yesterday, is that it won’t work. Not at any level. For one thing it won’t increase volume of homes built in England. For another it won’t reduce house prices by a pound.
The reason isn’t that the speech was merely a re-announcement of existing government policy as set out in last year’s White Paper—which it was. It is more fundamental than that. To solve a problem you need to diagnose it properly—and May’s approach is based on big myths about housing.
Firstly, there was the suggestion that developers are a problem because they are “land banking,” that is holding on to land until it is more profitable to build on it. May pledged to tackle this problem. But this is a classic example of the way in which the current government is Miliband-lite. It was Ed Miliband, when he was leader of the opposition, who brought to mainstream politics the paranoid anti-capitalism of the far left. Workers on boards. Price freezes for energy. Seizure of private property. All announced by Miliband, denounced by David Cameron and George Osborne and now adopted by May.
A moment’s thought reveals that logically developers can’t be land banking—otherwise they would go out of business. House building is a low margin business and no company has the capital to hold assets idle on its balance sheet for long periods of time. This is knee jerk anti-business rhetoric of the worst kind which arises from politics premised on the need, when faced with a difficult and complex problem, to find a villain to blame rather than a solution.
Secondly, the government continues to peddle the pernicious myth that it can build (or in reality create the conditions in which others will build) 300,000 houses a year. This is just not true.
House building, put simply, is driven by four factors—developable land, capital (from companies for development, from individuals for purchase), labour and materials. A pinch point in any one is a constraint in production. And unmentioned in May’s speech was the major constraint she is imposing on the construction industry—Brexit and the end of freedom of movement. Take away European workers and you…