Michael Gove’s complaint that building developers are acting as a cartel once again highlights the parlous state of Britain’s housing market. For reasons that will emerge it has problems far too deep to be resolved merely by an intensive building programme – even one of Rooseveltian grandeur. As a lifelong conservative Conservative – and at 87 now a very old one – I view the situation with dismay. I outlined the arguments involved in an earlier blog (Housing for All July 3 2020) but they are worth repeating because the situation is so acute and little has been done to correct it.
For a start, the problem is colossal. Decades of neglect were compounded by a huge increase in Britain’s population. Since 1990, when the building of homes by local authorities came more or less to a standstill, Britain’s population was allowed to rise (with little debate or consultation) from just over 57 million to nearly 68 million in 2020. Then the ‘right to buy’ introduced by Margaret Thatcher took large numbers of dwellings out of public ownership – and the money generated was never put back into housing. In addition, a general disdain for social housing caused many local authorities to sell their tower blocks to private owners.
Any attempt to alleviate the resultant acute shortage of affordable housing must confront a basic problem. The difficulties facing house builders are not green belt restrictions or planning regulations but the nature of the housing market itself which is not free at all, since it is the state, in the form of planning authorities, which decides where houses can be built.
Because of the enormous increase in the value of the land thus designated – between 100 and 300 times – this has led to a number of consequences, all of them dire. Land with planning permission has become a tradeable commodity and can pass through several hands before ending up in the land banks of a small group of development companies which hold on to their assets in the certain knowledge that they will increase in value as time passes. Politicians on planning committees, both Labour and Conservative, have been found to indulge in unhealthily close relationships with developers .
Other rackets have developed. Thanks to a well-meaning but flawed government- subsidised help-to-buy scheme, building companies like Persimmon have been making obscene profits.
In the public sector a moronic mathematics has arisen in which local authorities are paying high rents for social tenants to occupy properties they once owned themselves. The housing benefit bill has soared and new properties are neither affordable or rentable by people on modest incomes.
Over-crowded and squalid living conditions, homelessness, crime, poverty and disease are among the results of this appalling mess.
All this is a particular challenge for the Conservative Party because its philosophy is currently bedevilled by fashionable claptrap dating from the Thatcher years. The first dogma that should be demolished is the belief that the survival of Conservatism depends upon the creation of a ‘property-owning’ democracy in which absolutely everyone should aspire to owning a house. But just as it was ridiculous to suppose that 50% of the population had either the ability or the inclination to go to university, so it’s absurd to assume that 100% of the population wants to own a house or flat. Many people simply don’t want the responsibility of ownership and the burden of a mortgage. Low-paid key workers in big cities should be offered homes with affordable rents to allow them to live with dignity and comfort.
Linked to the property-owning concept is the idea that the state should be small. How small or how big the state should be is another question in itself, but it should surely be big enough to provide adequate housing for its citizens.
These two doctrinaire beliefs are in direct conflict with the core of the problem, which is that the biggest deficit by far is in social housing – what used to be called council housing in my young day.
Yet there are ways in which not only could houses become affordable for young couples wishing to buy, but also become widely available at social rents. The first step would be to allow local authorities to compulsorily purchase land at existing use values – a practice common in Holland and one that has been proposed by commentators on the right as well as the left. Immediately this would collapse the land-banking racket and massively reduce land costs, leading to a major reduction in the price of housing.
The second step would be to accept that a large amount of land is publicly owned: at least 2.2 million acres of it – 6% of the UK total – is known to be owned by public sector bodies of one sort or another, enough, according to a 2014 Savills report, to accommodate two million homes. That’s roughly how many homes have been built since then, but not all of them on publicly owned land, so it’s safe to assume that a considerable proportion of it remains undeveloped.
The third step would be to enact a law forbidding all local authorities and central government departments from selling such land to property developers. Making windfall profits from long-held assets should not be part of the public service ethos of local authorities, especially as many of then have benefited from the donation of land by Victorian or Edwardian philanthropists. Similarly, central government bodies like the MoD own land which was confiscated from its original owners at the start of WW2.
These authorities should retain ownership of their land – in effect donating it to the public – and instead of resorting to developers they should employ architects and builders to develop housing for them. In such cases land costs would be removed entirely, again cutting the price of housing significantly – by between a half and a third. And at a later stage, these bodies could recoup some of their costs by charging ground rents (of the conventional modest and non-escalating sort). With house prices much reduced it would make sense to rescind the ‘right to buy’ policy, already abolished in Scotland and Wales.
The fourth step would be to harness the benefits of mass production through the widespread adoption of prefabricated and modular housing, bringing further reductions in costs. A single
unit, say, would be a one-bedroom bungalow; put another on top of it and you have a three bedroom house; put nine of them together and you have a three-storey block of nine apartments. Though prefabs were greatly appreciated after WW2, prefabrication and ‘system’ housing has a chequered history, but in the 21st century it ought surely be possible to bring the concept to fruition. Several British and overseas companies are now manufacturing housing of this sort.
Finally, since we’re in a state of emergency here, why not set up trailer parks on disused airfields all over the country? A well-insulated modern trailer home provides cosy but perfectly civilised accommodation for a young couple with two children.
None of the three steps proposed here – compulsory purchase at existing use values, the wholesale donation of publicly owned land and prefabrication – involve any descent into neo-Marxist socialism as feared by those on the right of the Conservative Party. Private companies would still be needed to plan, design and build. But at present the Tories are showing no sign of displaying the imagination needed.
Of course there are other spurious doctrines that need to be dropped, such as gormless globalisation and idiotic outsourcing, but those are topics for another day.
Michael Gove’s complaint that building developers are acting as a cartel once again highlights the parlous state of Britain’s housing market. For reasons that will emerge it has problems far too deep to be resolved merely by an intensive building programme – even one of Rooseveltian grandeur. As a lifelong conservative Conservative – and at 87 now a very old one – I view the situation with dismay. I outlined the arguments involved in an earlier blog (Housing for All July 3 2020) but they are worth repeating because the situation is so acute and little has been done to correct it.
For a start, the problem is colossal. Decades of neglect were compounded by a huge increase in Britain’s population. Since 1990, when the building of homes by local authorities came more or less to a standstill, Britain’s population was allowed to rise (with little debate or consultation) from just over 57 million to nearly 68 million in 2020. Then the ‘right to buy’ introduced by Margaret Thatcher took large numbers of dwellings out of public ownership – and the money generated was never put back into housing. In addition, a general disdain for social housing caused many local authorities to sell their tower blocks to private owners.
Any attempt to alleviate the resultant acute shortage of affordable housing must confront a basic problem. The difficulties facing house builders are not green belt restrictions or planning regulations but the nature of the housing market itself which is not free at all, since it is the state, in the form of planning authorities, which decides where houses can be built.
Because of the enormous increase in the value of the land thus designated – between 100 and 300 times – this has led to a number of consequences, all of them dire. Land with planning permission has become a tradeable commodity and can pass through several hands before ending up in the land banks of a small group of development companies which hold on to their assets in the certain knowledge that they will increase in value as time passes. Politicians on planning committees, both Labour and Conservative, have been found to indulge in unhealthily close relationships with developers .
Other rackets have developed. Thanks to a well-meaning but flawed government- subsidised help-to-buy scheme, building companies like Persimmon have been making obscene profits.
In the public sector a moronic mathematics has arisen in which local authorities are paying high rents for social tenants to occupy properties they once owned themselves. The housing benefit bill has soared and new properties are neither affordable or rentable by people on modest incomes.
Over-crowded and squalid living conditions, homelessness, crime, poverty and disease are among the results of this appalling mess.
All this is a particular challenge for the Conservative Party because its philosophy is currently bedevilled by fashionable claptrap dating from the Thatcher years. The first dogma that should be demolished is the belief that the survival of Conservatism depends upon the creation of a ‘property-owning’ democracy in which absolutely everyone should aspire to owning a house. But just as it was ridiculous to suppose that 50% of the population had either the ability or the inclination to go to university, so it’s absurd to assume that 100% of the population wants to own a house or flat. Many people simply don’t want the responsibility of ownership and the burden of a mortgage. Low-paid key workers in big cities should be offered homes with affordable rents to allow them to live with dignity and comfort.
Linked to the property-owning concept is the idea that the state should be small. How small or how big the state should be is another question in itself, but it should surely be big enough to provide adequate housing for its citizens.
These two doctrinaire beliefs are in direct conflict with the core of the problem, which is that the biggest deficit by far is in social housing – what used to be called council housing in my young day.
Yet there are ways in which not only could houses become affordable for young couples wishing to buy, but also become widely available at social rents. The first step would be to allow local authorities to compulsorily purchase land at existing use values – a practice common in Holland and one that has been proposed by commentators on the right as well as the left. Immediately this would collapse the land-banking racket and massively reduce land costs, leading to a major reduction in the price of housing.
The second step would be to accept that a large amount of land is publicly owned: at least 2.2 million acres of it – 6% of the UK total – is known to be owned by public sector bodies of one sort or another, enough, according to a 2014 Savills report, to accommodate two million homes. That’s roughly how many homes have been built since then, but not all of them on publicly owned land, so it’s safe to assume that a considerable proportion of it remains undeveloped.
The third step would be to enact a law forbidding all local authorities and central government departments from selling such land to property developers. Making windfall profits from long-held assets should not be part of the public service ethos of local authorities, especially as many of then have benefited from the donation of land by Victorian or Edwardian philanthropists. Similarly, central government bodies like the MoD own land which was confiscated from its original owners at the start of WW2.
These authorities should retain ownership of their land – in effect donating it to the public – and instead of resorting to developers they should employ architects and builders to develop housing for them. In such cases land costs would be removed entirely, again cutting the price of housing significantly – by between a half and a third. And at a later stage, these bodies could recoup some of their costs by charging ground rents (of the conventional modest and non-escalating sort). With house prices much reduced it would make sense to rescind the ‘right to buy’ policy, already abolished in Scotland and Wales.
The fourth step would be to harness the benefits of mass production through the widespread adoption of prefabricated and modular housing, bringing further reductions in costs. A single
unit, say, would be a one-bedroom bungalow; put another on top of it and you have a three bedroom house; put nine of them together and you have a three-storey block of nine apartments. Though prefabs were greatly appreciated after WW2, prefabrication and ‘system’ housing has a chequered history, but in the 21st century it ought surely be possible to bring the concept to fruition. Several British and overseas companies are now manufacturing housing of this sort.
Finally, since we’re in a state of emergency here, why not set up trailer parks on disused airfields all over the country? A well-insulated modern trailer home provides cosy but perfectly civilised accommodation for a young couple with two children.
None of the three steps proposed here – compulsory purchase at existing use values, the wholesale donation of publicly owned land and prefabrication – involve any descent into neo-Marxist socialism as feared by those on the right of the Conservative Party. Private companies would still be needed to plan, design and build. But at present the Tories are showing no sign of displaying the imagination needed.
Of course there are other spurious doctrines that need to be dropped, such as gormless globalisation and idiotic outsourcing, but those are topics for another day.
Grumpy Greybeard 