Action not words
First it was 200,000 per year. Then it was 250,000 per year, or perhaps one million by 2020.
On Sunday, Chancellor Philip Hammond announced he wanted to see 300,000 new homes built per year across the country.
Indeed, he suggested that this was the agreed view of most ‘experts’ today, and it’s true that most in the country would agree that there needs to be many more new homes built if the UK is to provide young people with an opportunity to get onto the housing ladder. Building new homes is in part about creating sufficient supply to meet demand, thus allowing the market to cool off to a level where the so-called Generation Rent can find properties that are cheap enough for them to buy.
Hammond was right to point out, however, that turning the government into a major housebuilder by throwing money at the problem could not provide a sustainable solution. Labour has been champing at the bit to pour more public money into infrastructure – including new housing – but as Hammond correctly identified on the BBC’s Andrew Marr show, there are a number of structural problems in the housing system that still need to be removed.
Planning is obviously a big one here, while more work also needs to be done to ensure new developments are taken through to completion.
Until such issues are properly resolved, getting the government to throw up new housing through its own balance sheet would only ease the bottleneck in the system for so long.
However, Hammond and his colleagues have spent far too long simply setting out the challenge – almost as if announcing the big numbers that are needed is the same as saying these are the volumes in which they will build.
Note that Hammond did not say “we will build 300,000 homes a year”, only that this was the generally accepted figure that is needed and as a result is the aspiration for the government to help the industry to reach.
The frustrating thing is that the figure is only this high because previous efforts to tackle the housing shortage have failed to have the desired effect.
And Hammond’s own plans to remedy the problem only go so far. Y3es, tackling the structural problems is important. But without the cash to support this, the change that is needed is unlikely to come.
It is generally accepted that PF2 won’t provide the solution for housing. When the new model was first launched back in 2013, then-chief executive of the Homes and Communities Agency, Pat Ritchie, suggested that the model was aimed at larger schemes than a typical housing programme. Some may suggest that has changed, given the massive need, but the difficulties that were faced by housing PFI schemes suggest there would be little enthusiasm to go down this road again.
However, in 2017 there are many more ways to deliver projects than simply focusing on a government programme.
Increasingly, there is a move towards developing new housing opportunities alongside major transport infrastructure projects. In part, this is led by the concept of value capture, as more deals need to find ways to pay for projects that do not rely on government subsidies and are too big for a private company to put on its balance sheet.
The leader in this area has long been seen to be Crossrail, which had to come up with some novel ways of finding the cash to build the project because central government would not fund the whole thing.
But more and more, authorities – not just in the UK but around the world – are looking at the possibility to use the potential of housing receipts as a way to fund new transport links.
So maybe the chancellor is right in his assessment that large sums of cash are not needed.
But that does not mean that central government can sit back and expect housebuilding to simply take off. It needs to help develop and support the infrastructure projects that will make new housing – whether that be in urban areas like central London, or new towns along the Oxford-Milton Keynes-Cambridge corridor – not only an added extra, but a key part of the financial package.