Anthony Breach is a Senior Analyst at Centre for Cities, where he leads on housing and planning.
The new housing minister stepped into her role just over two weeks ago and faces a daunting in-tray.
Alongside the immediate planning reform agenda and various consultations linked to the Levelling Up Bill, Rachel Maclean inherits the job of whittling down the backlog of the UK’s 4.3 million missing homes.
Centre for Cities’ new report on the housebuilding crisis sets out the scale of the challenge facing the Government: for the UK to reach the housing availability of the average Western European country, the total number of homes would need to increase by 15 per cent.
And these are cautious figures that are adjusted for population and population growth – reaching the outcomes of high-flyers like Austria or Finland would require increases of 25 to 30 per cent.
If we hit the Government’s ambition of 300,000 new target for England, which was set in the 2019 manifesto, England’s share of the backlog will eventually close – in 65 years.
Closing the gap in twenty-five years requires us to set and hit a target of 442,000; a goal of ten years (or two parliaments) requires a target of 654,000.
At present, England’s housebuilding rate of 220-240,000 homes a year – the highest it has been in a decade – is merely the minimum required just to stand still. Any drop-off in housebuilding will see outcomes fall even further behind the rest of Europe, with a return to falling homeownership and rising housing costs for younger families.
So how did we get to this 4.3 million home shortage?
A backlog that large did not appear overnight, or even over one or two governments. It’s the result of decades of underbuilding, and the result is the housing crisis and all its consequences for Britain’s economy and society.
The conventional story is that the housing backlog can be dated to 1980, with the Thatcher Government’s introduction of Right to Buy and a subsequent decline in council housebuilding. In this account, the housing crisis can only be solved by returning to the mass council housebuilding approach of the post-war period.
However, this explanation is not true, or at best contains only a partial truth. The housing crisis began long before 1979, and its root cause is the introduction of England’s restrictive planning system.
Our new report uses data from old United Nations statistical annals to compare the UK’s housebuilding rates and outcomes to other Western European countries after the Second World War.
Britain began the post-war period with one of the best housing markets in Europe, but housing outcomes declined as housebuilding fell.
In 1955, the UK had a ratio of dwellings per person that was 5.5 per cent above the European average. But by 1979 it was already two per cent below it, and by 2015 it had fallen further to at least eight per cent below the European average.
It is important to note the decline in housing outcomes predates the increase in net immigration in the 1980s, 1990s and 2000s. Annual net migration from 1964 to 1978 ran at an average of 58,000 more people leaving Britain than arriving here, but housing availability still declined as housebuilding was too low.
The decline in housing outcomes is often explained by the significant fall in council housing towards the end of the post-war period. But while it’s true that Thatcher did preside over the end of mass council housebuilding, it was already well underway before she took office and introduced Right to Buy.
Council housebuilding fell from 1.1 per cent growth a year in 1968 to 0.6 per cent in 1979. Its decline was alongside a bigger fall in private housebuilding from 1.3 per cent in 1964 to 0.6 per cent by 1979, as the already-restrictive English planning system became even more restrictive as time went on.
As the initial post-war local plans were exhausted and the green belt expanded from under 700,000 hectares in 1968 to 1,600,000 hectares by 1984, builders found it harder and harder to identify sites for new homes.
The legacy of the Thatcher Government on housing is therefore more nuanced than is commonly understood.
Thatcher’s real legacy in housing was not Right to Buy, but the failure to apply her own supply-side arguments to the planning system and private housebuilding as social housebuilding declined.
Attempts to review the green belt in the early 1980s and increase freedoms to build on non-green belt agricultural land in 1987 were met with a howl of outrage from her own backbenchers and Nimby campaign groups, and the Town and Country Planning Act 1990 ended up even more restrictive than the 1947 Act.
The history of housebuilding in Britain now presents a challenging set of problems for the new Minister for Housing.
The long-term solution to all this is planning reform. The existing discretionary system’s uncertain, case-by-case approach to decisions means that proposals for new buildings that comply with the rules can still be rejected. Replacing it with a new rules-based flexible zoning system, where proposals that follow the rules must be granted planning permission, would be a subtle but critical change.
The short-term politics make this goal challenging. The turbulence caused by maintaining the manifesto commitment to 300,000 new homes a year suggests that increasing it to 654,000 homes is probably off the table for now, and the Government is reluctant to tear up the Levelling Up Bill and restart the reform process.
Yet it is the repeated failure of successive governments to grapple with short-term political problems that have created the shortage of 4.3 million homes, and created the long-term political problem of the housing crisis.
There are two important changes the minister can make immediately to leave a positive legacy in planning and housing.
First, the various wrecking amendments suggested in the National Planning Policy Framework (NPPF) consultation as a sop to anti-housing backbenchers should not be allowed to progress into national policy.
Ideas such as “no longer requiring councils to review green belts if it is the only way to meet housing need”, “blocking development at densities different to the surrounding area”, and “weakening the requirement to establish a Five Year Land Supply” will have real economic and social costs, damaging the living standards and prospects for homeownership of millions of people.
Second, the Levelling Up Bill will introduce National Development Management Policies (NDMPs) (which aren’t the same as the NPPF), which will help slim down local plans by providing a rulebook for granting planning permission in England. These have the potential to substantially improve housebuilding rates in England by reducing the political conflict caused by the planning system’s uncertainty.
The Government should be bold and use the NDMPs to establish a more rules-based planning system that gives greater certainty to builders, councils, and local residents in England.
The housing shortage did not appear overnight, and it won’t be fixed overnight either. The Government has a choice.
It can deepen the housing crisis by further restricting the type and number of homes that can be built and what land they can be built on. Or its planning reforms can start a journey to a country where everyone enjoys a high quality and affordable home.
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