industry news housebuilder Issue: August 2004 john stewart's housing viewpoint:
CASTLES IN THE SKY
Anyone with doubts about the present government's policies for housing supply should take a look at emerging Conservative policies. Things could only get worse, argues John Stewart In a key speech on 24 May, John Hayes, shadow minister for housing and planning, set out his new vision for housing policy. There was much in the early part of his presentation that housebuilders would warmly welcome.
He said the idea of the home "should become a defining theme for Conservatives". The Conservatives are committed to:
help more people to afford a home of their own ensure everyone has a warm, safe home - built to last give local communities control over how they develop protect and enhance our precious environment regenerate urban Britain, building high quality homes on brownfield sites.
For housebuilders, probably his most important statement was that "there are far too many people in our otherwise wealthy society who either do not have a home or else the kind of home they deserve". This seems to suggest Hayes recognizes Britain suffers from an undersupply of housing. He reinforced this interpretation when he said "frustrated aspirations to home ownership, overcrowding and fuel poverty are painful symptoms of what's wrong with Britain". He quoted Shelter's estimate of 500,000 households officially overcrowded. Later in his speech, Hayes referred to figures showing rising numbers of people who are homeless, in B&B and temporary accommodation or sleeping rough.
Hayes said the Conservatives oppose "the over-mighty planning system" which is "bureaucratic, unresponsive and esoteric" and "frustrates developers". He claimed heavy handed regulation limits the scope of innovative development, but fails to stem urban sprawl. He said: "Conservatives know that the energy of the market powers the drive to social renewal". We believe that private developers should build long-lasting homes in character and scale with the built environment and local landscape, BUT to do so we know they need an efficient planning system which assists their businesses to plan". He added that, "the market and government can be good servants of the common good".
So we have an acceptance of housing shortages, rejection of an over-mighty planning system, and a belief in the power of markets. A promising start.
TORY POLITICS
Sadly, the speech quickly lurched into the crude politics of nimbyism.
Hayes said he would use his speech to "expose the twin threats posed by Labour's gargantuan housebuilding plans - to Britain's precious countryside and to the prospect of urban renewal". The deputy prime minister was arguing that Britain needs at least two million more houses, "more than enough houses to gobble up land equivalent to two cities the size of Birmingham". For every year, "two towns the size of Middlesbrough will eat into England's shires"; "mile after mile of the world's finest countryside. would be bulldozed"; "much of rural Britain would be concreted over - destroying vast swathes of the world's finest countryside."
Hayes condemned the government's regional authorities, which "would overrule the wishes of local people and impose sprawling developments on reluctant communities". Having initially referred to evidence of housing shortages - far too many people do not have decent homes - and the consequences of such shortages - frustrated home ownership aspirations, overcrowding, homelessness - he contradicted himself by firmly rejecting any notion of shortages, quoting
2001 census evidence produced by CPRE showing there is a surplus of dwellings over households.He said Labour would lead us to believe that housebuilders "are desperate for more land" when in fact "planning permission has already been granted for 250,000 homes". As this represents about 1.7 years supply of new housing at current build rates for England, or 1.5 years supply for Great Britain, it is not clear how 250,000 permissions does anything other than support the belief that housebuilders are desperate for more land.
Hayes said a Conservative government would crack down on the problem of empty homes. Those who oppose development always quote the 700,000 empty homes in England, but fail to acknowledge that around half are short-term "transactional vacancies" due to house moves, refurbishment, the death of an occupant, etc, and that many of the rest are in the wrong places, or obsolete house types, or in markets with very low demand. Bringing empty homes into occupation is clearly highly desirable, but any contribution to solving the housing supply crisis could only ever be small. It is very misleading to argue that "before Labour destroys more of Britain's countryside it would seem sensible to fill these empty homes".
Hayes said Conservative housing policy "has been inspired by many meetings with developers, pressure groups, charities and housing experts". It is difficult to imagine any developer endorsing the policies put forward in Hayes's speech, but the fingerprints of the CPRE are everywhere.
AFFORDABILITY CRISIS FIRST PRIORITY
The Conservatives' first priority addresses the crisis of affordability, according to Hayes. In particular her referred to the affordability problems faced by first time buyers and key workers.
Yet his proposed solutions would make the situation even worse. The big idea at the heart of the Conservative Party's help for first time buyers is to promote shared ownership to "help people to afford the homes that are available".
In addition, building on the right-to-buy policy, they would "promote and extend transferable discounts to help tenants buy a home in the marketplace."
But these two policies would worsen the affordability crisis because both would add to demand when demand is already outstripping supply, driving up prices even further. Neither would do anything to improve supply.
The real solution to the affordability crisis seems to lie in the Conservative Party's broader economic policies.
Quoting a House of Commons select committee report, which concluded that a major housebuilding programme would be unlikely to reduce house prices, Hayes said it is "low interest rates, macroeconomic factors and the relative unattractiveness of alternative investment opportunities which drive up house prices". So one must conclude that a Conservative government would use macroeconomic policies, and particularly higher interest rates, to choke off demand and drive down house prices in order to improve affordability.
This interpretation is supported by remarks by Archie Norman in an earlier House of Commons debate on the Barker Review. This does not seem like a policy designed to appeal to existing home owners or Tory voters, nor indeed to first time buyers.
LOCAL POLITICS
Conservative planning policies rest on devolving power to local planning authorities: "Local people - not Mr Prescott - should decide what kind of houses they want and where they should be built."
But Hayes fails to explain how giving power to local communities would ensure enough homes were built. Some communities would plan to meet housing need and demand, but many others would cut back, or even stop housebuilding altogether. The inevitable result would be housing shortages, especially in the more buoyant and desirable areas of the country.
There is always a wider strategic dimension, as well as a local dimension, to housing provision, just as there is for health, education or transport. Governments have to ensure institutional structures provide a proper balance between bottomup and top-down decision-making.
Conservative policies stress the need to use brownfield land - a "brownfield first" policy: "We will review the planning, regulation and tax treatment of contaminated land with a view to making it safe and then developing more of it".
Yet Hayes condemns the government's efforts to meet its brownfield target. These have "crammed high-density housing into suburban back gardens. More than half of the 'brownfield land' which the government claims has been previously developed is people's backyards, gardens and the like". He adds that, "Labour is doing nothing to prevent 'town cramming'."
This seems to suggest the Conservatives would relax Prescott's higher density targets in PPG3 and stop development in people's backyards. If so, then, to quote Hayes own figures, the half of all brownfield development in suburban backyards would cease, and at least some of the remaining urban brownfield land would be developed at lower densities to avoid "town cramming". Such policies would bring a drastic reduction in housing supply. They are entirely inconsistent with meeting housing need and improving affordability.
AND FINALLY...
Towards the end of his speech, Hayes refers to growth of the buy-to-let and second home markets as one area of concern, and family breakdown as another. Unfortunately he offers no policy prescriptions to help solve these two concerns.
If the shadow minister's speech represents the Conservative Party's "new vision", then housebuilders can only hope Blair or Brown occupies No.10 Downing Street after the next election.
But should the Conservatives manage to oust Labour, we will have to rely on civil servants at the Treasury and the new housing and planning ministry telling the new Tory ministers their policies are hopelessly incomplete, contradictory and would have disastrous consequences for the economy, the housing market and the British people's aspirations to home ownership. hb
(John Stewart is HBF director of economic affairs. His analysis of economic and housing market trends is published monthly in Housing Market Report. )