All posts tagged: housing crisis
Ed Miliband devoted 212 words to housing in his conference speech in Brighton. That’s about 2.3 percent of a 9,000 word speech. Disappointing perhaps, but he did make three significant pledges. I will use his exact words as posted on the Labour Party website to avoid any ambiguity in what follows.
“So we’ll say to private developers, you can’t just sit on land and refuse to build. We will give them a very clear message - either use the land or lose the land, that is what the next Labour government will do. We’ll say to local authorities that they have a right to grow, and neighbouring authorities can’t just stop them. We’ll identify new towns and garden cities and we’ll have a clear aim that by the end of the parliament Britain will be building 200,000 homes a year, more than at any time in a generation.
I will pass over “use it or lose it” because it is just empty rhetoric, but the pledge on the right to grow is to be welcomed. It’s a firming-up of the duty to co-operate, as set out in the NPPF, and is designed to tackle recalcitrant local authorities who refuse to allow expansion by neighbouring land-locked authorities. The North Hertfordshire and Stevenage case is often given as an example. Whether this will translate into an effective policy remains to be seen.
Despite its rather strange wording, the pledge to “identify new towns and garden cities” is something that I and others have been arguing for for a very long time and is to be welcomed. Whether this can be translated into a realistic policy (eco-towns anyone?) is another matter. It will only work well if land is purchased at sub-residential values and development funded through uplifts in land values.
But the pledge to build 200,000 homes a year is rather misleading. Had he been referring just to England the “more than at any time in a generation” would have been correct. But according to the CLG we built 205,050 homes in Britain in 2007/08 (218,530 if you include Northern Ireland to cover the whole of the UK). That is certainly less than a generation ago by my reckoning. The last time we built more than 200,000 in England was in 1988/89 when we built 202,930, which I guess is more than a generation ago. This is one of the problems with devolution – you can mix and match your countries and cause havoc with accuracy and understanding – a politician’s dream perhaps? Building 200,000 homes a year in Britain is nowhere near enough. We need to build 250,000 in England alone to meet demand and claw back past under-supply.
Miliband also said, “There are 9 million people in this country renting a home, many of whom who would like to buy. 9 million people - we don’t just have a cost of living crisis, we have a housing crisis too”. That seems a curious thing to say. If he is again referring to Britain and not England then I am assuming he just means those living in the private rented sector. Yet many in the social rented sector would also like to buy and many people living in the PRS do not want to buy. Odd.
But the fundamental point that the Labour Party have missed is that the “cost of living crisis” is fundamentally a housing crisis. They are not separate things but inextricably intertwined. Several recent reports have highlighted these issues, and I won’t rehearse them here, but when Londoners are having to find £64,000 to fund a deposit, when so-called “affordable rent” homes are being let at £180 a week and when Generation Rent is paying up to half of their wages in rent it is quite clear that tackling housing supply and afffordability would do more to improve the standard of living of millions of disadvantaged Britons than any other single measure.
The Labour Party has listed a number of steps that it will take to address this “cost of living crisis” including abolition of the bedroom tax, freezing energy prices, extending childcare and rasing the minimum wage. All well and good, but many of these are mere pinpricks in the bigger picture of housing supply and affordability across vast swathes of the country. The bedroom tax may be controversial but it affects relatively few people and, as Joe Halewood has pointed out, Labour has completely missed the point in its pledge to scrap the tax. Too often, our politicians chase public opinion rather than forming it by their vision and leadership.
Our present housing system damages the dreams and aspirations of millions of people, it creates a mighty chasm of inequality between our two housing nations, the haves and the have-nots. Is there any issue that should be a greater priority for One Nation Labour than housing? We need to shout it from the rooftops that the cost of living crisis is fundamentally a housing crisis.
George Orwell described Doublethink as the ability to hold two contradictory beliefs in one’s mind simultaneously, and accept both of them. The latest IPSOS MORI survey on attitudes to housing reveals a widespread dose of Doublethink in the minds of the British public.
For example, 80 percent of us agree that “there is a housing crisis in Britain” but only 45 percent agree that “there is a housing crisis in my local area”, even though 59 percent disagree that “there is enough affordable housing to buy or rent in my local area”. Of course it is mathematically impossible for people to perceive that there is both a national crisis but not a local one, so this dysfunctional picture of public opinion neatly encapsulates one of the greatest problems facing British housebulding in modern times; what I call the NIMBY paradox. This can be summarised as follows: “Yes, I agree there is a housing crisis, but it is in the next town, the next County, over the horizon, not around here, so developers should build elsewhere.”
Some other interesting statistics from the IPSOS MORI survey are:
- 63 percent think that 25 percent or more of England’s land is built upon (the true figure is 9 percent).
- 90 percent agree that, “it will be harder for the children of today to buy or rent a home than it is for me”.
- 82 percent agree the government should give more attention to the issue of housing.
In terms of politics, 74 percent of Conservative voters agreed there was a national housing crisis compared to 83 percent of Labour voters. Yet only 35 percent of Conservative voters and 43 percent of Lib Dem voters agreed that there was a housing crisis in their local area, compared to 55 percent of Labour voters. It is, of course, the Conservative and Lib Dem voters who subscribe most fervently to the NIMBY paradox.
Traditionally, only 10 percent of voters see housing as a key election issue, even though millions suffer from the impacts of poor housing. Ben Page of MORI summarised this as follows: “Our regular polls find few people mention (housing) spontaneously and it tends to be, at most, a second order issue in local and national elections. It can be seen as something like the weather, that no one is responsible for.”
Something like the weather? If this is true, and the British public has developed a fatalistic attitude towards the housing crisis then it is deeply worrying. Mankind has put a man on the moon and mapped the human genome, so solving our housing problems should be relatively straightforward, but if the public believes that the housing crisis is more like a natural phenomenon than a man-made crisis then the chances of garnering enough public and political support for a decent approach to housing is receding. If people think nothing can be done then nothing will be done.
Compare and contrast this degree of fatalism to the immediate post-war period. Like now, there was a housing crisis. Many towns and cities had been bombed. Thousands of returning troops wanted a decent, affordable home to reward them for their years of sacrifice. But they didn’t wait patiently like sheep: instead there was a mass squatting movement that forced the government to take action. By the end of 1946 over one thousand redundant army camps in England and Wales had been squatted by nearly 40,000 people.
The post-War Labour government responded by launching a huge housing programme. In the ten years after 1946 over two million homes were built in England, from a standing start, and 75 percent of it was social housing, mostly council housing. At that time the national debt as a percentage of GDP was four times larger than now. By contrast, in the last ten years, we built just 1.4 million homes and only 16 percent was social housing. Yet the population of England in 1950 was 40 million and it’s now 53 million. So with fewer people and more debt we built thousands more homes. It shows what determined political action can do. But that will only happen now if the public is battering down the doors of their MPs’ and councillors’ surgeries, and politicians have the guts to stand up for housing and confront the NIMBY paradox. It also means a major change in approach is required – tinkering with the present system will not work because, as Ben Page from IPSOS MORI says, “Councils report public opposition to be the biggest block to building new homes” - the NIMBY paradox again! To by-pass this opposition we need a major programme of new settlements with land bought at agricultural prices and developed by not-for profit corporations. In 1948 Aneurin Bevan, the Minister for Health and Housing (now there’s a radical concept!) said, “The NHS will last as long as there are folk left with the faith to fight for it.”
The same could be said for decent, affordable housing. Who has the faith to fight for it?
I spent a few days in Manchester last week at the CIH Conference.
To begin with, I think the new venue is excellent, the programme was stimulating and the vibe was good. Thousands of intelligent conversations took place, (followed by thousands of semi-intelligent conversations as the nights wore on.) Lord Freud and Grant Shapps glided smoothly through their sessions with barely a ripple of impoliteness from the not-so-cheap seats (apart from a couple of impertinent questions that were either ignored or rebuffed).
On day one, the latest housebuilding figures were released, suggesting that England could build fewer than 100,000 new homes this year, the lowest ever in peacetime. So everyone left Manchester in agreement that the housing crisis was deepening, that housebuilding was the key to economic stimulus and that we need we need to find new models of funding.
So far so good. But if you searched through the national press at the end of the week you would struggle to find any mention of Manchester and the serious issues that had been raised at conference. Issues that are fundamental to the health and wellbeing of the nation. In fact, apart from the JRF report on housing options for young people and the excellent Hannah Fearn in The Guardian, the conference, and housing in general, was largely ignored. For the average man or woman in the street the thousands of people who assembled in Manchester could have spent their time grouse shooting on the nearby moors and they would be little the wiser.
Does this matter? Hannah Fearn thinks that those who shape policy read The Guardian so our sector’s lack of national coverage is not a big deal. I beg to differ. To start with, if policy shapers are reading The Guardian then it has hardly done us much good of late! But politicians respond to the public mood. They may get bagfuls of desperate people in their surgeries with housing problems, but unless the well-housed start to lobby them about the need to invest in housing then we stand little chance of making an effective case.
To compare and contrast, look at the impact that the National Trust had during the NPPF debate. They mobilised their 4 million members in a wholly impressive way. Hundreds of tweets went out each day, a quarter of a million signed their petition, the Daily Telegraph ran its spurious “Hands off Our Land” campaign, their Director General was invited to Number 10. Their misleading message that the countryside was about to be concreted over entered the public consciousness, and the government was rattled. By contrast, the housing sector was virtually silent throughout the campaign, even though the outcome had the potential to change the shape of our housing system for a generation. We really need to do better.
Now we may not have 4 million members but we do have 4 million tenants and we could and should be doing more to mobilise them in favour of housing investment. Former Housing Minister John Healy said that he had never come across a more introverted sector than housing. He is right. During her double act with Grant Shapps, Grainia Long, the new Chief Executive of the CIH, talked about setting the housing minister his annual objectives. Well if I could set one objective for Grainia it would be this: your media operation needs a massive shake up. We need a Max Clifford for the housing sector, someone who can make housing stories interesting and understandable and help to shift pubic opinion about the scale of the crisis. We also need to link up more effectively with others in the wider housing sector, including groups like PricedOutUK, who aim to speak on behalf of a generation that cannot afford to buy. We also need to be less polite. The National Trust was extremely robust in the way it dealt with ministers, but their campaign was effective. To be frank, cuddling up to successive housing ministers simply has not worked. It’s time for a re-think.
Two days ago the BBC published “Eight radical solutions to the housing crisis”. They were:
1. Encourage the elderly out of big houses
2. Freestyle planning
3. Contain population growth
4. Force landlords to sell or let empty properties
5. Ban second homes
6. Guarantee mortgage payments (i.e. force the banks to lend)
7. Live with extended family
8. Build more council homes
It’s an interesting list, although the suggestion that “building more council homes” is seen as radical will have Harold Macmillan and Aneurin Bevan spinning in their graves!
Here is my quick take on the rest of it.
Number 1 is Stalinist and would upset middle England.
Short of re-negotiating the Treaty of Rome or introducing compulsory euthanasia Number 3 is a non-starter. Much of the projected growth in population is down to people living longer. The rest (about 44%) is due to in-migration, mostly from the European Union, which we are powerless to stop. This is the issue that most excites letter writers to the Daily Mail and Telegraph: in fact most of the comments in their pages during the NPPF debate focussed on immigration control as a way of solving all our problems, not just the housing crisis. Don’t go there.
Number 4 – fine, but local authorities already have powers to deal with long-term empty properties.
Number 5 is a non starter- most peers and MPs have second homes and they are hardly likely to vote for a ban. Introducing fiscal disincentives to second-home ownership is one option, but it could penalise the poor – what about families who’ve owned a chalet in Clacton for decades?
Number 7 is happening already (the average age of a first time buyer is 37) and is bound to get worse. It’s market-driven and not something you can legislate for.
That leaves numbers 2 and 6, which are to some extent two sides of the same coin. “Freestyle planning” is a clumsy description of the draft National Planning Policy Framework, and reflects the largely successful scaremongering anti-campaign run by the National Trust and others.
As I’ve argued before, we need to build at least 5 million homes over the next twenty years to catch up with under-supply and population growth, but this means building on little more than one per cent of the unprotected countryside of England (and remember that 45 percent of England’s land area is protected).
The price of land is a significant element in the price of any house – up to 50% or more in some areas. More land means lower land prices, means lower house prices. It’s a simple equation isn’t it?
Lower house prices will lead to a more balanced mortgage market which will allow more first-time buyers to borrow. One of the key arguments made against the NPPF has been the outstanding number of planning permissions - about 300,000.
Apart from the fact that this is not much more than a year’s supply of homes, the mortgage drought is a short-term phenomenon. Banks are building up their balance sheets after the crash and housebuilders won’t build if there is no demand, but they will start lending and building again before too long and if house prices are lower relative to incomes it means they will be able to build for and lend to more people.
That is why the NPPF is a once-in-a-generation opportunity to restore some of the balance in the housing market and, subject to some tweaking, it opens up the possibility of providing the much-needed affordable homes that we need.
So numbers 2 and 8 in the BBC list are the answer. Forget the rest. All the recent fluffy initiatives on right to buy, buy to let and under-occupation are just so much smoke and mirrors, designed to conceal the fabled elephant in the room - the fact that housebuilding is at its lowest level since 1923.
In 1845 Benjamin Disraeli, wrote of, “Two nations between whom there is no intercourse and no sympathy; who are ignorant of each other’s habits, thoughts and feelings, as if they were dwellers in different zones or inhabitants of different planets; who are formed by different breeding, are fed by different food, are ordered by different manners, and are not governed by the same laws … THE RICH AND THE POOR.”
Disraeli’s words, the foundation stone of One Nation Conservatism, hit me between the eyes when I read two contrasting reports in today’s papers. Today, the two nations of England, are the owners and the renters, (which you could argue is just about the same thing as the rich and the poor.)
Homeowners have never had it so good. Figures from the Council for Mortgage Lenders (in today’s Times) show that only 9.4 per cent of their income is now being spent on mortgages - the lowest since records began in 2002. Eight years ago this was around 15 per cent.
But for people who rent in the private sector times have never been tougher. According to Shelter (reported in today’s Guardian) families have now been priced out of a majority of local authorities in England, with average private rents being unaffordable for ordinary working families in 55% of local authorities. This means that in a majority of local authority areas rents now take up more than 33% of median take-home pay - a widely accepted measure of affordability. Shelter also found that 38% of families with children who were renting privately had cut down on food to pay their rent.
The number of tenants renting privately has increased by nearly a million over the past five years. This increased demand has pushed up rents. In London an average two-bed rent is £1,360, compared to an average across the country of £568. The least affordable local authority area outside London is Oxford, where typical rents account for 55% of average earnings.
With a lack of mortgage funding and house prices showing no signs of dropping to affordable levels, the outlook for first time buyers remains dire. The average age of first time buyers is now 37. Many young people are stuck with parents or in expensive private sector lets. By and large, the more money you spend on rent the poorer you get, whereas the less money you spend on your mortgage the richer you get. The gulf between the two housing nations is widening and deepening.
Yet with housebuilding at its lowest level since 1923 and neither Labour nor Conservative politicians offering up any radical housing policies it seems to me that we are entering a period of stagnation and retreat that will cause misery for millions and a deepening gulf between the haves and the have-nots. But this is what puzzles me. Where is the anger? Why aren’t young people, trapped with crippling rents and unable to buy, marching on the streets and occupying the City as they have on Wall Street USA? How can we ever be One Nation when there is such a gulf between the owners and the renters, between the haves and the have-nots? Perhaps, being English, this anger and resentment is bubbling beneath the surface and will erupt into social unrest at some point in the future.
Over the past few weeks I have been engaged in a twitter debate with the countryside campaigners who oppose the draft National Planning Policy Framework. Try as I might, I have been unable to extract from the National Trust and others their long-term policies on housebuilding and population growth. The fact that households are going to increase by nearly 6 million over the next twenty years means we will have to build at least 5 million new homes to meet demand and catch up with past under-supply. This exactly matches Kate Barker’s target of 250,000 a year. I am all in favour of dense, compact cities, but even if we build at high densities on existing and future brownfield land only two million of the required homes can be built within existing urban areas, leaving three million plots to be found on sites beyond the present urban fabric.
That is why I think the NPPF, for all its faults, is the greatest opportunity in a generation to deal with some of the deep-seated structural problems in our housing market. Yet those who oppose these sensible reforms seem to be oblivious to the scale and depth of the housing crisis. The National Trust’s disingenuous “Planning for People campaign” reminds me of Tom Lehrer’s comment that he gave up on satire when Henry Kissinger won the Nobel Peace Prize. Speaking in today’s Lord’s debate Alan Howarth described the Trusts’s campaign as “a case study of the mischief that can be created by unscrupulous digital campaigning… Members of the National Trust, who are almost by definition responsible citizens with a deep commitment to the well-being of our country, must be embarrassed by the antics of their normally revered organisation.” Hear, Hear, I say to that.
But the NPPF debate has left me feeling deflated and depressed. To me, it seems like a classic case of the haves drawing up the drawbridge against the have-nots. Their blinkered “I’m All Right Jack” attitude echoes Disraeli’s notion of Two Nations, the haves and the have-nots, the owners and the renters, the rich and the poor, between whom there is “no intercourse and no sympathy”. Only if we can bridge the gap between these two nations, both financially and emotionally, will we begin to solve our housing problems.
I think Grant Shapps is on to something with his latest plan to encourage people to live on boats.
Here in Cambridge we have hundreds of people living on boats along the river. Some of them are a bit ramshackle and lack decent sanitation but the occupants seem to like them and they are affordable and close to the centre of town.
On a similar theme, I listened to a recent Radio 4 programme that re-assessed the world’s slums and shanty towns and found that they are actually very useful in providing low cost housing for workers who need to live close to the centre of cities. I fully accept that conditions in the shanty towns are often awful but their inhabitants have a good sense of community and high levels of social capital. We could follow this model in London, pick a couple of the big vacant sites like Chelsea Barracks or Battersea power station, or even a corner of Hyde Park, and allow people to move in and build their own shacks.
It could be really popular with eastern Europeans who work in nearby hotels and restaurants. We could follow this model elsewhere in the country by relaxing the planning rules to allow people to build habitable sheds in their gardens and on allotments. These measures alone could produce thousands of new homes.
I’ve also been reading Orlando Figes’ book The Whisperers, a brilliant account of private life under Stalin. As the populations of Russia’s cities grew the regime responded not by building new houses and flats but by forcing people to share apartments. Families often lived in a single room and shared bathrooms, kitchens and toilets. Admittedly there was the odd argument about space and some petty squabbling over the use of shared facilities, but many children recalled how much they enjoyed the sense of community and companionship as they grew up. We could adopt this model in some of the big apartment blocks in Belgravia and Knightsbridge. Some of the rich, older residents may appreciate having someone billeted upon them. It would bring back memories of the war and the privations of rationing and they would have someone to talk to.
I think all of these ideas taken together could solve our housing crisis at a stroke and we wouldn’t have to build any new homes.