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There's A New Consensus On Housebuilding, But Is There A Gap In The Manifesto?

17/05/2017 13:06
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66 years ago, Conservative Prime Minister Winston Churchill saw his party returned to power having put housing at the centre of his party's agenda. One of his first acts was to summon Housing Minister Harold Macmillan to Chartwell to tell him: "Build the houses for the people". There began two decades of cross-party consensus on housing, with the number of homes built a year exceeding 300,000 as the state took a much more active role in housebuilding.

Fast forward to 2017, and you might be tempted to think that we are on the cusp of another era of mass housebuilding. With Labour's out and Conservatives briefing their housing pledges over the weekend, we are starting to see a post-Thatcherite consensus on the role of the state in housebuilding. The Labour manifesto commits the party to building 100,000 council and housing association homes if it forms the next government. It looks like the Conservatives won't go that far, but they are still pledging to reboot council housing and get thousands of new homes built over the next parliament. This is an important moment for the politics of housing in the UK.

The scale of the challenge faced in 1951 is comparable to today. We don't face the need for post-war reconstruction or such rapid population growth, but the withdrawal of the public sector from the business of building has seen the number of homes built each year fall dramatically, down to an average of 150,000. Crucially, it's not just the numbers that have changed. Public housebuilding in the 1950s was all about building homes for working people to rent. In contrast, the majority of the homes built in the last 30 years have been built by the private sector for sale on the open market.

As the housing gap - that is, the difference between demand for housing and the number of homes actually built - has grown, house prices have spiralled out of control. If the price of food had increased at the same rate, a single chicken would today cost over £65. This has kicked the housing ladder away from a great proportion of people - only half of families in Britain today own their own home. In other words, 49% of people form generation rent, and they have been doubly hit. Not only is home ownership increasingly out of reach, but rents have grown far beyond incomes because we have stopped building homes for rent at any scale. For a great many people, the housing crisis is one of two things: an ownership crisis, a cost of living crisis - or both.

While we have a new consensus on housing, it needs to translate into a real offer for generation rent. What's being touted is social housing (certainly needed, but only available to those on the lowest incomes) and continued support for home ownership (which only helps a very small number of first-time buyers).

There are two ways the next government can build on this new consensus. First, investment in public housebuilding should be put into a fund of the kind ResPublica has proposed to build high quality homes for rent. Creating an institution to fund a new housebuilding drive would create a lasting endowment for generation rent. And it would generate revenues that could be reinvested in perpetuity in new homes for generation rent as well as subsidised housing for those on the lowest incomes.

Second, behind the new commitment to council housing, the Conservatives have announced plans to give local authorities the ability to purchase brownfield land for housing at below market value. This is a potentially transformative departure from the way the land and housing markets currently operate, and is something that the Labour party should support too. It would mean more resources for housing and infrastructure, and less used up by inflated land prices. Indeed, the next government could be even more ambitious and apply it to all sites, not just the "brownfield land and pocket sites" the Conservatives are currently talking about. This would allow new investment in public housing to go much further.

Perhaps more than anything else, if the new consensus on housebuilding is going to deliver for generation rent, it will require the sustained commitment of politicians and the raising of ambitions on all sides over the long-term. On this, only time will tell.

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