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One million homes by 2020 is not enough and will not happen anyway

Daniel Bentley, 22 September 2015

The housing minister, Brandon Lewis, would like to see a million homes built during this parliament. He would regard this as “success”, he says. While this is a step forward – ministers have long refused to put a number on their housebuilding ambitions – it is still not enough. That would be 200,000 homes a year, when we need something like 250,000 just to keep on top of demand, and really we need many more than that in order to start reducing the scarcity which has driven up prices.

Worse, even 200,000 a year simply will not happen. Private sector building has languished in the low 100,000s since the financial crisis. There has been no improvement in recent years, which is to be expected given that there has been nothing done to remedy the situation. The Treasury must know this – it is why the government will not set targets (Lewis’s figure is an ambition, not a target, apparently). As David Cameron has found to his cost with immigration, so too with housebuilding: when picking a target one must choose between the unambitious or the undeliverable. Without a fundamental change of course, it is sometimes best to keep schtum altogether.

The government is not even approaching the kind of understanding necessary to turn around the great housing disaster which is unfolding before us. While George Osborne tentatively liberalises the planning system and berates housing associations for failing to build enough homes, he has failed to grapple with two huge obstacles which are to a great extent within his own ambit of influence.

The first is that the country remains addicted to rising house prices. If we are ever to improve affordability then prices need to fall. This is not a difficult equation. But hardly anybody is prepared to admit it because it would be anathema to the majority of households, which are owner-occupied, rendering the issue politically off-limits. Housing campaigners appear to think that stating this bald fact would do their cause more harm than good – and they might be right. In consequence everything the government does in housing is designed to maintain prices by maximising demand, whether that is from buy-to-let landlords and overseas investors or even from first-time buyers. This last group needs support more than most, of course, but the way the government does it – by helping them afford the unaffordable through Help-to-Buy loans and mortgage guarantees – assists a few while merely reinforcing the problem for the many.

The second problem the government fails to face up to is that Britain has never built the homes it needs by leaving it to the private sector, which is the experiment Whitehall embarked upon from the 1970s. It is no coincidence that the decline in housebuilding dates from that decade – that is when public sector housing went into sharp decline. The idea that if the state got out of the way then private builders would fill the gap has now been tested to destruction. Instead we are seeing re-emerge in housing now the same problems that were typical before 1914, the last time that the country’s housing needs were left entirely to speculative private builders: accommodation is expensive, insecure, overcrowded and increasingly dominated by private landlords. It is possible to exaggerate the comparison with the Victorian slums, but the direction we are heading in is clear enough.

It was the truth of this which led the inter-war and post-war governments – Conservative as well as Labour – to subsidise building and encourage local authorities to borrow to invest in new homes. It is time to accept that the experiment in private sector-dominated housing provision has failed and for the public sector to take advantage of low interest rates, while they last, to build the housing infrastructure that Britain is lacking.

Daniel  Bentley is the author of ‘The Future of Private Renting: Shaping a fairer market for tenants and taxpayers’

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