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Are ministers quietly watering down their housebuilding ambitions?

Daniel Bentley, 27 May 2016

The latest housebuilding figures published this week were a significant moment in the life of this government, as they provided the first meaningful progress update against its ambition to build a million more homes across the parliament.

They showed that after the first of five years, output is a long way off target. There were just 139,690 completions in England in 2015/16, against the 200,000-a-year that would be needed to hit a million by 2020.

More worrying still, possibly, was that the most recent quarter (January-March 2016) saw a decline in housebuilding. Completions were down three per cent on the same quarter a year ago, and starts were down nine per cent. So building activity has recently been going in the wrong direction. This was only one quarter, however, and may prove to be a temporary blip. Let’s hope so.

Either way, the government is a long way short of its one million homes target – by about 60,000 homes after the first year. Or is it? The figures published yesterday are part of the quarterly series on housebuilding which are usually an underestimate of actual output.

A more accurate figure for new-build completions is contained in the annual series, ‘Net supply of housing’. This will not be out until November but in recent years has produced a significantly higher figure for new-build completions than the quarterly series, as this table shows:

Capture

If the difference between the two series is anything like last year’s (c.30,000), we could be looking at output for 2015/16 in the region of 170,000 – still 30,000 below target but certainly edging closer to the target nonetheless.

But as I pointed out last week the housing minister, Brandon Lewis, has recently taken to claiming that 181,000 homes were ‘built’ last year. This figure, which you can see in the top row of the table above, is based on figures in the same annual ‘Net supply of housing’ series. But it includes not just new-builds but conversions (subdividing houses into flats, for example) and change of use (from office to residential, usually). This gross supply figure also excludes the number of demolitions that have been undertaken during the period – when you deduct that you are left with the net supply.

The gross figure that Mr Lewis uses is neither an accurate portrayal of how many homes have been built nor how many homes the housing stock has increased by. It is an odd figure for him to alight on – but of course it has the advantage of sitting rather more closely to the 200,000 goal than any of the others.

The question is, how is the government measuring its own progress? Is its commitment to build a million homes by 2020, or is to supply them? There are good arguments for using net supply (although I have reservations, which I may return to in another post) but if that is the marker the government is using then it would represent a downsizing of its ambition.

If it is using gross supply – and ignoring demolitions – as Mr Lewis seems to be doing, then they are really pulling a fast one.

As for the truth of the matter, there are mixed signals. DCLG’s Single Departmental Plan, published in February, says the government wants to ‘supply’, or ‘deliver’, a million homes (hat-tip to Jules Birch for highlighting this document):

deptplan

But as recently as last Wednesday, the Queen’s Speech contained a commitment to ‘build’ a million homes:

qspeech

The distinction is not just semantic. It is a difference that was worth, last year, about 25,000 homes. Given that the 200,000-a-year target is already probably 50,000 short of what is needed, let’s hope ministers feel bound by the words they had Her Majesty deliver to parliament last week.

 

 

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