Home is not where the art is
THE Treasury is up to its old tricks. Faced with the crying need for more homes, the mandarins have dusted down the old speeches and insisted that the only answer is reforming the planning system and building on the green belt, oblivious to the fact that they’ve tried that solution several times before and it’s never worked. Nonetheless, once again, they and their colleagues in the Department for Communities and Local Government— the housing department—have got the Secretary of State to repeat what we’ve already heard from all his recent predecessors. He’s going to allow sensible building on the green belt wherever local councils designate alternative compensatory areas and he’ll also allow them to redraw the boundaries if there are obvious anomalies.
Sounds perfectly good until you look at the detail. The land they want to build on is often the very piece that most protects us from urban sprawl and the so-called compensation often turns out to be a bit that was pretty safe from development anyway. As to anomalies, these bits of undeveloped land may be crucial to stopping very much bigger inroads. Each effort at tidying up can lead to another anomaly and another, until huge areas have been built over.
I’m not, of course, suggesting that there are no possible improvements in the planning system. It’s simply that any change is controversial, it’s fought tooth and nail over and it’s marginal in its effect. The fundamental issue is the housing industry itself. This is the most reactionary of sectors, remaining significantly behind many Continental countries and viewing all innovation with scepticism. Combine that with the undoubted conservatism of the average home buyer and you have the recipe for housing stagnation, leaving us short of at least half a million homes.
House builders have got it very comfortably summed up. Put up 110,000 houses a year, give or take 10%, and they get the best possible return on capital. Nine companies build the overwhelming majority of new homes, so they’ve got things under control—use the land supply sparingly, hoard as much as you can and keep the prices rising by never over-supplying any area of the country.
Because they maintain a complicated supply chain, with sub-contracting at almost every level, house builders have never had to make the reforms that have been forced on other industries. They build to standard designs, but use on-site labour, getting the worst features of mass production and those of bespoke building. It’s as if the ceramic industry made pots following a bog-standard computer-generated design, but then continued to throw them by hand. Nowhere would disruptive technology be more valuable. No industry needs an Uber or an Airbnb more.
However, because of its control over the supply of land, the industry can’t be easily reformed by market forces. That’s why the Government has to step in. Ministers have already announced direct funding for factorybuilt homes. It must now place the large-scale orders that alone will bring down the price of prefabricated houses. It must release much more inner-city land and insist that it be built on within two years. Indeed, two years after the grant of planning permission, any land still undeveloped should attract a monthly ‘planning rent’. In addition, much tougher energy-saving regulations would make new homes much more affordable to run.
It really is time that the Government insisted that house builders accept the necessary challenges to double their output, embrace new technology, raise their environmental standards and stop blaming everyone else for our housing failure. That would then give them the right to call on Government for help and encouragement.
‘Nowhere would disruptive technology be more valuable. No industry needs an Uber or Airbnb more
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