6 October 2021

Conference season shows the Nimbys have triumphed again

By Chris Worrall

Conference season is upon us, and with it each party’s muddled attempt to tackle our chronic housing shortage with more of the same market-distorting status quo. Indeed, glancing at the parties’ proposals, you would struggle to notice much difference between them.

At Labour’s conference in Brighton, we heard Shadow Housing Minister Lucy Powell claim the planning system is not an issue, while trotting out the misleading, widely debunked claim that we have 1 million unbuilt planning permissions (a figure torn apart by Matthew Spry of Lichfields just four days before Powell was speaking).

Encouragingly Labour did announce proposals to reform the Land Compensation Act, so that the ‘planning uplift’ in land value is shared with local authorities, rather than all of it going to the landowner. As so often, the devil will be in the detail, but the thrust of the policy has support across the political spectrum, most notably from former Communities Secretary Sajid Javid, who saw his own proposals blocked by Theresa May. Javid considered land value uplift reforms ‘morally justifiable’ and he was backed by experts such as the late Tony Pidgeley and Liam Halligan, now of GB News.

Some critics argue that you could get the same result with meaningful planning reform, making land more affordable for local authorities by increasing the volume of planning permissions. Nevertheless, absent the kind of radicalism we’d like to see, reforming the LCA is one way for communities to share in the value uplift that planning permissions provide. The big question is how the money would be divided between landowner and local authority (Javid, for instance, favoured a 50/50 split).

Much less encouraging were Labour proposals to ban foreign buyers purchasing off-plan and a first dibs policy for first-time buyers. The first of those is a carbon copy of reforms enacted by the Labour government in New Zealand, which has since still seen record increases in house prices. As so often in housing policy, it’s a populist policy that treats the symptoms of house price growth, rather than the causes.

A better solution would be loan guarantees for first time buyers to buy off-plan, not dissimilar to what the banks backing those foreign investors are offering. The ‘first dibs’ policy, on the other hand, could end up costing developers more by preventing them reducing the borrowing requirement they would otherwise cross-subsidise from off-plan sales. Higher borrowing levels in turn result in higher interest costs, therefore hampering viability – all of which ultimately means lower housing supply.

The belle of the ball at Labour conference, however, was Shadow Communities Secretary Steve Reed, who once claimed Tory plans to allow by-right 8-metre extensions to existing homes would harm the economy and ‘slow it down’. That remark gives you some sense of Reed’s attitude to both market forces and basic economics, given that research suggests every £1 spent on construction results in £2.92 of added value for the economy.

Reed was in triumphant mood at a fringe event, heralding Labour’s role as handmaiden to the Tory backbenchers who helped oust Robert Jenrick as Housing Secretary. That this was the worst of all the Labour events on housing was little surprise, given that Reed is so anti-housing that he even tries to torpedo development outside his own patch. I say ‘tried’ because the last time he tried to oppose development in the City of London, Reed managed to direct his complaints to Westminster CIty Council.

Some perhaps naively hoped he might have changed his mind after a huge backlash to a Labour social media post attacking Tory planning reform, which included the strapline “Do you want developers building on your green spaces without your say?”. Even his own shadow housing colleague Lucy Powell admitted she ‘would not have signed off’ on the ad.

Sadly, that controversy doesn’t seem to have been a Damascene moment for Reed, who carried on wheeling out the same tired tropes about the planning reforms being a ‘Developers’ Charter’, all the while offering nothing in the way of a meaningful alternative. What little he did propose was a re-heated ‘use it or lose it’ policy, first mooted by Ed Miliband and based on the widely debunked idea that developers are deliberately ‘land banking’.

But even if Labour seem beyond redemption on this issue, some were optimistic that Michael Gove being put in charge of housing might herald some much-needed radicalism from the Government. Judging by his appearances at Tory conference, however, Gove’s appointment has actually put Nimby lobbying efforts on steroids. The Tories’ conference slogan might be ‘Build Back Better’, but that doesn’t seem to apply to actually, y’know, building anything.

Not only has Gove ditched the Government’s target of 300,000 homes a year, but he appears to have had his head turned by the Piers Corbyn of housing economics, Ian Mulheirn of the Tony Blair Institute for Global Change. Much like Mulheirn, Gove has been heard suggesting that just 15% of price increases are down to a lack of housing supply, contradicting the vast majority of housing economists, not to mention the groundbreaking research from the LSE’s Christian Hilber and Andreas Mense, who put the figure at 66%.

It was thoroughly dispiriting to hear Gove tell Tory activists that ‘the route to having more good affordable homes is not simply through planning reform to increase supply’. Equally disconcerting was his claim that ‘counterintuitively the areas with the biggest differentials between rents and mortgage payments are not in London and the South East, but in Yorkshire and Humber’. That might be true in the most literal sense, but as Chaminda Jayanetti pointed out, the only reason rents and mortgage payments are closer in London is that house prices in the capital are ‘exorbitant’.

Rather depressing, the only pledge that has really stood out at either conference is Labour’s commitment to 150,000 social homes – 31,000 more than the 119,000 earmarked in the Government’s Affordable Homes Programme, of which fewer than 30,000 are for social rent. Even that, however, is nowhere near the kind of radical, systemic reform we need if we want a housing system that actually provides the homes we need, in the places we need, at prices people can afford.

As it stands the sad truth for us Yimbys – and young people desperate to get on the housing ladder – is that both Labour and the Tories are offering little but the same failing status quo.

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Chris Worrall is Editor of Red Brick Blog.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.