9 December 2020

Let’s ditch the false promises on housing

By

Parliament’s Public Accounts Committee has today declared that the Ministry of Housing (MHCLG) should “ditch the false promises instead of serially ditched housing policies”. They also condemn the “cycle of policy invention, abandonment and reinvention, stringing expectant young people along for years”, “wasting time and resources” on housing policies that “come to nothing”.

The Committee is right to focus on housing. It correctly complains that the Ministry has repeatedly changed policy and abandoned previous initiatives. But that is not MHCLG’s fault. Like a loyal Labrador, it just obeys its owners.

There have been 17 housing ministers since 2001; eight Secretaries of State since 2006. Each change has brought new policies, new initiatives, and generally a new forgetting of all the things that failed before.

By the time a minister understands the Himalayan scale of the challenge – how hard it is to find politically durable ways to add more homes in expensive areas with a majority of homeowners – that minister is moved on, generally before even starting to look at realistic solutions. Small wonder we have been going backwards on housing for 70 years.

The Committee itself notes that “ministers come and go with alarming frequency”, an implicit admission that its report is not really directed at the Ministry, but rather a veiled criticism of successive governments who have used MHCLG as a short-stay parking bay for Cabinet members on the move. We will never fix housing without good, talented ministers in place long enough to understand the problem and start to test realistic long-term solutions.

The seeds of the current shortage were sown decades ago. We currently aim for 300,000 homes a year, but under the early Blair government the target was 155,000, which completely ignored the already huge wedge between house prices and build costs in expensive regions. The 155,000 a year target was even less than the Government’s own predicted increase in household numbers. Of course, the projected increase in households is no use for setting targets because it is circular: “households” are defined as people living in a separate home, and that is limited by how many homes you build.

And, of course, the 155,000 target a year was never achieved. They planned to fail, and surpassed themselves.

Another topic for the Public Accounts Committee should be the appalling damage to regions, wages and growth caused by bad planning over the last seven decades. We need a much better planning system, that actually works to overcome political obstacles and achieve plentiful housing where it is most needed.

We need to stop making false promises to the young, as the Committee says. But not by giving in to an unnecessary housing shortage that has probably hurt wages by some 20% — succumbing to a zero-sum mindset of rearranging the deckchairs on the Titanic.

We know that we have built far more homes in the past, even though the available profits were much smaller because houses were much cheaper. We can easily do it again, if we just solve the politics.

But we will not solve the political problems by ignoring them. For example, the Treasury is partly at fault for the damage to incentives that has been a large cause of the housing problem. So far the Treasury has shown little imagination in fixing that. Externalities and incentives are not its strong points. Applied political economy is nowhere to be seen. Ironically, the best department at that was the Department for International Development, now subsumed into the Foreign Office.

The Treasury has made strides in fixing the incentives for city regions, but now it needs to do the same for housing. The truth is that simply fixing a target of ‘X-thousand’ homes a year will never work.

So what is the way forward? One obvious step is to give small groups of local people easy, workable and powerful ways to set rules to allow more homes of the right kinds near to them, while sharing the enormous benefits of doing so.

There are plenty of options which have worked well elsewhere. For example, one-third of the new homes in Tel Aviv last year came from apartment owners voting to extend or replace their own apartment building.

In England, there is tremendous scope for letting rules be set by the residents of individual streets or blocks, so that they can benefit from the doubling or trebling in the value of their own homes from the additional development they permit. That idea has been flagged by the Government’s own White Paper, and endorsed as potentially fruitful by people ranging from the Royal Town Planning Institute and the former President of the Royal Institute of British Architects to the Centre for Cities, the Adam Smith Institute, the effective giving charity Founders Pledge, the late Sir Roger Scruton’s Building Better Building Beautiful Commission and even Jacob Rees-Mogg.

It is high time to try it.

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John Myers is co-founder of London YIMBY, a grassroots campaign to end the housing crisis with the support of local people.

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