2 May 2023

Two cheers for Labour putting housing at the top of its agenda


Planning reform is the quintessential third rail issue of British politics. Attempts to fix Britain’s burdensome planning system have repeatedly failed and caused significant political damage for those who have tried. Despite the urgency and seriousness, politicians have all but abandoned the issue.

That is, at least until this past weekend. ‘I want Labour to be the party of home ownership,’  Labour leader Keir Starmer told The Observer. He has promised to make ‘tough decisions’ and be ‘bold’. The specifics remain murky, but acknowledging and prioritising the issue could mark a turning point.

Labour has grasped the essential link between planning reform and economic growth. Housing shortages prevent people from living nearby productive jobs. The lab space shortage in Oxford and Cambridge forces high-tech companies to establish themselves outside of Britain. The blocking of wind, solar and nuclear power has pushed up the cost of electricity and made businesses less competitive.

The result of this system is to entrench intergenerational inequality and unfairness; it makes the UK less attractive to newcomers and prevents social mobility. In this sense, fixing the housing system should be at the core of Labour’s social justice mission. The question then, is whether Labour can acknowledge what is causing the crisis is precisely their historic policy prescription: the socialised political control of development. That is, socialist policies leading to the opposite of social justice.

Labour has so far largely focused on the right target. Over the weekend, national campaign coordinator Shabana Mahmood rejected rent freezes and emphasised the importance of increasing the housing supply to get to the ‘heart of the problem’. Indeed, as a Centre for Cities report in February highlighted, the UK has built 4 million fewer homes compared to other European countries in recent decades.

That said, Labour’s proposals are far from perfect. The reintroduction of binding housing targets may be necessary if we want to ramp up housebuilding in the short term, especially given that 55 local authorities scrapping their targets since last year. But top-down targets are hardly a substitute for fixing the underlying system. It’s also entirely unclear how Labour will combine targets with more power to local authorities, as has been promised. Regional planning, the party’s apparent solution, has been tried but consistently failed; it could just end up adding another layer of bureaucracy.

The idea that first buyers would get ‘first dibs’ on over foreign buyers for new build properties is also pretty daft. It is not only unworkable, as properties can always be sold on, but risks backfiring by reducing investment in the sector. The Battersea Power Station redevelopment, for example, would literally not have happened without foreign investment and buyers.

There is also talk about a ‘comprehensive mortgage guarantee scheme’ for first-time buyers. This proposal sounds eerily similar to sub-prime mortgages, and we know how that turned out.

Starmer does seem to have some better ideas though. For example, introducing a zonal type system, in which a development that fits the requirements of a local plan would not have to be reapproved. (This would, of course, depend on an underlying local plan being more permissive of development.) There is also talk of taking another look at the Green Belt, which includes a great deal of featureless, intensive agricultural land, patrol stations, and parking lots. There is even some discussion about the once promising, since-junked Oxford-Cambridge Arc.

The full details of Labour’s housing plans are expected to remain scant until at least its autumn conference, but its pivot towards housing is welcome, if a tad belated.

The Tories, on the other hand, have gone from promising genuinely radical reform after the 2019 election, to Rishi Sunak reportedly proposing a re-heat of Help To Buy – a scheme that does nothing but pump up demand and increase prices, often subsidising the already well off into the bargain.

‘If we can’t do anything on housing supply we are going to have to do something on affordability,’ a government source told The Times yesterday. In other words: if they can’t fix the problem, they’ll just make it worse by throwing wheelbarrows full of cash into the fiery pit that is the UK’s housing market. In any case, the ‘if we can’t’ formulation is obviously ridiculous; the Government can and must do something about supply.

The housing crisis is at root a straightforward problem: the UK hasn’t built enough homes where people want to live for many decades. This has caused a significant shortage, pushing up prices and killing the dream of homeownership for many.

It’s the politics, on the other hand, that is very difficult to address: existing residents, who through the planning system have a veto over new developments, receive little benefit from more homes in their area. The holy grail of planning reform is identifying policies that enable more homes to be built with local support.

Whether either of the biggest two parties is truly willing to address this problem is yet to be seen – but we should at least be grateful that it’s back at the top of the national agenda.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Matthew Lesh is the Director of Public Policy and Communications at the Institute of Economic Affairs

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