Anthony Breach is a Senior Analyst at Centre for Cities, where he leads on housing and planning.
Earlier this month, Bob Seely MP wrote for these pages on the Government’s “positive story” on housing since 2010.
There have been some real successes: the miles of planning red tape that were rolled up into the National Planning Policy Framework in 2012 are the clearest example.
As a result, housebuilding in England has been hovering around 220,000 to 240,000 a year since 2016 – a decades-long high after New Labour’s historically low levels of housebuilding. But not enough to stem the worsening housing crisis.
Seely also claimed that the manifesto commitment of a 300,000 a year target for new homes in England was “entirely arbitrary”. On this, he is entirely correct – it is arbitrarily far too low.
There are several reasons for this. The most important is that economic growth drives demand for housing. As people become richer, they want to rent and buy more and higher quality living space. Rising demand for housing is therefore a success story for individuals and for the country.
This explains why London now has a terrible housing crisis, even though its population is roughly the same as it was 70 years ago. Londoners demand more and better housing today as they are more affluent than they were in the 1950s.
But the green belt and wider planning system have prevented the supply of square feet from increasing nearly as much as their incomes. As a result, interwar family homes that were comfortably occupied by a one or two-earner household are now often subdivided into flats that are expensive even for professional couples.
Income therefore matters both for how much and for where housing should be built. If the economy returns to sustained growth, then we would need to build more homes than we do now – especially in the most expensive areas – to stop rising living standards from dissolving into rising housing costs.
Correcting the economic underperformance of the large cities outside London so they could compete with the capital would help, but just shifting those new homes to poorer places will neither boost their low incomes nor help voters in expensive areas.
But more contentious than the role of income is population growth and immigration. We don’t know what future need for housing will be, but higher population growth obviously means that, everything else being equal, we do have to build more houses every year than a future with lower population growth.
The problem is that however quickly the population grows, the planning system fails to provide enough land for the new homes that are needed.
There are both present and historical examples of this. The 2018 household projections, which indicated population growth was trending lower than previous estimates, prompted furious lobbying from MPs and councils to reduce housing targets and led to the collapse of numerous local plans.
This was despite the fact that we currently do not have enough homes for the existing population of England, whatever projections about the future might say.
This is because for almost 70 years, the planning system has struggled to deliver new homes at any rate of population growth. By comparing the change in the number of homes per person in the UK to other Western European countries from 1955 to 2015, Centre for Cities research has shown that, after controlling for differences in population growth, we are today missing 4.3 million homes that other European countries managed to build.
Crucially, we even failed to build enough even when immigration was negative. From 1955 to 1980, a period of consistent net emigration, the UK went from having five per cent more homes than the European average in 1955 to two per cent below the average in 1980, even though more people were leaving the country than arriving here.
This implies that even if immigration or population growth fell, the planning system would adjust – and continue to underbuild at a lower rate.
The reason the planning system underbuilds is that ever since the Town and Country Planning Act 1947, brought in by the Attlee Government, it has granted planning permissions in a case-by-case manner. As a result, proposals can comply with the local plan, and still be denied permission.
The barriers of this process – and the green belt – create a permanent bottleneck in the housebuilding industry that requires central government to set targets to push new supply through the system. This problem with English housing policy will persist even if immigration falls to zero.
The housing crisis is now so severe that these targets must account for both future annual growth and the backlog of 4.3 million missing homes. Taking the 300,000 target as an estimate of future annual need – which you can adjust upwards or downwards depending on your beliefs – we have calculated that clearing this backlog in 25 years would require a housing target for England of 442,000 homes per year, or to do so in a decade, 654,000 per year.
In a perfect planning system, there would be no need for targets. If there were no barriers that were preventing the market from responding to demand, with rules-based rather than discretionary planning, the housebuilding industry would supply all the new homes in the places and of the type that the country needs. There would be no need for algorithms or quotas calculated by boffins in Whitehall.
In contrast, a commitment to the existing planning system entails a commitment to targets. Retaining its arbitrary barriers to new homes without measures to push housebuilding above its current levels is a recipe for a worsening housing crisis.
If the Government was serious about building on the progress of the past decade and ending the housing shortage, it would either be ramping up housebuilding targets, or it would pursuing further planning reforms, along the lines of those in New Zealand and US states like Oregon and Montana, to make the system more rules-based and certain.
If it instead agrees with Seely that enough has been done, there won’t be anything resembling a positive story to tell on housing.
Anthony Breach is a Senior Analyst at Centre for Cities, where he leads on housing and planning.
Earlier this month, Bob Seely MP wrote for these pages on the Government’s “positive story” on housing since 2010.
There have been some real successes: the miles of planning red tape that were rolled up into the National Planning Policy Framework in 2012 are the clearest example.
As a result, housebuilding in England has been hovering around 220,000 to 240,000 a year since 2016 – a decades-long high after New Labour’s historically low levels of housebuilding. But not enough to stem the worsening housing crisis.
Seely also claimed that the manifesto commitment of a 300,000 a year target for new homes in England was “entirely arbitrary”. On this, he is entirely correct – it is arbitrarily far too low.
There are several reasons for this. The most important is that economic growth drives demand for housing. As people become richer, they want to rent and buy more and higher quality living space. Rising demand for housing is therefore a success story for individuals and for the country.
This explains why London now has a terrible housing crisis, even though its population is roughly the same as it was 70 years ago. Londoners demand more and better housing today as they are more affluent than they were in the 1950s.
But the green belt and wider planning system have prevented the supply of square feet from increasing nearly as much as their incomes. As a result, interwar family homes that were comfortably occupied by a one or two-earner household are now often subdivided into flats that are expensive even for professional couples.
Income therefore matters both for how much and for where housing should be built. If the economy returns to sustained growth, then we would need to build more homes than we do now – especially in the most expensive areas – to stop rising living standards from dissolving into rising housing costs.
Correcting the economic underperformance of the large cities outside London so they could compete with the capital would help, but just shifting those new homes to poorer places will neither boost their low incomes nor help voters in expensive areas.
But more contentious than the role of income is population growth and immigration. We don’t know what future need for housing will be, but higher population growth obviously means that, everything else being equal, we do have to build more houses every year than a future with lower population growth.
The problem is that however quickly the population grows, the planning system fails to provide enough land for the new homes that are needed.
There are both present and historical examples of this. The 2018 household projections, which indicated population growth was trending lower than previous estimates, prompted furious lobbying from MPs and councils to reduce housing targets and led to the collapse of numerous local plans.
This was despite the fact that we currently do not have enough homes for the existing population of England, whatever projections about the future might say.
This is because for almost 70 years, the planning system has struggled to deliver new homes at any rate of population growth. By comparing the change in the number of homes per person in the UK to other Western European countries from 1955 to 2015, Centre for Cities research has shown that, after controlling for differences in population growth, we are today missing 4.3 million homes that other European countries managed to build.
Crucially, we even failed to build enough even when immigration was negative. From 1955 to 1980, a period of consistent net emigration, the UK went from having five per cent more homes than the European average in 1955 to two per cent below the average in 1980, even though more people were leaving the country than arriving here.
This implies that even if immigration or population growth fell, the planning system would adjust – and continue to underbuild at a lower rate.
The reason the planning system underbuilds is that ever since the Town and Country Planning Act 1947, brought in by the Attlee Government, it has granted planning permissions in a case-by-case manner. As a result, proposals can comply with the local plan, and still be denied permission.
The barriers of this process – and the green belt – create a permanent bottleneck in the housebuilding industry that requires central government to set targets to push new supply through the system. This problem with English housing policy will persist even if immigration falls to zero.
The housing crisis is now so severe that these targets must account for both future annual growth and the backlog of 4.3 million missing homes. Taking the 300,000 target as an estimate of future annual need – which you can adjust upwards or downwards depending on your beliefs – we have calculated that clearing this backlog in 25 years would require a housing target for England of 442,000 homes per year, or to do so in a decade, 654,000 per year.
In a perfect planning system, there would be no need for targets. If there were no barriers that were preventing the market from responding to demand, with rules-based rather than discretionary planning, the housebuilding industry would supply all the new homes in the places and of the type that the country needs. There would be no need for algorithms or quotas calculated by boffins in Whitehall.
In contrast, a commitment to the existing planning system entails a commitment to targets. Retaining its arbitrary barriers to new homes without measures to push housebuilding above its current levels is a recipe for a worsening housing crisis.
If the Government was serious about building on the progress of the past decade and ending the housing shortage, it would either be ramping up housebuilding targets, or it would pursuing further planning reforms, along the lines of those in New Zealand and US states like Oregon and Montana, to make the system more rules-based and certain.
If it instead agrees with Seely that enough has been done, there won’t be anything resembling a positive story to tell on housing.