Daniel Bentley is the Editorial Director of Civitas.
The Government’s long-promised housing White Paper has been pushed back so often it would hardly be a surprise if this week’s expected publication was postponed once more.
Preoccupations with Brexit and the election of Donald Trump may account for part of the delay. But the truth is that providing ‘serious, lasting, long-term reforms’ to boost housing supply, as Sajid Javid, the Communities Secretary, has promised, would be a tremendous achievement even for a government with little else on its plate.
There is no easy response that will please everybody. A knotty, complicated mess of a problem, overlaid by a tangle of competing interests, has consequently been met with a series of timid, piecemeal changes. Some of these have helped a bit, some have not, but none have been the game-changer that is required.
Net housing supply hit a post-crash high of 189,650 last year, but with at least 230,000 homes a year needed just to keep up with projected household formation, we are still going backwards.
There are two principal objectives for ministers: ensuring a steady flow of developable land with planning permission, and ensuring that that land is then built out as quickly as possible.
The emphasis under David Cameron’s premiership was on increasing the number of planning approvals, to the anger of many countryside campaigners. There is still a significant proportion of local authorities who have failed to identify the required five-year land supply, and this will need addressing. There are signs that Javid is prepared to get tough with them, as he must, even though this will pit him against many on his own benches and may, in certain areas, mean bringing the green belt into play.
But he is also, according to today’s Daily Telegraph, ready to take on developers and landowners over the rate at which planning permissions are built out, with some form of ‘use it or lose it’ conditions attached to future consents. Such is the kaleidoscope world of politics that a policy for which Ed Miliband was lambasted as a Stalinist in 2015 is today being considered by one of the Conservative cabinet’s staunchest free marketeers.
But what has become clear in the past few years is that simply increasing planning permissions will not be enough on its own. The number of homes permitted for development reached 277,000 last year – up from 179,000 in 2010. Yet, after four years of permissions running at more than 200,000 per annum, there were still only 163,940 new-build completions in 2015/16.
This is partly a question of developers’ build-out rates, which are designed to release homes into the market only at a rate that prices in the local area are not depressed. This means that large schemes, with the potential for hundreds or even thousands of new homes, take much longer to build than is technically possible, even after pre-commencement conditions and infrastructure requirements have been met.
But there is also an issue with permissions being granted that are never built at all, or are recycled into future permissions further down the line. This is about landowners and traders as much as it is about developers, holding off sales to builders until a time of maximum financial advantage, or even boosting the value of their land with no intention to build at all (in order to provide security for loans, for example). There is thought to be a ‘lapse rate’ in planning permissions of in the region of 30 to 40 per cent.
A report by the planning consultancy Nathaniel Lichfield & Partners last week argued that, in the present system, delivering 300,000 homes a year over the next decade would require planning departments to gradually increase the number of permissions to 460,000 a year. Given the strain that planning departments are already under, having borne the brunt of local government spending cuts since 2010, this would be an extraordinary challenge.
It should also be unnecessary: there is no good reason why we should expect town halls to process so many applications that do not result in new homes. In Germany, for example there is a much tighter relationship between approvals and completions.
But to achieve that here, the Government needs to give councils the tools to focus on those schemes that will deliver new homes, and to ensure that they are built out much more quickly than they are at present. Some sort of use-it-or-lose-it regime would begin to give them the leverage they need and subject new developments to a greater degree of democratic control.
Such powers as these must be matched by greater responsibility. Councils need to be prepared to step up to the challenge. They need to get their Local Plans in place – and if they don’t, then be prepared for Whitehall to step in. But they also need to be empowered to get things done.
Rather than requiring them simply to enable delivery by private developers, let’s give them the powers to drive that delivery and get homes built where we need them, when we need them.