Stacking supermarket shelves is about as close as Anthony normally gets to new construction. A hard-working 25-year-old in a former industrial town, he has moved twice to London to work for an internet company. Each time, endless months in an expensive, overcrowded and mouldy shared flat pushed him home again, to lower pay.
That is not Anthony’s fault. For decade after decade we have built too few homes in places with abundant well-paid jobs like London – or Leeds, or Cambridge, or Bristol – for those who want to live there. That means someone will always be priced out, and the steep downward slope of prices from central London out across the country tells you many people have been.
Ryan Bourne’s recent article for Conservative Home tells us we must help people, not places, but I think we can help both.
Wages in London are higher than in Blackburn because rents are higher in London and people cannot move freely between the two. With plentiful housing in London, competition for workers would raise Blackburn wages for the same skills until they nearly matched London’s – or even exceeded them, because some people will accept slightly lower wages to enjoy more theatres and restaurants.
The Council for the Protection of Rural England and the Town and Country Planning Association do not seem to have realized that banning more homes in high-wage places just pushes down wages in already-struggling places with more workers than jobs.
After the Black Death of 1348-9 killed some two-fifths of England’s population, the shortage of workers increased their bargaining power. The outraged aristocracy persuaded King Edward III to pass the Statute of Labourers, forbidding workers from moving around the country or to different jobs. It was deliberately designed to keep pay down.
We have our own 21st-century Statute of Labourers, but we have done it more cleverly, through a needless shortage of housing near high-wage opportunities.
Building enough homes within reach of the best jobs – while making those places better, through better design and with the support of local communities – could boost growth and wages by one or two percent a year for a decade. It will increase competition for workers and so raise the wages of workers across the country, while boosting growth and generating more tax revenues to invest in local infrastructure in places that need it most.
There is no reason to fear letting people move if they want to, so long as wages are rising everywhere, as they would. Places with rising incomes are good to live in, no matter whether the population may be static or even declining, like the centre of Paris.
Local councils can then spend more on making the place better and a smaller share of their revenues on dealing with problems. The residents can live in bigger houses. Around the world, various communities have become magnets for artists or other creative types, because the cost of living was low. The artists then attract the tech people and others. That is how you truly regenerate a place. Not through forcing people to live there.
The Cotswolds are so pretty and popular now because for centuries the population was not growing and so their glorious heritage was preserved. That is nothing to be feared; quite the reverse.
Bourne is right that preventing workers from moving around has led to much lower average wages. Our failure to build enough homes and other things in the right places is one of the main reasons for Britain’s low productivity.
The same goes for factories and offices. One study found that commercial space in Bristol – not even London – was more expensive than in Amsterdam, Paris, and Singapore. And then we wonder why we have lost manufacturing industry.
The original intent of the planners was to ‘rebalance’ the country by pushing jobs away from London. Sadly, in a complex and interconnected world, preventing a job being created in Cambridge does not move it to Sheffield. That job is far more likely to go to Singapore, or Paris, or not be created at all.
In the 1960s, Birmingham was booming and planners clamped down on new offices and factories in an attempt to push jobs further north. That backfired horribly. Network and what economists call ‘agglomeration’ effects are real costs and benefits. Otherwise every tech company would locate in Preston or Blackpool, where rents and wages are far lower than London or Cambridge.
For too long we have underinvested in commuting infrastructure in regions like the North-West that could form much better jobs clusters if commuting were easier. If we are serious about rebalancing, we could also move the capital from London to Manchester. It would not be the first time it has moved. Strangely, few of the organisations trumpeting rebalancing seem to want that. Perhaps rebalancing is just their excuse not to build homes?
Anthony’s wages are not lower in his home town because we have built too many homes in Cambridge and London. He, and his fellow residents, are poorly paid because we have built far too few homes within reach of higher wages, and he has no better choices.