Nick Faith is Director of WPI Srategy.
Harold Macmillan achieved a feat that future political leaders can only dream of emulating. As Housing Minister in the early 1950s, he presided over the largest housebuilding programme this country has ever witnessed, consistently reaching over 300,000 a year. Fast-forward to today and the numbers look paltry in comparison. According to DCLG’s latest reckoning, just over 144,000 new homes were started last year. Given the existing shortfall and projected demand for housing in the coming years, the Government is going to struggle to meet its target of 1.5 million new homes by 2022. This is not to doubt the will of Sajid Javid to tackle this enormous challenge. The Secretary of State has made it his mission to increase the speed of development, the rather archaic planning system and the diversity of providers delivering new homes.
The problem for the Conservative Government is that the will may exist, but the electoral clock is ticking. The availability, affordability and quality of housing will be a decisive factor for so many voters at the ballot box. The figures from the 2017 election bear this out. According to Ipsos MORI, the Tories boasted a huge lead among owner-occupiers and a smaller one among voters with mortgages at the last election. However, Labour had a 23-point advantage among private renters and virtually all the support of people living in social housing.
The political and media pressure is most intense in the South-East, where prices have rocketed. Cheaper housing and better transport links are tempting many potential Labour voters to the commuting suburbs, which traditionally have been Conservative heartlands. I know some left-leaning friends who have taken the decision to move to the seaside town of Hastings, in the constituency where Amber Rudd has a majority of 346.
While London is experiencing the greatest demand for housing, the prospect of building on the green belt or of increasing the density of housing in the capital is politically fraught with risk. The safer option would be for the Government to focus its efforts on increasing the supply of new homes across our regions, especially in the north.
Today, Homes for the North, an alliance of the 19 largest housing associations in the north, publishes new research. It highlights the fact that at least 50,000 new homes will be required every year for the next decade in the north of England to keep up with demand.
The pressures are most acute in the seven city regions, suggesting that more people are making the move towards more built up urban centres. Leeds is projected to account for a quarter of the homes needed every year in the north, closely followed by Manchester, Liverpool and Sheffield. As we know from the general election results, the Conservative vote is dwindling among city dwellers. To address this decline and, more importantly, to boost economic growth across the country, the Government might want to consider prioritising housebuilding in the north.
First, as Homes for the North propose today, a set of regional housing targets – alongside the existing national figure – would focus the minds of local authority leaders and the newly-elected metro mayors. These new targets should be embedded in the Infrastructure Strategy to cement the relationship between housing and supporting infrastructure.
Second, combined authorities should be given a greater role in identifying potential sites for development: Housing Zones. These areas would benefit from place-specific deregulation and exploring the role of housing development orders on brownfield sites. A proportion of the £3 billion Home Building Fund could also be allocated to the north to help speed up development in the regions.
And, finally, there needs to be more diversity in the market. The bigger housebuilders have a financial model which prevents them from building at scale in more deprived areas of the country. As they are reliant on private capital, and hence speedier returns for investors, there is little appetite to take on the risk of developing in areas with lower demand.
Housing Associations (HAs) can play a much larger role in delivering new homes. There is certainly appetite among many in the 1,500-strong sector to up their numbers. According to a 2014 Policy Exchange report, HAs could build as many as 100,000 of the new homes we need every year, double the number they are currently delivering. In order to achieve this, the Government would need to give the most efficient Housing Associations the ability to set their own rents.
A housebuilding drive in the North will inevitably involve cross-party collaboration. The Conservative Government can set the broad policy framework, for example, setting out regional housebuilding targets. However, in many cases it will be up to Labour Mayors in cities such as Manchester and Liverpool, as well as council leaders, who will need to identify sites for development and work with housing providers to ensure quality new homes are delivered quickly.
The economic, social and political benefits of the Conservative government extending the hand of collaboration to deliver homes for the north are well worth pursuing. The question that the Prime Minister and Javid should be asking is what Macmillan would have done.