Building more homes is like unlocking a door, at least if you want to boost home ownership. That’s to say, you need planning laws and the tax system to work together: these then become the key that will prise the door open. If you try to use one without the other – or get either wrong – you will either be reduced to working uselessly away at the lock or, in extremis, to trying to kick the door down.
This is the conundrum that the Government is now wrestling with. The economic recovery and the planning framework put in place under the Coalition has had some success. Housebuilding figures have been rising: there were about 140,000 completions in 2013-14. But we need to build nearer 250,000 a year if home ownership levels are to return to the levels they reached under Margaret Thatcher and Tony Blair. They peaked in 2002 at 70 per cent. When Thatcher came to power, they were 55 per cent. They are now about 63 per cent, their lowest level for almost 30 years. The Conservative vision of a home-owning democracy, present from the era of Antony Eden to that of David Cameron, is vanishing into mist.
This explains why George Osborne is committed to building more homes, both on policy grounds (Britain needs them) and more narrow political ones (higher home ownership is good for the Conservative cause). Good on him. But the Treasury’s instinct is to pull at only one of those two levers – namely, the planning system. There was heavy briefing from it over the summer that local authorities will be compelled to build more homes: “George Osborne will today order sweeping reforms of the planning system to fast-track the construction of more than 500,000 homes,” the Daily Mail reported.
Change on this scale would force Greg Clark, who designed the Coalition’s planning framework as Planning Minister, and is now returned to CLG as Secretary of State, to overhaul the system he originally designed. And while the Treasury is institutionally disposed to drive change through from the centre, CLG is more sensitive to local sentiment since, unlike the Chancellor’s department, it has to deal with local authorities and councillors. Many of these are Conservative, and all of them must, if possible, be kept onside.
Cameron, caught between these two competing views, has been more cautious than Osborne. Perhaps, having a constituency in the south-east, he is better attuned to the resistance among some shire Tories to more building. But today, according to the Daily Telegraph, he will throw his full weight behind the Osborne plan, telling councils that “they must agree where to build new homes by 2017 or Ministers will work with local people to agree plans without local authority input”. Local authorities will thus have two years breathing-space before the full weight of the Treasury comes down on them.
One way of viewing this plan it that it will use only one of the two levers – planning reform. But if the new houses that are built are simply swallowed by more buy-to-let, levels of home ownership among younger people won’t recover. This is more or less what happened between 2001 and 2007, when their was a building boom, but one in which home ownership and lending to first-time buyers fell, while house prices and buy-to-let mortgages shot up. Furthermore, the whole of the increase in the rate of house building was in the form of flats and not the houses with gardens that most families want.
Another way of seeing this Treasury-led scheme is as an attempt to kick the door down. If you do this in real life, the people in the room tend to be displeased: in this case, they are local residents and councillors, including those Tory ones. To date, more of the latter have co-operated with the Government than Nimby caricatures would suggest: consider Oxfordshire itself and the new development at Bicester, or what it happening in South Cambridgeshire. None the less, there are already complaints that, when it comes to housebuilding, the Government talks localist but acts centralist. There is a sense of betrayal. And although there seems to have been a shift in public and party sentiment towards building more homes, there could be a clash that would soon turn ugly.
What’s needed instead of forcing the door down or using the wrong key is finding the right one – in the form of pro-ownership planning, a switch from funding mortgage subsidies to supporting local councils, more garden cities and the right taxes on professional property investment. For more details, see the ConservativeHome Manifesto.