Radical solutions to the housing supply crisis – or just common sense?

Duncan Bowie displays his encyclopaedic knowledge of planning and housing in his excellent new book ‘Radical Solutions to the Housing Supply Crisis’, much of which is derived from the work of the ‘Highbury Group’ of planning academics and practitioners that he convenes.

bowie-radical

Bowie takes a long view of the housing supply crisis, looking back at the inadequate policies of governments of both persuasions over several decades. He sees ‘ideological continuities’ in policy since the 1970s but reserves his particular ire for the current Government’s policies as contained in the 2016 Housing and Planning Act. He criticises all governments for giving over-riding priority to the promotion of home ownership at the expense of a broader and deeper housing strategy. Even in its own terms the fixation with home ownership has failed over the last dozen years, as home ownership has declined, but this has brought about little apparent change in thinking. He criticises the long term switch from subsidising bricks and mortar (investment) to personal subsidies (housing benefit) and, even worse, to self-defeating subsidies designed to stimulate demand for home ownership. He criticises government approaches to the planning system for making private capital more powerful and the public sector weaker and more reactive, and argues that ‘localism’ cannot deliver social justice. He traces the growing abuse of the term ‘affordable’, which has been taken to Orwellian levels in last week’s White Paper (“War is peace. Freedom is slavery. Ignorance is strength. Unaffordable is affordable” he might have said.)

Bowie’s book is an interesting read from the start, full of policy scrutiny, but the book comes alive when he moves on to make a passionate case for a wholly new strategy. Based on a set of principles derived from the historical analysis, he makes the case for a much larger number of new homes but he puts the strongest emphasis on homes being genuinely affordable. The first action of a new government should be to switch subsidies from market or slightly sub- market provision to social rented homes at ‘target’ rents. In the long term, over a period of thirty years, funding should be switched gradually from personal subsidies to investment subsidies, providing housing that is genuinely affordable. Instead of counting anything which is in the slightest sub-market, as the White Paper does, Bowie reverts to the definition contained in the first (Livingstone) London Plan that housing costs should not exceed 30% of the net household income of the lowest quartile households. However, his central case is for a new spatial planning system with a National Spatial Plan and effective structures at regional, city region and local levels, with significantly stronger requirements for collaboration between authorities – effectively allowing a ‘right to grow’. He argues for a much clearer relationship between local plans and neighbourhood plans, avoiding the latter becoming a mechanism by which wealthy residential populations protect themselves from development that might benefit disadvantaged people. He also makes the case for councils taking an equity stake in larger new developments, looking to benefit from long term capital appreciation rather than initial levies.

As you would expect, Bowie does not duck the question of land. He supports the Lyons Commission proposal that there should be a cap on the value that can be gained by a landowner, for example when agricultural land is rezoned for housing, with the land coming into public ownership where necessary (eg if it remains unused). Published planning policies and conditions should aim to minimise land price inflation based on ‘hope’ value. Viability assessments, where needed, should be fully transparent, and he argues that taking development taxes (whatever system is used) at the point that the increased value is realised rather than when schemes are started would help developers to bring forward more schemes. Public land should be released for housing on the basis of meeting defined public objectives rather than just being put up for market sale, and councils should have far more flexible powers to undertake prudential borrowing for their own developments. Property taxes generally, he argues, need urgent reform, especially the hugely out-of-date council tax valuation system. Stamp duty hits households when they are at their most extended and there is a much stronger case for a tax on capital gain on disposal, starting at a high threshold to avoid penalising people on the margins of home ownership. Reforms to other taxes that impact on property, like inheritance tax, are also considered.

The current chronic lack of housing provision has been four decades in the making and will take many years to put right. Bowie’s central case is that wholesale radical reform is essential which will bring about an integrated approach between housing, planning, land, taxation and social security. It will be possible to argue about the nuances of every point, but it is rare to see such a clear programme of action proposed in one slim volume (and there isn’t space in a short review to mention many important points).

The book could be called ‘common sense solutions’ rather than ‘radical solutions’ because  almost everyone knows that these issues must be tackled at some point. But can they become a winning programme for a future Labour Government? Proposals like applying capital gains tax to first homes would meet a hysterical reaction even if there are clear offsets like abolishing stamp duty. Council tax reform has been avoided by every party for the last thirty years due to fear of adverse reaction (even if gainers and losers cancel each other out). The housing supply problem will not be solved by a cautious approach, but our political and media culture induces panic unless proposals are carefully worked out and presented convincingly and with enough conviction to overcome the inevitable reactionary storm. After Lyons, and with contributions like this one, Labour now has an excellent stock of possible policies to put together into a strategy. The earlier that task is undertaken the more time there will be to convince the public. A bold approach to housing could be key to turning Labour’s fortunes.

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One Response to Radical solutions to the housing supply crisis – or just common sense?

  1. Pingback: The mother of all monopolies | Red Brick

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