Ambition to Build

Below is my contribution to the Spring Edition of Fabian Review, Ambition to Build. Labour has a strong set of policies which command a lot of support across the Party, but we need to do more to ensure that our strategy will meet the scale of our housing crisis.

 

To mark the recent 40th anniversary of the death of Anthony Crosland, I re-read his influential 1971 Fabian Pamphlet  ‘Towards a Labour Housing Policy.’, which led to a serious re-think within the Labour Party.

It made me conclude that, although Labour has developed a substantial set of housing policies which attract wide support, skilfully marshalled by shadow Secretary of State John Healey MP, I have growing doubts that they will meet the scale of the task, which is so much bigger than any of us could have imagined possible a decade ago. To meet the challenge, we must find more ambitious, radical and transformative solutions. Of the many areas to explore, there are five I would like to highlight here.

First – where will the money for investment come from? After 2010 the Coalition massively cut traditional housing investment – 60% in the 2010 budget alone. We are now building virtually no new social rented homes. Despite austerity, the Tories have propped up the failing housing market, throwing money at it in the form of subsidies, loans and guarantees. Yet most economists agree that their action on the demand side will increase prices in the longer term, intensifying unaffordability with little impact on supply. The main rented programme – so-called ‘affordable rent’ – was an abuse of language with very high rents.

Based on Treasury figures, a new Government reverting to Labour’s balanced 2010 priorities would have a bonanza of £32 billion available as subsidy for genuinely affordable housing including a major new programme of social rent. That is a transformative amount.

Secondly, and linked, we must finally end the Treasury conventions that discriminate against public investment. It’s an old story, but a good one. No other country in Europe accounts for public investment as we do. That’s why foreign state-owned companies can invest in our utilities when we can’t. Council borrowing for housing, which pays for itself by generating an income stream (rents), should be taken out of the main measure of public borrowing – as happens across Europe. Councils, controlled by effective prudential rules, could become major contributors to housing supply once more.

Thirdly, a century ago Winston Churchill called land ownership ‘the mother of all monopolies’, describing owners as benefitting from ‘enrichment without service’. Land values are not created by owners but by all of us. The public should share in land value appreciation, especially when planning permission – the process by which the community takes on the costs and externalities of development – is provided. Instead of selling land, public sector land purchase and effective value capture would give greater control over outcomes and moderate the high cost of land that underpins the housing crisis.

Fourthly, private renting is the last great unmodernised industry, with outdated standards and management. Labour should now go well beyond the 2015 ‘Miliband’ reforms. There is better understanding now of how other countries successfully regulate rents without undermining the market. Tenancies should be longer, grounds for eviction clearer and rules concerning harassment and illegal eviction tougher. Crucially, there should be a revolution in standards. Landlords should be licensed, with a crack-down on letting hazardous or non-decent homes. We don’t accept hazardous food or cars, why allow hazardous homes?

Fifthly, there is the whole question of rents and benefits. Out of control house values and dysfunctionality mean that intervention in ‘market’ rents is justified. The Tory policy of linking public rents to market rents is not rational. Instead, council and housing association charges should be linked to the collective cost of provision plus a return to encourage further investment. Subsidy is needed to get the homes built but then they will ‘wash their own face’ for decades to come. Rent setting should be open and predictable with tenants in comparable properties paying comparable rents. Vicious benefit caps, which penalise people with little or no choice in the housing market – should be ended. Over time the subsidy system should move ‘from benefits to bricks’ – supporting greater supply at lower rents, reducing the need for benefits.

That’s five for starters. So many other areas could be mentioned – including rights for homeless people, the crisis in estate regeneration, construction standards, the use of energy, and how to promote ‘yimbyism’ (yes in my backyard). It’s a debate to which we can all contribute.

Finally, Tory policies have been piecemeal, forged around soundbites. The more they mention strategy the less there is of it. Labour should develop a comprehensive housing strategy, with a strong emphasis on important regional variations, which takes a clear view of future investment needs and how they will be met, adopts a balanced view of tenure with fair treatment for renters and owners, and has as a core principle that there must be a decent housing solution for everyone, irrespective of their position on the income distribution.

Housing is central to the pursuit of equality, social justice, economic progress, health and well-being. We do not have to go on as we are. As Anthony Crosland showed all those years ago, other choices are available.

March 2017

A previous post on the legacy of Anthony Crosland – A Basic Right of Citizenship – can be found here, together with a fascinating comment from Brian Lund, who very fairly disagrees with some of my points. Brian’s latest excellent book – Understanding housing policy (Understanding Welfare: Social Issues, Policy and Practice series) is now available on Amazon and on Kindle.

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3 Responses to Ambition to Build

  1. Donald Simpson says:

    The 6th paragraph of this rightly raises the land problem as an issue but then seems to opt for a development land tax. This has been tried before but has never worked. Ithas many disadvantages, including acti9ng as a disincentive to develop.A much better option would be an annual land value tax (LVT). All landowners would pay an annual amount base on the value of their land holdings, whether or not developed.

  2. Tim Lund says:

    Very interesting. First two incidental things: (1) that link to Tony Crosland writing in 1971 – why house building started to decline from 1968 has always puzzled me. His contemporary view is valuable. Second your mention of ‘yimbyism’ – I’ll be making sure London and Cambridge Yimbies see this, and hopefully we can identify yimbies elsewhere.

    My main criticism is that you do not address the problem of where all the new homes needed will go,and how the arguments with nimbies can be won.

    I’d have welcomed also a link explaining “how other countries successfully regulate rents without undermining the market.”, with longer tenancies, grounds for eviction clearer and rules concerning harassment and illegal eviction tougher. What is the vision for a market which is not to be undermined? When you write that “council and housing association charges should be linked to the collective cost of provision plus a return to encourage further investment. Subsidy is needed to get the homes built but then they will ‘wash their own face’ for decades to come”, you could as well be describing how a market supplier of rented housing would behave if they had a long enough investment horizon. How would an appropriately regulated market supplier of rented housing differ from a social landlord?

    I agree that the public should share in land value appreciation when planning permission is given, but what should that share be, and should the seller of the land retain a long term interest? Good answers to these questions will encourage private sector investment in housing, while giving the public greater control over outcomes.

    As I understand it, having landlords able to extract the maximum price from developers means there is no scope for “New Civic House building” as wanted by Shelter, but that price is only so high because the supply of land available for development is restricted by planning policies, so the high cost of land is only a proximate cause of the housing crisis, not what underpins it.

  3. Jacky Peacock says:

    Hooray! Best Red Brick ever. The electorate is ready to vote for radical change. Sadly, the last was based on fear (i.e. Brexit) – let’s now give people a chance to vote for radical solutions based on their hopes and aspirations. Perhaps a step too far to nationalise land in one fell swoop, but Labour should certainly be promoting robust CPO policies, for example on properties bought by foreign investors and left empty, and when sold on, only the building not the land should be sold.
    You’ve laid down the cornerstones for a radical new approach, and I’m sure John Healey is up for the challenge to build them into the most coherent and vote winning policies we could wish for.

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