This week The Voice is running a four part series from the Centre for Cities, a think tank that works on analysis and policy to boost city economies. They launched their ‘Cities Manifesto’ at the Bournemouth Lib Dem Conference and this series looks in more detail at its main planks. You can also find out more at http://www.citiesmanifesto.org.
In our cities, some of the most visible effects of the credit crunch are the housebuilding projects and plans that have ground to a halt. The regeneration of York Northwest that is struggling to be financed, and the East Pilgrim Street project in Newcastle that would have replaced empty office blocks with homes and shops, are just two examples in some key Liberal Democrat cities.
But the problem isn’t just a recession problem – the housing boom of the last decade was in part a result of not enough houses have been built in some of our most successful cities, even in the ‘good years’. Housing affordability in Cambridge is worse than in London. And now it’s getting critical – some predict that there will be 1 million fewer homes than we need next year. This is a real, bricks and mortar problem holding back our cities.
How do we get out of this rut, and encourage more houses to be built, creating more construction jobs, and getting the right houses in the right places?
With leadership of many of the UK’s major cities, Lib Dems have been searching for new solutions. Sarah Teather has called for more Government-backed starter home loans, and has criticised the shortfall in family-sized social housing. And the cities themselves have tried to do what they can – buying up houses in Newcastle, for instance.
But this isn’t enough. Why isn’t housing higher up the agenda as we debate how to get out of recession and on the road to a stronger recovery? Why isn’t it a more important issue in the run-up to the election?
Our Cities Manifesto calls on the next Government to give cities control over their own housing supply. The Government’s top-down, target-driven approach hasn’t worked. But as well as more control, cities need to be given the right incentives – so Cambridge City will want to build the houses that it’s economy so desperately needs. A few years ago Tim Leunig devised a radical reform that would encourage Councils to build more houses, by allowing them to keep more of the value to reinvest in local communities. This needs to be given proper consideration.
Giving cities the incentives to deliver the right houses, in the right places, at the right prices, would be the strongest way of doing giving Councils more control over their local economies. Based on the Lib Dem’s strong track record of running some of the UK’s most successful cities, Sarah Teather and all the Lib Dem city leaders must push this up the agenda in the next few months.
Hannah Brown, Senior Research Manager, Centre for Cities
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14 Comments
I despair. There is a three word solution. Many in this party from the highest echelons down say they agree with it, yet it remains almost a taboo subject.
When we started talking housing policy six years ago or whenever it was now I asked at teh first meeting whether we wold be discussing it and was told in no uncertain terms that “no, it was a thing for the finance/treasury teams and policy”.
Since then we have had policies in other areas where this single measure should have been way out in front – an almost a priori policy around which to take stock and build any other policies needed – these include transport, climate change, food security, energy supply, business and economic development, the credit crunch and its effects on financial markets as well as housing.
And yet it lies there, almost unmentioned, perhaps unmentionable.
LAND VALUE TAX
Grow some spine. Do it now!!
David Lloyd-George, Newcastle, 4th March ’03
(that’s NINETEEN-OH-THREE and we are still waiting).
Hannah – to paraphrase “we need 1 million houses”.
Why? Where? Who has come up with this forecast? On what basis?
What I don’t understand is that since the end of WW2 the population has not grown significantly (maybe 20%), yet I suspect there are more than twice as many houses as there were then. Why do we need so many more? Can we not do something about demand?
Sure – you can actually never satisfy the demand in reality. If you have more houses, more new households will form, for example young people deciding they can now move away from the family home sooner, and of course, older people remaining in their homes longer.
So you need a market mechanism to feed this demand information into the market more effectively than Stephen Nickel or Kate Barker ever can, and that is LVT.
I also completely disagree with party policy which says that “75% of the housing we will need in 2050 already exists”. It’s more like “75% of the housing that already exists will be inappropriate for 2050” and that is a significant difference!
Jock has a point – a very good point!
Could it be that this is the result of the Rennardian approach to policy which, as I understand it, involves conducting opinion polls of voters’ to discover their concerns – just the top 5 or 6 or so – then finding something vaguely liberalish to say about each of them that also polls well? The hope is that this leads to a manifesto with maximum voter appeal.
In reality, it leads to minimal analysis, minimal narrative and minimal credibility.
Jock also mentions another thing that really bugs me, namely the misguided belief that the Treasury should be the only group entitled even to discuss anything to do with tax. This is nonsense. I would expect them to lay down ground rules and provide guidance – for instance what is affordable in the case of the spending departments – but they should not be allowed to take for themselves power without responsibility.
Sure there must be discussions between departments but back seat driving is never a good idea. Devolution is not limited only to geography but also to political power.
I was going to write something more substantial about fiscal policy being “centralized” based on the ALTER book, which clearly to me seems to scream out for each policy area to be able to choose how they would “finance themselves”.
But I do very much like the analogy to “devolution”. It’s obvious really. It should be devolved and then the Treasury team’s job, like the Treasury’s in government ,is to broker deals between them to balance the edges out. I went through that entire housing policy process knowing we had our best hand ties behind our backs and completely dependent on completely different priorities – i.e. fiscal ones rather than housing ones when it came to forming a tax policy.
LVT and SVR would be powerful tools in a radical manifesto. All it requires is a more confident leadership that is willing to campaign for solutions like these which are outside the highly limited vocabulary of the Westminster Village. Our Parliamentary Spokespeople are too timid because they fear ridicule if they step outside the chosen area of debate. Dare to be different on College Green for once!
The work of this Centre for Cities ginger group seems ill-thought-out in each of the spheres they have published here over the last few days. If they are funded through the core cities then our City Leaders should pull the plug on them. They want to portrait cities as presently governed as inept in order to pendle less democratic forms of decision making.
In this instance, I think a small amount of research by them would show that there is a large reservoir of planning consents already in exisitence – it even quotes some. The trouble will be land banking. Or ownership is in the hands of second grade developers who in a down turn have neither the equity nor the borrowing capacity to start work. Hence the need for the stick of SVR and the carrot of councils being given the lead in a National Programme of Recovery stimulus package. Until Councils are given the resources or the ability to self-finance regeneration they will be stymied.
A year ago there was a lot of talk about such a stimulus package, but actually the UK has done less proportionally than China, France, Germany or even the USA, which is why we are still mired in a downturn. Housing investment should have been one of the key features of our effort to stimulate demand, because once again the problem is demand not supply.
There are scores of people out there who would still like to own their own home. They have the income qualification and the job security to take on the responsibility but cant find the 30% odd percent ‘deposit’. There are dozens of development sites and unused cranes that can’t move through the private sector investment route at the moment. A government sponsored shared equity scheme and social housing initiative would bridge this gap and get thinbgs moving.
But what about the 300,000 homes that are supposed to be empty – arent they the priority any more?
Bill, whilst I agree with everything you say, you must also agree that “we are in the best position of developed nations to be still mired in a downturn”…:-)
Lost LibDem, what about them? – Land Value Tax clears them up nicely – who would want to hold onto a non-performing asset whilst having to pay tax on it? Owners and landlords would either have to get them occupied or release them for better uses to someone who will pay the LVT. It’s beautifully simple.
In answer to Tabman, I’m afraid it is a population issue, like so much else – especially green issues. According to Population Watch (which is concerned chiefly with world population growth rather than immigration) the UK population grew by 434,700 in 2007 – a larger figure than the population of Cardiff.
I don’t have an easy answer to this. Family break-up also leads to more demand for housing both directly, and indirectly since many people have second families.
As I say, I have no easy answer for these uncomfortable facts.
But one thing that could easily be tackled is to stop building too many flats in the boom times – most people want a house, even if small and humble.
Whatever the eventual answer though, we must be sensible and understand the magnitude of the situation, which is not vast.
To build 2,000,000 new homes at less than half the density now recommended for houses, not flats, (ie about 10 houses per acre) would take up less that one half of one per cent of the land currently not built on in the UK.
To build all of these 2,000,000 homes in a ring around London would mean only an extra station 2 minutes from the next nearest station currently within the built up area.
At the same densities as in Singapore and Hong Kong, two of the wealthiest territories on the planet by GDP per capita (and a long way ahead of the UK) the entire population of the South Eastern England region would fit on the Isle of Wight and the area of Southampton and Portsmouth alone.
The highest density ward in the UK that I can find is one in Kensington and Chelsea to the west of Imperial College and Kensington High St which is leafy garden squares, mansion blocks and Georgian terraces – it need not look like Kowloon central or the South Bronx to be an even higher density than Hong Kong.
Every other OECD country has seen the average size of their housing per person increase since the second world war. In the UK the size has fallen by a third.
Over 40% of fifty-five plus year olds say they would like to be able to downsize their former family home when they retire, releasing an average of one and a half bedrooms each. Yet few are able to and remain in the communitis they wish to remain in. Yet more than a third of all housing is “underoccupied” defined as two or more bedrooms unoccupied.
It’s all very well though Chris, saying “stop building flats” but one must also deal then with the issue of land supply seriously in order to build houses. To do so will necessitate a measure no less powerful than Land Value Tax to create a true market in housing land. This will itself have effects on the pattern of demand. When people get to realize the *true costs* of occupying x amount of land and have marked effects over time of things like travel to work patterns. And if these changes still leave people unable to afford to live where they need to, then release of new land must be made easier and less of a political “rent-seeking” exercise on the part of monopoly landowners.
It is not a difficult or intractable problem. The Liberal party and others have theoretically understood the solution for over 100 years. Its adoption would also release far more resources in the UK, returning it to a viable manufacturing economy, producing a third more food of its own, paying properly for its infrastructure and reducing other taxes by an equal amount.
Jock
“Bill, whilst I agree with everything you say, you must also agree that “we are in the best position of developed nations to be still mired in a downturn”…:-)”
Must I be positive?
B
I think Jock answers the q’s about why we need more houses, and the amount of land we have available very well (tho’ I doubt it will have a big effect on mfg output or farming). I would add that vacancy levels are not particularly high by international standards, although there are issues about probate that could usefully be sorted out that would release houses onto the market after a death more quickly.
My scheme is a form of LVT, albeit only levied on new development. By levying an upfront payment rather than an annual levy I get over the classic objection to LVT that some people are asset rich and income poor. My scheme is also localist, in that local areas can choose whether to allow more building and receive the proceeds of granting planning permission, or not, as they choose.
Tim:
…assuming it is used to reduce or eradicate taxes on labour in particular in the case of the former and a little bit of that too in the case of the latter. But Duncan Pickard’s chapter in our recent “The Case for a New People’s Budget” makes some more interesting points about its effect on farming: that it could cause the release of up to a third of agricultural land currently underutilized by “land rich capital/labour poor” landowners to aspiring farmers currently frozen out or finding it more difficult to be cost efficient on smaller farms with all the overheads of labour based taxation and regulation.
If part of such a drive is to be done on land not presently designated for housing, there are great attractions in Tim’s idea of auctions which, whilst giving present land owners a fair return, provide the community through its council the greatest return for the uplift. It certainly would be interesting to see such a scheme operating in the run up to the production of Town Maps and Urban Development Plans when any changes in designation result in huge ‘unearned’ gains to the land owner.
Before the sharp downturn councils were beginning to use Section 102 ??? agreements creatively to win gains for the community.
Also councils in Neighbourhood Renewal Areas were beginning to try to put in place infrastructure before transferring ownership of land to their so called ‘preferred developer’ so as to benefit from any uplift in value from the infrastructure. But this (and everything else about Neighbourhood Renewal) was causing delay and promoting land-banking.