Urgent provision of UK housing is now required

We will be fighting for the young people of our country if we demand that the government declare this year a national emergency to provide thousands of new houses, especially affordable homes, before the next General Election.

The house price-to-earnings ratio shows that in 2024-25 a home cost roughly 8 to 9 times the average individual wage to buy, compared to about 5 to 6 times twenty years ago. With private rents additionally being so high now, it is small wonder that, even if they are working full-time, many young people in Britain are these days remaining in their parental home into their 20s and even 30s. With house prices only reducing slightly recently, the need for rapid provision of more small affordable homes for young people, whether for single people or couples, is evident. But much more evident are three or four-bedroom Executive-type houses being built on new estates country-wide.

The government after its election promised to build 1.5 million new homes by 2029, and pledged in July it would build up to 300,000 affordable homes over a decade, 60% of them for social rent. Our own party’s policy, passed at the Bournemouth Conference in September 2023, is for 150,000 social homes (that is, homes costing less than 50% of current market value) to be built every year by the end of the next Parliament. Neither the government’s pledge nor our own party’s policy look at present remotely attainable.

This is despite Keir Starmer’s party-conference announcement in September last year that the tens of thousands of homes promised to be built over the next decade will be partly provided before the next General Election by construction starting in at least three proposed new towns, most likely at Tempsford in Bedfordshire, Leeds’ South Bank and Crows Hill in Enfield, north London. Each town is to have a minimum of 10,000 homes, with the appropriate social infrastructure provided. This sounds admirable, and in keeping with our own policy of seeking ten new towns, but where is the urgency to begin the construction?

The government is hoping to emulate Clement Attlee’s post-war housing programme from 1945, which rebuilt the construction industry, and began the New Towns’ development with Harlow and Stevenage. Building to meet immediate needs, 156,623 prefabs were rapidly erected, and more that 1.2 million new homes, mostly council houses, were built under that government. Then the Churchill government from 1951, with Harold Macmillan as Minister of Housing, made housing the government’s top priority, co-ordinating the supply of labour, materials and finance, pressurising local authorities and private builders to meet demand, and did succeed in building 300,000 houses a year. Labour had emphasised council-house building, the Conservatives encouraged private builders as well as councils, and the mixed economy – continuing state subsidies for council housing – increased the total output quickly.

Councillor Peter Thornton, Chair of our party’s Working Group on tackling the housing crisis, says that the current system relies on the private sector only, and in his opinion “We now need to add powers and funding to allow the public sector to build.” This is likely to be provided for the proposed New Towns under their development corporations, but not generally to councils at present. Our local councils should surely be demanding this now. In Liverpool Councillor Carl Cashman, leader of the Liberal Democrats on Liverpool Council, has written of the need to empower local authorities to build the social and affordable homes required, with local government financial rules apparently requiring to be changed. Councils will need to be given new powers to force developers to build on sites they have obtained permission for, or to compulsorily purchase and develop land themselves or through local housing associations.

Only just over 10,000 social homes are currently built in England each year. In London, the government sought to have 88,000 finished last year, but by mid-October only 3,248 had been built. Yet the government’s emergency plan for London was to reduce the proportion of new development required for affordable housing from 35% to 20%, worsening the crisis of too-few affordable dwellings being built there. The government also planned to suspend the necessary infrastructure contributions, known as the Community Infrastructure Levy, which could mean estates being built without the essential provision of schools, surgeries and transport links.

Far from reducing the proportion of affordable properties required from the big developers, it would surely be better to subsidise them for every home for social rent they provide. However, it would also surely be desirable for councils to invest in new or existing small-scale ventures to build modular housing, dwellings constructed in factories to provide homes much faster and more cheaply. Modular Methods of Construction, now using digital technologies for building, could be promoted by the government and councils with a view especially to provide first-time homes for young people. In the UK, Artificial Intelligence suggests modular means of building could provide around 15,000 new homes a year, but industry figures suggest that in fact only 3,300 were provided in 2022.

The needs of young people beginning their working lives and wanting homes of their own should surely be the driving force behind emergency action on provision of housing this year and next We should now demand of the government Attlee-type urgency to fulfil this urgent continuing need.

* Katharine Pindar is a long-standing member of the Cumberland Lib Dems

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38 Comments

  • Joan Summers 12th Jan '26 - 12:41pm

    I don’t understand why the suggested solution to the shortage of housing is to build more new, smaller houses. Surely first-time buyers should be aiming for the cheaper second-hand housing market rather than expecting to move straight to a brand new house? (Just like how I buy second-hand cars because I can’t afford brand new.)

    That being the case, surely we need more building of family sized houses so that those in smaller private houses will be more able to move to a home that better meets their needs, and in moving, increase the availability of smaller second-hand houses for first time buyers?

  • Peter Martin 12th Jan '26 - 1:51pm

    @ Katharine,

    Of course most politicians will pay lip service to the idea that homes should be more affordable for young people. This applies to the value of our existing housing stock too. I’m not quite sure why Joan thinks that these are necessarily a cheaper option. Add in the cost of repairs and renovations and they usually aren’t.

    So “more affordable” has to mean lower prices all round.

    The problem is that successive governments have used housing as a collateral for the private debt which they have deliberately encouraged to mount year by year. It’s seen by more conventional economists (I’m trying to avoid the term ‘neoliberal’!) as being more responsible than allowing the state to accumulate debt. The reality is that someone in the UK has to assume the debt to support an external trade balance.

    So despite what all politicians might promise they’ll do anything they can to avoid a house price collapse and homes being made more affordable any time soon.

  • Katharine Pindar 12th Jan '26 - 3:01pm

    @ Joan and Peter. Thank you for your interesting comments. I think, Joan, that smaller modular houses or flats should be part of the mix: certainly my local good friend, mother of eight young people, is enthusiastic about the idea, and cites a German initiative of turning shipping containers into flats, I suppose probably on the coast. Here, as Peter points out, buying second-hand homes, though certainly seeming a good idea, may well incur large extra costs of repairs and renovations.

    Peter. that’s a gloomy suggestion, that governments want to keep up private debt to help the economy! Whether that was a major consideration or not, the fact is that Keir Starmer announced a major housing investment at the last Labour Conference – they actually suggest 12 new towns, beating our policy of ten! – and I believe we need to press for a diversity of homes provision in this Parliament, incidentally helping with something reported last autumn, ‘a skills shortage in the construction industry’.

  • Peter Martin 12th Jan '26 - 3:47pm

    “Peter. that’s a gloomy suggestion, that governments want to keep up private debt to help the economy! ”

    I didn’t actually say that. It’s more like that all those, who share the conventional view that government debt is the only debt that matters, are caught in a bind of their own making. This includes the whole of the EU BTW. They have lots of rules on levels of government debt but none at all on levels of private debt.

    You’ve quoted “8 to 9 times the average individual wage to buy, compared to about 5 to 6 times twenty years ago”. Going back even further it was even lower than that. So why the increase? Maybe you have a different explanation to my own?

    This would mean that prices have risen, relative to incomes, by 8.5/5.5 = 55% relative to average wages. So prices would have to fall by ~ 35% from present day levels to get back to the same ratio as 20 years ago.

    If this were to happen, the high level of private debt would transform into a high level of bad private debt and the economy would collapse.

    I don’t normally quote Richard Murphy but he’s on the right track in this video.

    https://www.facebook.com/watch/?v=4113742258917551

  • Joan Summers 12th Jan '26 - 3:47pm

    @Katharine Pindar
    My own experience was that I could not afford to buy a new build house but could afford to buy a cheaper second-hand house which needed ‘done up’. Over the next few years, we gradually set aside a little, month by month as we could manage, and made improvements bit by bit. Then we sold for a better price and were able to buy a new build of the type that was unaffordable to us a few years earlier.

    I just think too many young people are being encouraged to expect a new car when they pass their test, or a brand new house when they choose to set up their own home…and politicians feed that narrative. Building more expensive houses that will make those already in good houses wish to move, has the effect of getting the whole housing market moving that ultimately opens up more affordable houses at the bottom for those seeking to stretch to own their first house. Building new smaller houses does not stimulate the whole housing market.

  • Katharine Pindar 12th Jan '26 - 7:21pm

    @ Peter Martin. Good point about the obsession of governments, ours and EU, about public debt, without apparently bothering about citizens getting oppressed by debt these days. I take it that the high rise in the cost of houses relative to wage growth is the result of insufficient supply to meet rising demand? Hence the need for far more homes to be built rapidly, especially affordable ones. Getting back to the ratio of years ago is presumably unobtainable, so we needn’t be troubled by that – but I’ll leave the economic argument to better qualified readers. (Got a talking head of the influential Richard Murphy, by the way, but sadly no sound from the video,)

  • Peter Davies 12th Jan '26 - 7:33pm

    Social housing is not a type of building, it’s a rental contract. “it would surely be better to subsidise them for every home for social rent they provide”. It would but the easiest way to do that is to buy homes that are suitable for social housing at market price. That would put new builders in competition with owners of existing homes. It would also allow councils to pick homes that match their waiting list rather than take a proportion of the wrong kind of homes in the wrong places that happen to be newly built.

    In London for example, housing waiting lists consist mainly of families and single parents. The main shortages of housing are for childless singles and couples and sheltered housing. Making 20% of these into social housing is not good for anyone

  • Katharine Pindar 12th Jan '26 - 7:42pm

    @ Joan Summers. I’m not convinced, Joan, that young people today do expect ‘a brand new house’, especially if they hear the horror stories about the quality of some new-builds. Congratulations on your own successful experience, but I should think that most young people in this country are looking for a decent affordable flat when they first are able to move out on their own. The crying need is for far more to be made available as soon as possible, which expansion of modular homes could surely help with.

  • Peter Davies 12th Jan '26 - 8:12pm

    It’s interesting to note that of the three “new towns” proposed, only one is actually a town. They all seem sensible areas to develop. Leeds South Bank is a city centre regeneration, Crows Hill, a London suburb around an under-used station and Temsford a genuine new town which should get a new station on an existing line. what they have in common is a five-figure intended population and the suspension of local authority.

    It raises the question: could local authorities be granted powers to set up their own “new estate / village corporations” to do the same, typically on a smaller scale.

  • Katharine Pindar 12th Jan '26 - 10:30pm

    @ Peter Davies. Thanks for joining in. Peter. I like your idea of councils buying ‘homes that are suitable for social housing at market price’, but wouldn’t they tend to be individual disparate houses where owners have private reasons to want to sell? Perhaps Council Housing Officers could be tasked to look out for such houses coming on the market, but it would be I suppose just a small-scale contribution. I hope we may have Lib Dem councillors commenting on and maybe able to forward some of these ideas.

  • Peter Martin 12th Jan '26 - 11:42pm

    @ Katharine,

    By far the most common theory is that house prices are high because of high immigration. That’s consistent with your supply and demand theory. A semi-socialist theory, which I’ve come across is that high house prices suit the propertied class who profit from high rents and high values generally so they don’t want to change anything, despite what they might say publicly, by building too many more houses. This is consistent with both my macroeconomic explanation and your supply and demand theory.

    Let’s take a look at the numbers. Since the turn of the century the number of homes per person has stayed relatively constant. In 2000 there were approximately 21 million homes for 59 million people. now there are 25 million for 68 million. Or 0.36 homes per person then vs 0.37 now. So if anything a slight improvement in the ratio.

    Yet house prices have continued to surge. So the supply and demand argument doesn’t explain it. Another factor is the move to smaller family units which would lead to a less efficient use of the housing stock. Whatever the reasons, we need to get a better understanding of them.

  • Steve Trevethan 13th Jan '26 - 8:27am

    Many thanks to K. P. for a deep article on an oustandingly important matter and her excellent continuing involvement in the associated comments!

    Might the attached article be of interest/relevance?

    https://www.taxresearch.org.uk/Blog/2025/01/16/the-uks-housing-costs-are-sucking-life-out-of-our-economy/

  • Alison Willott 13th Jan '26 - 10:06am

    Thoroughly approve of the building of modular houses (a) quick (b) cheaper. The grant of planning permission automatically gives developers a huge rise in the value of their land, worth thousands to them. This extra value should be given back to the local authority. Preferably local authorities should build their own housing stock, using affordable modular homes, on their own land. In our rural neighbourhood, the shortage of cheaper homes means that children cannot remain living near their parents, which has implications for council provision of social care and breaks up communities as the children have to live away.

  • Peter Martin 13th Jan '26 - 10:17am

    @ Simon,

    You could be right about the UK / England point. I can correct the calculation if you like but the overall conclusion remains the same.

    You’re right about London, and I’d add, the South East of England generally. A sensible approach would be for government to direct its spending more towards the North and Wales. Spending more in areas where there are spare resources won’t create inflation whereas it will, and does, in the South East.

    Instead we get considerable sums of money spent in London, such as on Crossrail and even HS2, but when overall budgets get tight it’s the spending in the North that is cut.

    The problem in London is worsened by considerable sums of overseas money coming into the housing market there. Many countries impose strict conditions on overseas buyers. Not us in the UK though. If anyone has the money they can buy up whatever they like and keep their properties empty even if homeless people are sleeping in the doorways..

    I doubt LibDems would do anything to change matters even if they were in government. They wouldn’t want to do anything to adversely affect property values of Lib Dem supporters in the leafy London suburbs.

  • Katharine Pindar 13th Jan '26 - 10:31am

    @ Steve Trevethan. That’s an extremely relevant article from Richard Murphy that you have posted, thank you Steve. If our housing costs are so very high compared with those of other OECD countries, the first remedial action that occurs to me is that far more houses and flats must be built, yes, to bring down prices by satisfying the continuing huge demand (however that affects the economy, Peter M. !), and that a far greater proportion of them must be of social housing, as our policy demands.

  • Katharine Pindar 13th Jan '26 - 10:58am

    @ Peter Martin. Thanks for your continuing useful suggestions, Peter, such as that of increased immigration causing increased pressure on the housing stock. If that is a factor, a natural remedy will arise from greatly reduced immigration now expected to be achieved (controversially) from current government action. But the government shouldn’t wait for that: I am suggesting here we should press for 1945-type deep and swift action.
    As Simon Robinson comments, house prices are very local; buying a house where I am, here in West Cumbria, costs much less than in the cities. But getting a well-paying job may be much harder (here you had better be a train driver, it seems, or work at Sellafield!), and everywhere it is the young people whose family can’t provide other than the shared family home, and who are struggling to find jobs paying beyond the national living wage, who are surely in need of social housing.

  • Yes, it’s a free market, governed by the balance between supply and demand. And yet we see massive market failure. Prices have soared. Young people are priced out. Why has the market failed?

    Start with demand. Why is there enough demand to keep prices so high? Well, oligarch investment and money-laundering drives the top-end London market, and does much to pull the whole country with it. Also, as housing is a good investment, older people like me hang on to that investment rather than downsizing. Immigration no doubt also helps keep prices up. All of this means there is enough demand to keep prices high. The market happily freezes out the young.

    Then supply. Builders control supply, in a free market. They won’t speed up building if they see a risk that this will drive down prices and profits. Starmer kids himself that more planning permissions will help builders build faster. They won’t. Builders are not being evil. They are just maximising profit, which capitalism allows. Ripping up planning rules, killing newts, and setting bombastic targets, will not change that.

    When the market fails, ditch the market. Give the job to government, and build social housing for rent.

  • Steve Trevethan 13th Jan '26 - 12:40pm

    Thanks to K. P and D. A.!

    Might a government work for a “free market” which results in our citizens and their children being “free from” continuing lack of enough decent food/semi-starvation, rubbish accommodation and homelessness, hospital corridors being used as medical wards etc., etc.

  • Peter Davies 13th Jan '26 - 12:56pm

    “Instead we get considerable sums of money spent in London, such as on Crossrail and even HS2, but when overall budgets get tight it’s the spending in the North that is cut.” The Government did not spend large amounts of money on Crossrail. They gave a guarantee on a low-risk loan which is rapidly being paid off from fares. As for HS2, It’s not even going to Central London unless it can raise the money commercially. The current plans are mainly useful for residents of Wormwood Scrubs prison who want to go shopping in the Bullring.

  • Peter Martin 13th Jan '26 - 1:41pm

    @ “The Government did not spend large amounts of money on Crossrail”

    This is the answer I get when I ask Google’s AI

    “Government funding for the Crossrail project (now the Elizabeth Line ) ultimately reached around £11.9 billion of the total £23.5 billion cost (excluding financing), with significant contributions from the Department for Transport (DfT) and Transport for London (TfL) as part of a shared funding package that grew from initial estimates”

    By any reasonable interpretation of the English language, £11.9 bn does qualify as a “large amount of money” especially as its just over half of the total project cost.

    But the principle goes deeper than just the funding of crossrail. In any any common economic zone, one sharing the same currency, there will always be a tendency for money to gravitate to other money.

    It’s the job of central government to equalise the regions under its control as far as is reasonably possible. Key parameters to be equalised would include house prices, average incomes, and levels of unemployment.

    .

  • @ Peter Davies. The £ 19 billion spent on the Elizabeth line could have done a lot to improve the economic infrastructure of the former Yorkshire, Lancashire and Durham coal field areas devastated by the then member for Finchley.

  • Katharine Pindar 13th Jan '26 - 6:07pm

    @ David Allen.That’s a fair point, David, I suppose, about ‘oligarch investment and money-laundering’, helping to keep house prices sky-high in London: contrarily, however, older people like me may hang on to our good house because it is a beloved home full of memories and allows the continued visits of friends and family, not because it is an investment.
    I want to see today’s young people get any decent home just now, with more social housing to rent being built, and the chance if they are fortunate to be able to acquire a more permanent dwelling in the future. However, if the big builders won’t build enough to let prices fall, the government needs to give local authorities the powers to support local builders, and themselves support the creation and expansion of firms making modular housing, along with their proposed freeing up of planning controls.

  • Katharine Pindar 13th Jan '26 - 6:20pm

    @ Alison Willott. Thanks, Alison, I entirely agree with your suggestion that local authorities should be building their own housing stock on their own land as a priority now, and including the erection of small modular homes. As we know, in any desirable rural area, cheap homes haven’t been provided to allow children to live near their parents, even if working from home has expanded the job opportunities. limited though these often are.

  • Katharine,

    In my area housing associations have purchased ex-council houses over the years.

    Peter Martin,

    The move to smaller households has been going on for a long time and is indeed a factor in the increase in house prices. I remember the reductions in government financial support on mortgages was a cause of large increases in house pricing before the reductions happened. Indeed we should impose limits on overseas buyers of housing. Local councils have the power to charge more Council Tax on empty properties. I assume most use this power. I know they do in my area.

    I agree the government should invest more in the north, the midlands and Wales rather than in south-east England and this investment is likely not to be as inflationary as it would be in south-east England.

    Steve Trevethan,

    Thank you for posting the link to the article by Richard Murphy. In that article Richard Murphy suggests that £25 billion a year, which is a quarter of the annual amount contributed to pension funds, could be used to build social housing. This would provide the funds to build over 100,000 houses a year.

  • Katharine Pindar,

    “older people like me may hang on to our good house because it is a beloved home full of memories and allows the continued visits of friends and family, not because it is an investment.”

    Oh, me too, Katharine! I’m not desperate to gain wealth! But, if I had to pay a market rent, and perhaps watch my retirement savings dwindle, then I might feel pushed towards downsizing. In that sense, I think the investment aspect of property ownership can’t be ignored.

  • Peter Martin 14th Jan '26 - 10:13am

    ” (£25 billion in Pension Funds) would provide the funds to build over 100,000 houses a year.”

    This would perhaps be true if each house cost £250,000 and the government gave them away afterwards! Or it could still be true if they cost £500,000 to build and they were sold off at half price! I’d say it’s more likely that at some would be sold at a profit and some would be rented out.

    If the latter the government would still have the asset value of the house on its balance sheet.

    It wouldn’t cost anything at all. If done properly it could even make a profit. This could mean govt using its powers of purchase to buy up land at agricultural prices. The building work would be put out to tender in just the same way as for any other civil engineering project.

  • Katharine Pindar 14th Jan '26 - 10:25pm

    The danger now is, that if you are born poor in Britain today you will remain poor. And if your parents who had to pay less for their homes than you have pay today, try to prevent that with their own savings, they could lose comfort in their old age. The poverty of young people today is a lot tied up with the cost of their housing, and that is why as a Liberal Democrat I believe we have to demand the costs are brought down urgently by far more affordable homes being built for sale or rent, to adjust the demand/supply problem. It seems to me that our own councils have a big part to play in this with greater small-scale provision now, before any of the planned new towns are built. And let the born rich stay rich, but not by keeping up all the inflated value of their houses!

  • Peter Davies 15th Jan '26 - 6:19am

    “Labour’s plans for new towns doesn’t look a bad idea.” Just a bit under-ambitious. We probably need some new cities.

  • Peter Martin 15th Jan '26 - 9:08am

    Thanks, Simon for agreeing that it wouldn’t actually cost anything to build some extra housing if done the right way by Govt.

    I also agree that local opposition to new building can be a big factor in slowing down or preventing the building of the necessary new homes.

    On the question of land: It’s generally agreed that there is a large demand for smaller housing units which would be attractive to both older and younger people who don’t necessarily want lots of garden space. If we’re short of land in London and the bigger cities then we have to build upwards.

    Tower blocks have had a poor reputation in the social housing sector but they work well at the upper end of the market. A logical first step is to build upwards and aim for this upper end. Their existence will create a downward pressure on prices generally.

    The lack of skills in the building sector will be solved over time as more building work progresses. The best way to learn how to do something is to get a job in the industry. I would say that nearly all the skills I’ve acquired in the electronics sector are those I’ve had to develop through working with colleagues and learning from them rather than what I was actually taught in a classroom.

    So this is all do-able but I don’t expect it will be done. The vested interests in wanting to keep housing prices high have too much influence.

  • David Allen 15th Jan '26 - 3:23pm

    Alongside advocating social housing for rent, Katharine Pindar also said:

    “If the big builders won’t build enough to let prices fall, the government needs to give local authorities the powers to support local builders, and themselves support the creation and expansion of firms making modular housing.”

    I understand the attraction of seeking market solutions as well as statist solutions. Yes, mixed economy building worked well during the postwar boom. However, market conditions are different now. In particular, I don’t think small local builders are immune from the pressure to keep prices high. Quite the reverse, in fact.

    In my area, it’s the small builders who build a few houses, put them on the market at outrageous prices, and calmly wait 6-12 months if necessary before they can find a buyer at such high prices. The reasons are readily understandable. A small builder lives on profit, not salary. Breaking even might be tolerable for a big builder, but disastrous for the small guy. This isn’t evil, it’s just life in a capitalist economy. But what it means is, we can’t rely on small builders, or local council support for them, to solve our housing problems.

  • Peter Davies 15th Jan '26 - 3:39pm

    You need to know the difference between small builders and small developers. Small builders can be hired by local government to build on their behalf. Their profit then comes from building on schedule and on budget.

  • Peter Davies 15th Jan '26 - 6:15pm

    It works the same way as any other markets. New entrants make the business more profitable. Suppliers expand production. First they use up any slack, then give their existing workers a bit of overtime then start taking people on. That’s not easy right now but there are people who have left the business who would come back if the price and job security were there. You can bring in workers with skills the Government considers important and you could even take on trainees.

  • David Allen 15th Jan '26 - 6:45pm

    It’s true that a builder may accept a somewhat lower level of profit in exchange for the greater security offered by a government contract (whether for housing for rent or housing for sale), as compared with the option to undertake speculative development and sale on the open market. However, this won’t have more than a marginal impact on house prices.

    The main thing that government can gain is the ability to direct builders away from profit maximisation and towards meeting what people actually most need. That means fewer “executive” houses for people who can afford high prices, and more social housing for people with no money and no power in the market.

    One problem to be coped with: The best builders, who can be confident of their cost control and their ability to produce highly saleable houses, will opt for speculative development. The poorer builders will opt for the safer, if less remunerative, government-sponsored contracts. So, advocating for social housing calls for local government to be hard-headed, as well as soft-hearted!

  • Simon Robinson,

    Local authorities should have local plans which set out where new houses are to be built for some time. I remember working on a ten year plan in the 1990s. My Borough’s current one is for 18 years and the one they are working on, is also for 18 years. Once the local plan has been agree planning permission is easier to get on the land where houses have been allocated.

    The Labour Government in December 2024 set out increased housing requirements and my local council is consulting on the areas being allocated for housing and businesses.

    The government needs to provide the finance for councils to build more council homes. Social homes are for rent not for the government to sell and make a profit from. I suppose local authorities could be given the power to build houses and sell them off at a profit to help finance the building of council houses.

    Peter Marin,

    I agree if more houses were being built there would be more opportunities to train in the building industry.

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