Build, Baby, Build: You don’t solve a supply crisis by juicing demand
Both parties are making big promises on housebuilding, but the policies being put forward are nothing new at best and actively harmful at worst, says Henry Hill
This election is an important milestone in this country’s long-running housing crisis, because it is probably the first one in which both major parties have formally acknowledged that said crisis exists.
Unfortunately, 4th July doesn’t seem likely to provide a watershed moment when it comes to actually solving it. Whilst both the Labour and Conservative manifestos contain some ambitious-sounding proposals, dig into the detail and the grand ambitions start to ring awfully hollow.
The Tory document is, superficially, extremely ambitious on housebuilding. It promises no less than 1.6m new homes in the course of the next parliament, delivered in part by “raising density levels in inner London to those of European cities like Paris and Barcelona.”
You might be surprised not to have heard that Rishi Sunak is planning a Haussmann-style total reconstruction of central London. But it was tucked away in a single paragraph on page 52 of the manifesto, so it’s not as if the Conservatives wanted you to notice – and there’s no mention of how they propose to achieve it.
Labour, meanwhile, are touting bold-sounding commitments to build whole new towns and reclassify ugly parts of the Green Belt as ‘Grey Belt’, allowing developers to build on them.
However, the new towns process involves setting up a quango and inviting councils to bid for a new town on their patch, when the biggest barrier to new towns is the fact that local authorities don’t want them.
Ditto with the ‘Grey Belt’: if the local Labour council wanted to develop Sir Keir Starmer’s go-to example, a disused petrol station in Tottenham, it could already do so.
Neither party commits to any general planning reform that might make its delivery goals achievable. Labour’s promises of beautiful homes would need a comprehensive overhaul of building regulations; the Conservatives’ aim to support “local and smaller builders” a streamlined, zone-based planning system that made a single-project developer a viable business.
Instead, the more believable parts of each manifesto will simply make the housing crisis worse.
The Tories, for example, pledge to revive Michael Gove’s Renter’s Reform Bill. Yet in the absence of a big increase in new homes, the crackdown on the private rented sector is already making people homeless.
Even if landlords sell to their tenants, as the Conservatives pledge to encourage with tax breaks, the owner-occupied sector has much lower density than the private rented one. Selling a four-bed shared house to a private owner boosts home ownership, but leaves several people looking for somewhere to live in a market with several fewer rooms to rent in it.
Other than that, both parties have promised mortgage guarantees, to allow people to secure mortgages without having to save up the normal 10 per cent deposit. This is just Einstein’s definition of insanity: “doing the same thing over and over again, but expecting different results.”
The Conservatives have tried such policies several times over the past few years. The result is a few winners in the short term, but in the long run it just makes the housing crisis worse by pumping even more credit into the market. Eventually, prices will equalise upwards and everyone will be worse off, with the next round of interventions to help people ‘get on the ladder’ needing to go ever further in compounding the problem.
(‘Help to Buy’, the Tory version, is especially obnoxious because it applies only to new-build developments, effectively turning overstretched first-time buyers into a captive market for housebuilders.)
We are supposed to be governed by serious people, and they should not need telling that you do not solve a supply crisis by repeatedly pumping even more demand into it. Yet that is, still, the best that either Labour or the Conservatives are likely to offer in the next Parliament.
Henry Hill is acting editor of Conservativehome