How Labour can deliver on its pledge and tackle London’s housing drought

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HAROLD Macmillan made his reputation – and became Prime Minister – after delivering on his pledge to build 300,000 houses a year in the early 1950s. As Ed Miliband made clear yesterday, when he promised that a Labour government would ensure that 200,000 new homes were built annually by 2020, we now need similar ambition. In 2012, new home completions were less than half the rate achieved by Macmillan, and there is a desperate housing shortage.

The problem is especially acute in London. Rents are rising more than twice as fast as wages. The average monthly rent is £1,240 and the average house price in the capital is £438,000. The government’s subsidised loans to first-time buyers are bidding prices higher still, because there is no supply to deal with the extra demand.

Housing completions in London – 18,000 last year – were less than half of the 40,000 a year that Boris Johnson says are needed, and only a third of the 52,000 estimated by property consultants Knight Frank as required simply to keep pace with the growth in households. At this rate, how can London possibly accommodate the extra 1.5m Londoners projected in the next 20 years?

But to boost supply, and for a Labour government to deliver on its promise to tackle the UK’s housing crisis, four things need to be done.

First, local authorities need greater freedom to borrow to build against secure rental streams. Micromanagement by the Treasury should be suspended.

Second, councils that want to authorise substantial new homebuilding – and they do exist – should be enabled to do so. Stevenage’s council leader told me she would support a substantial 16,000 home extension to the town, ideally located for jobs and growth, and not environmentally sensitive. She is held back by lack of government support in the face of Nimby opposition from neighbouring North Herts council, which doesn’t want these houses crossing its rural “border”.

The government should be intervening strongly to support Stevenage and others like it, and rewarding them with a bigger share of the new property tax income they generate. 

Third, the mayor of London needs a credible plan for at least 50,000 new homes a year and the infrastructure to support them. This does not exist. Boris talks of 33 “opportunity areas” for brownfield development in the city. But development plans exist for only ten of these, and even these are mostly weak.

Barking Riverside, for example, is slated for 11,000 new homes on the site of an old power station. But the transport links which the mayor’s development plan says are needed – an extension of the Docklands Light Railway and the new Thames Gateway Bridge across the Thames – are not even being planned. Boris actually cancelled the bridge in 2008, because Bexley Tories didn’t want to be connected across the Thames to Barking and Newham. So the East Thames remains a chasm, a barrier to housing and growth.

Fourth, we need to build new towns within reach of London. New towns are one of the great unsung successes of post-war planning. Nearly 1.5m people – almost the population of Birmingham and Manchester combined – live in the new and radically extended towns around London started in the 25 years after the war, including Stevenage, Milton Keynes, Crawley, Basildon, Harlow and Hemel Hempstead. 

The first such new town could be at Ebbsfleet near Dartford, which is currently little more than a station on the high speed line from St Pancras to Ashford surrounded by fields. More than 10,000 houses plus a commercial district have been intended for years, and there is a credible proposal for a theme park to rival Disneyland Paris. But almost nothing has been built because of lack of local infrastructure, leadership and co-ordination.

The post-war Attlee government started 11 new towns between 1946 and 1950 alone, all but two of them around London. They were driven forward by development corporations with strong powers over land purchase and planning. In financial terms they turned out to be one of the best investments ever made with taxpayers’ money. Their employment rates are generally far higher than the national average and they are key drivers of job growth, in no small part due to their excellent transport links.

By contrast, the government two years ago promised a policy paper on new towns – David Cameron cited the garden cities as a model – but it hasn’t been published because of Whitehall inertia.

The plan for the post-war new towns was drawn up by Lord Reith, the founder of the BBC. He completed it in less than a year, telling critics that “indefinite planning is not planning at all.” Today, all we have is indefinite indecision. What we need is a plan.

Lord Adonis was transport secretary and minister for schools in the last government.