Andrew George on Labour's housing policy and why it won't work

It's clear that Andrew George, Liberal Democrat MP for St Ives again after nine years, has little time for the idea that if only developers weren't encumbered by the planning laws they would flood the market with so many new houses that prices would come down.

He writes for the Cornish Voice newspaper:

Having tracked the way the housing market works in places like Cornwall over recent decades, it seems clear that development tracks house price inflation and slows when the market stagnates. 

Higher housebuilding targets are reflected in higher hope values land adjoining every community around Cornwall; land value speculators sit on those sites until planning permission granted enables a maximisation of development value and undermines the viability of affordable developments suitable to meet local need.

Cornwall doesn’t have a major problem with NIMBYs resisting development. Cornwall has been the one of the fastest growing places in the United Kingdom – nearly trebling its housing stock in the last 60 years – and yet the housing problems of local people have got worse. 

Housebuilding targets are a means to an end. The intended purpose is to meet housing need. Yet, in Cornwall, this is one of the best examples of how that policy completely fails.

The late Ian Jack explained why it fails in the London Review of Books five years ago, with a little help from Oliver Letwin:

A report in the Times last year showed that out of more than 1.7 million applications for residential planning permission granted between 2006 and 2014, fewer than half had been completed after three years. According to the Local Government Association in 2016, councils consistently approved more than 80 per cent of major residential planning applications; but the difference between the number of houses being approved and those actually being built was almost 500,000 – ‘and this gap is increasing.’ 

The hardly radical figure of Oliver Letwin identified the real brake on house-building when he published the interim conclusions to his inquiry into low completion rates last year. What governed the numbers, he decided, was the absorption rate – "the rate at which newly constructed homes can be sold into (or are believed by the house-builder to be able to be sold successfully into) the local market without materially disturbing the market price". 

For ‘materially disturbing’ read ‘lowering’: to protect profits, developers are sitting on land that has been given planning permission. ‘Efficiency’ in this instance is a concept confined to the shareholder.

All of which means that the Lib Dems' emphasis on building social housing - seen in the motion passed at last year's autumn conference but less evident in this year's manifesto - must be taken on by the government if they are to fulfil their ambitions.

I should add that everyone I talk to who knows about housing says there is an endemic shortage of the relevant skilled labour in Britain. This too must be tackled by government if its housing policies are to succeed.

No, Nimbys can't stop all housing development with just a petition

Listeners to the latest Private Eye podcast risk coming away from it believing it's possible to stop new houses being built on a local open space simply by getting up a petition.

I suppose it's London's domination of political media that leads to such odd beliefs being held by intelligent people,

The left is convinced that Nimbys stop all development. The right believes it's the planning laws that have that effect. Both are mistaken.

Come away from the capital to Middle England and you will find small towns surrounded by successive rings of new development and local council that are wary of turning down planning applications because of the costs they will pay if the developers win an appeal.

But holding simplistic beliefs means you needn't get to grips with deeper, harder questions. One example: is the security that people need when it comes to their home compatible with private landlordism?

And there are more such questions to be answered if you want to go in for a new building spree.

First, where will the skilled labour come from? The British building industry has long been complaining about shortages.

Second, how will you force developers to bring houses on to the market at a rate that reduces prices and thus their profits? Oliver Letwin is good on this.

These questions do sound difficult, so let's just mock Nimbys instead.

Our problem is landlordism not a shortage of housing

The conventional wisdom is that house prices are so high in Britain because we do not build enough new houses. It also holds that this is because of restrictive planning laws and self-centred Nimby campaigners.

Several things puzzle me about this view. The first is that every town I know is ringed with street after street of new housing.

Take Desborough, whose vanished high street so occupied me last month. There is almost a second town at Desborough, built in recent years up the hill from the original town, that has its own Sainsbury's and M&S food store.

The second is that district councils cannot turn down planning applications just because they are unpopular with existing residents. They have targets for housing approvals to meet and the pressure on their budgets means that they are wary of turning down applications in case they have to bear the costs of a successful appeal.

And the third is something I blogged about five years ago. However many permissions to build councils grant, the interests of developers will dictate how many new houses are built.

In that post I quoted the late great Ian Jack:

The hardly radical figure of Oliver Letwin identified the real brake on house-building when he published the interim conclusions to his inquiry into low completion rates last year. What governed the numbers, he decided, was the absorption rate – "the rate at which newly constructed homes can be sold into (or are believed by the house-builder to be able to be sold successfully into) the local market without materially disturbing the market price". 

For ‘materially disturbing’ read ‘lowering’: to protect profits, developers are sitting on land that has been given planning permission. ‘Efficiency’ in this instance is a concept confined to the shareholder.

I have never seen anyone in the 'build baby build' camp address this point. They tend to see the answer as lying in even more market freedoms for developers and campaign for the loosening of planning controls. How those developers will be prevailed upon to act against their own economic interests is made clear.

But there is an article in today's Guardian that does address the point, and it agrees with Letwin:

The yimby argument has always seemed flimsy. Its strange logic is that speculative developers would build homes in order to devalue them: that they would somehow act against their own interests by producing enough surplus homes to bring down the average price of land and housing. That would be surprisingly philanthropic behaviour.

The article is by Nick Bano, who also argues that there is no evidence that Britain has a housing shortage:

In London, as the Conservative Home blog notes, there is a terrible housing crisis “even though its population is roughly the same as it was 70 years ago”, when the city was still extensively bomb-damaged by the second world war.

In terms of the Organisation for Economic Co-operation and Development countries, the UK has roughly the average number of homes per capita: 468 per 1,000 people in 2019. We have a comparable amount of housing to the Netherlands, Hungary or Canada, and our housing stock far exceeds many more affordable places such as Poland, Slovenia and the Czech Republic. It is impossible to make a case for unique levels of housing scarcity in Britain, in comparative international or historical terms. 

Bano argues that our problem is not a shortage of housing but its cost. And the reason for that is landlordism.

For an answer to our current crisis, he looks back to the Seventies. Then, as a response to the evils of private landlordism highlighted by the case of Peter Rachman, Labour and the Conservatives agreed that private rented dwellings should be taken over by local authorities.

So successful was the move that the private rented sector declined from nearly 60 per cent of dwellings in England and Wales in 1939 to just 9 per cent in 1988.

It was when the Conservatives then began to argue again that being a private landlord should show an attractive economic return that the seeds of our current crisis were sown.

I did know a fair bit about housing in the Eighties when I chaired Harborough's housing management subcommittee, but I don't know enough now to judge how accurate this historical account in Nick Bano's article is.

But he has encouraged me to think that the conventional wisdom on housing is wrong. I suppose though, in the current climate, it is easier to blame local authorities for our problems than promote them as the solution to them. But maybe that's what needs to be done.

Party like it's 2005: Ed Davey announces new decapitation strategy

Embed from Getty Images

Liberal Democrat leader targets senior Tory seats at UK general election

runs the headline on the Financial Times interview with Ed Davey today.

Older Lib Dems will immediately be put in mind of the 2005 general election, when the party boasted of its 'decapitation strategy'. The seats held by a number of leading Conservatives had been chosen as targets and we expected to deal a mortal blow to the Her Majesty's Opposition on the night.

In the event, David Davis, Oliver Letwin, Theresa May and the rest survived. It was our Labour targets (Cambridge, Hornsey and Wood Green, Manchester Withington) that fell to us at that election.

Our only leading Tory scalp in 2005 was a long-forgotten figure called Tim Collins. It was he who had briefed the press back in 1993 that John Major's 'Back to Basics' speech was about personal morality. and thus done much to ensure that the Tories became figures of ridicule for the rest of Major's time in power as one juicy scandal followed another.

Collins lost to another Tim: Tim Farron.

As to Ed Davey's interview, the big news is that he is happy to discuss Europe:

He said his party would be pushing for a new trade deal with the EU to replace the “appalling” one signed by Johnson when he was prime minister. He added his party’s long-term policy was to rejoin the single market. 

“If you don’t put a better trading relationship with Europe in as part of that mix, you’re not going to get the economy sparking again,” he said, though he noted his EU counterparts had been clear that for now “the single market ain’t on the table”.

And, something that is hard to reconcile with his bullish talk of Lib Dem prospects earlier in the interview, he thinks there is a good chance of a hung parliament.

Why you can't afford a home in the UK

This video from the New Economics Foundation gets it about right.

It shares the analysis of Ian Jack, which I quoted a couple of weeks ago:

A report in the Times last year showed that out of more than 1.7 million applications for residential planning permission granted between 2006 and 2014, fewer than half had been completed after three years. 

According to the Local Government Association in 2016, councils consistently approved more than 80 per cent of major residential planning applications; but the difference between the number of houses being approved and those actually being built was almost 500,000 – ‘and this gap is increasing.’ 

The hardly radical figure of Oliver Letwin identified the real brake on house-building when he published the interim conclusions to his inquiry into low completion rates last year. 

What governed the numbers, he decided, was the absorption rate – "the rate at which newly constructed homes can be sold into (or are believed by the house-builder to be able to be sold successfully into) the local market without materially disturbing the market price". 

In other words, the popular argument that it is all the fault of Nimbys and we need to weaken councils' planning powers is a load of nonsense.

Why granting more planning permissions doesn't cut house prices

If you want to know why I admire Ian Jack so much as a writer, try his London Review of Books piece on The New Enclosure: The Appropriation of Public Land in Neoliberal Britain by Brett Christophers.

He begins, characteristically, with a little bit of autobiography, remembering his childhood in Fife:

A single-track road ran across it, looping downhill through the gorse and wild raspberries to a beach where many of us learned to swim. Elsewhere, mysterious holes in the ground and abandoned military architecture proved ideal for games that involved imaginary rifles and the great thrill of hiding, and of hunting those who hid. 

Then one day the local paper carried a small item reporting the sale of this extensive territory to someone who was never named and therefore became ‘a mystery buyer’. Our families wondered who it might be, and why they would want to buy such a ruin-filled and unkempt acreage. 

The newspaper didn’t enlighten us, and for several years nothing at all happened to what we called ‘the barracks’, until in 1964 the first of the road bridges opened and our part of Fife became commutable by car from Edinburgh. Over the next decade crescents and avenues of showy villas with built-in garages and first-floor sitting rooms transformed the army’s old patch, spilling down to the beach and erasing many of our paths and hideouts.

Jack then sets out Christophers' argument at length, without making it sound as though the ideas in it are entirely his own. Some other LRB reviewers should take note of his technique.

But what struck me most in this piece was this passage, which explains why the unaffordability of housing in Britain has little to do with the Nimbys that haunt the opinions of many young activists:

In Christophers's words, "The private sector does not lack land; and nor, more significantly, does it lack land that is suitable for commercial development, or for which planning permission has been granted."

A report in the Times last year showed that out of more than 1.7 million applications for residential planning permission granted between 2006 and 2014, fewer than half had been completed after three years. According to the Local Government Association in 2016, councils consistently approved more than 80 per cent of major residential planning applications; but the difference between the number of houses being approved and those actually being built was almost 500,000 – ‘and this gap is increasing.’ 

The hardly radical figure of Oliver Letwin identified the real brake on house-building when he published the interim conclusions to his inquiry into low completion rates last year. What governed the numbers, he decided, was the absorption rate – "the rate at which newly constructed homes can be sold into (or are believed by the house-builder to be able to be sold successfully into) the local market without materially disturbing the market price". 

For ‘materially disturbing’ read ‘lowering’: to protect profits, developers are sitting on land that has been given planning permission. ‘Efficiency’ in this instance is a concept confined to the shareholder.

Letwin later published his review of housing development, which made limited suggestions for improving the 'absorption rate', but fell some way short of offering a comprehensive solution to the problem.

What more can you ask of a favourite writer than that they provide you with the facts to defend views that you already hold?

Six of the Best 563

The Liberal Democrats should cut their spending by moving their headquarters out of London, argues Simon McGrath.

"Pickering, North Yorkshire, pulled off protection by embracing the very opposite of what passes for conventional wisdom. On its citizens’ own initiative, it ended repeated inundation by working with nature, not against it." Geoffrey Lean explains how one town that beat the floods.

Terence Fane-Saunders dissects Oliver Letwin's inadequate apology.

James O'Malley wants the left to stop retweeting bullshit.

"If it looks completely at home in this northern European setting, that's because a mosque has stood here, roughly 20 minutes' drive south-west of the Lithuanian capital, Vilnius, since 1558." Tharik Hussain on the Muslims of the Baltic.

The Downstairs Lounge celebrates the career of Kenneth Horne.

Lord Bonkers' Diary: The tramps of St James's Park

The new issue of Liberator has arrived in the post, so it is time for Liberal England readers to spend another week with Rutland's most celebrated fictional peer.

Monday

If I am up in town, staying at Bonkers House in Belgrave Square, and wish to know what is going on in the political world, I allow my morning constitutional to take me to St James’s Park. For the tramps who frequent that pleasure garden form an unrivalled source of news and gossip. There, over a stiffener of Special Brew or white cider, one may learn who is up and who down at the Home Office, how trade negotiations with Paraguay are progressing and whom the Minister for Fish was seen with at a soirée last week.

Quite why these gentlemen of the road should be so well informed has always been something of a mystery, but that mystery was solved this morning when I borrowed a footman’s Daily Mirror for the racing tips and saw its front-page story. It seems a Conservative by the name of Letwind (one of the Dorset Letwinds, I imagine) has been in the habit of working on his red boxes whilst sitting in the park and then tipping their contents into the nearest litter bin when he has finished. I know office space is at a premium around Westminster, but this does seems a trifle eccentric.

Now this practice has come to light, the Chief Whip will no doubt Have A Word with him, so I fear I shall have to fall back upon the National Liberal Club for political gossip in future.

Lord Bonkers was Liberal MP for Rutland South-West, 1906-10.

A defence of romanticism in politics

Steve Richards had an important column in the Independent last week in which he observed:

To his credit, and in spite of his instinctive pragmatism, Cameron is surrounded by a surprisingly large number of Tory romantics. They include his senior advisers, Steve Hilton and Rohan Silva, and influential ministers such as Oliver Letwin.

And at one time those romantics promised to have a strong influence on the new government:

I have notes from an address from Letwin in which he said explicitly: "If a service fails, an interview at ten past eight on the Today programme should be with the direct local provider of the service and not the Cabinet minister in Whitehall." He acknowledged, as did other aspiring ministers, how tough this would be in a centralised media culture. Cameron was in the audience modestly taking notes but ended the meetings by insisting that this was part of the Conservatives' big idea.

But as Richards argues, this approach has been hard to sustain in politics given the relentless political and media pressure demanding the centralisation and standardisation of services.

I think that is a shame, because as Richards said:

I do not describe them as romantic to be disparaging. On the contrary politics desperately need more like them on the left and the right, original thinkers driven by ideas, vision and with the courageous guile to follow through with policy implementation. Several senior Labour figures tell me they lack the equivalent now.

And I fear that British politics and British society as a whole lacks romanticism. The idea that anything other than the provision standardised services run by the state represents a return to the law of a jungle is deeply ingrained. It lies behind everything from the Children's Laureate's distrust of parents who teach their children to read to Archbishop Williams' bizarre intervention last week.

And we Liberal Democrats have to decide whether we are romantics or not. Are we offering the same centralised services as Labour (but somehow offering more of them or to run them better) or are we offering something different and a little more exciting.

Refer to The Theory and Practice of Community Politics in your answer.