Cameron Watt: Building to Win

Gordon Brown has made clear that housing is a policy area he believes can win him many votes at the next General Election. Already announced are plans to increase the number of new homes built annually from 200,000 to 240,000 by 2016. Next week much more detail of the new Government’s housing strategy is expected with the publication of a green paper. If Brown can enable large numbers of younger voters currently priced out of the market to fulfil their dream of home ownership, he will be obviously become very popular.

Housing also has the potential to be almost as important as welfare reform in reversing poverty. As well as benefits traps, punitive marginal tax rates and couple penalties, the poor are also increasingly trapped in ghettoes of social housing where both aspiration and opportunities are scarce. Two facts here are particularly startling:

• In the UK’s 3.8 million social housing units, more than half the adults of working age do not have paid work; and
• If you are living on a council estate and have two people of working age on either side of you, the chances of them both working is just one in 10.

Waiting lists for the greatly diminished stock of social housing have doubled to 1.6 million in 10 years. Such demand is fuelled by the chasm in prices between social housing and the alternatives: a housing association flat may cost £70 per week against £180 for a comparable property in the private rented sector. As it is so cheap and tenancies are often effectively for life, the stock of social housing has been gummed up by an ageing populace. It can therefore only be expected that most of the out-of-work tenants are not be prepared to move to find or keep work with poor prospects of getting equivalent accommodation elsewhere. As a result only a relative handful of social residents move each year to get jobs.

So, what can be done? Research by the Joseph Rowntree Foundation this week confirmed the increasing geographical segregation of the poor from the rich. The need to create mixed communities with a diverse housing stock is a cliché, but it must be a top priority to prevent the poorest becoming progressively further detached from the mainstream, confined to welfare ghettoes where few have ever worked.

Measures aimed at guaranteeing that the extensive new house building around the country facilitates mixed communities will almost certainly be included in the green paper. Less likely to appear would be any moves to limit the durations of tenancies in social housing. However such a bold move may be necessary to ensure social housing is allocated to the most deserving. Furthermore, with much of the widening wealth gap attributable to the rapid appreciation of most peoples’ main asset – their home, better-off tenants of social housing have been missing out on the opportunity to build-up a significant asset through owner-occupation or part-ownership.

As LSE professor John Hills stresses, creating a new home to be part-rented, part-bought costs the taxpayer only half the £60,000 required to establish a new unit of social housing, yet they account for just 1% of the owner-occupied stock. Without a huge expansion in this section of Britain’s housing stock, it will be impossible to enable current tenants of social housing to bridge the growing gap between where their current situation and full owner-occupation.

The Conservative Party is responsible for the most bold and empowering housing policy in the last fifty years. David Cameron, now ably supported by Grant Shapps, must quickly demonstrate that the Tories are best placed to ensure housing becomes the engine of poverty eradication and social mobility it could be. As the largest party of local government, mobilising the party’s council leaders to do all they can to create more social housing, large increases in shared equity schemes and the development of diverse, mixed communities would be a great place to start.

Comments

[Patsy Sergeant]

One area that could do with greater control, is the amount of profit that developers make. According to an article in last week's Sunday Times, flat-pack houses (a new idea and designed by Lord Rogers no less), that cost £6o,ooo total construction costs, are on the market for 5 TIMES that amount, now they are supposed to be more affordable houses.

Developers should be 'persuaded' to build reasonably-priced houses that are WITHOUT basic faults, sometimes structural, due to cutting corners because the builders profit margin HAS to be the same whatever the job.

The only reason that new-build houses are as expensive as other houses on the market is that the builder (most of them multi-millionaire's), are not about to miss out on the profits that they can make in a vastly inflated pricing market. The cost of the workmen's wages have not inflated at the same speed, and also there are the much talked about immmigrant workers... Similarly although building materials do increase in price over time, that also doesn't match the speed of house-price rises.

Even if it is impossible economically for a developer to keep new-build house prices at an affordable level overall, Mr. Brown, through his close associate, Housing Minister Yvette Cooper could apply more pressure for more affordable 'social' housing.

[Andrew Lilico]

Cameron,

What's your view (and indeed what is the view of other ConservativeHome readers) on the issue of whether the State has a duty to enable the poor to own their own home versus its merely having a duty to ensure that the poor have somewhere to live (e.g. by renting or through state-provision)?

On the one hand, is facilitating the less-well-off to own their own homes the sort of thing that Conservatives should believe in at all - except perhaps in extraordinary circumstances such as if we are trying to move the whole economy from a state-owned to a privately-owned basis? Is the private acquiring of assets something the State helps with?

On the other, given the collapse of marriage, would I be right in thinking that buying a home together is one of the major commitment signals people use in our society? If the less well off are excluded from that, mightn't that have profound consequences for social exclusion through denying the poor access to the modern equivalent of marriage? But is there a superior mechanism for allowing the poor to marry that would not involve encouraging them to take on huge debts and to have much higher housing costs than they would by renting?

[simon]

It's all well and good saying that there should be more 'affordable housing'- but what constitutes as affordable? What is affordable to someone who earns £ 20,000 pa? £ 10,000 pa? Less than that? Not everybody wishes , or has the financial capacity, to own a home. We don't need more 'affordable housing', but more low-rent 'council housing'.

[Mike A]

Patsy - that's because our planning laws are too illiberal. We need to take power away from councillors to stop housing being built.

[Paul Oakley]

Can't agree with you on "controlling" builders' profits Patsy. The market must and does decide on the price. Your argument could just as easily apply to other products and then we're on the road to a disastrous prices and incomes policy.

[Derek]

State support to enable people to acquire their own asset is something which Margaret Thatcher did and it was very popular. I am a little uneasy about it, as it is not open to all, only those who can afford it.

Clearly there is a need for some rented accommodation for those who are unable to get a home of their own, but it must be a least preferred option. If we were to provide too many good quality homes at subsidised rents then many more would want them. The main dawback to an "affordable home" is the neighbours!

We must always provide an incentive for people to provide for themselves. The more we pander to the wants of the feckless and the idle, the bigger their ranks will become.

Councils housing waiting lists always seem amazingly large, but they include many who are in assured shorthold privately rented accommodation as well as those who are currently in accommodation that is not large enough for their needs. The numbers who are actually without a home is very much smaller. Statistics can be used to prove anything and should always be challenged.

If the Conservative Party were to commit to drastically reduce the current amount of immigration there would be no need for the massive housebuilding the government are proposing.

[Patsy Sergeant]

Paul - I think that the phrase 'The market must and does decide on the price', is one of those that covers a multitude of meanings (I won't say sins!). Its like the phrase 'the public demands' - often used by advertisers, without saying that they stimulate the custom.

[Difficult]

Much of Cameron's analysis (that's Watt, not DC) makes sense. The only problem - and it's a problem we face with developing a policy - is that Cameron doesn't tackle the 'where do we build them' case. As a Party, we have strong emotional roots in our self-perception as the Party of England's Green & Pleasant Land. At the same time, we have strong emotional roots in our view of the Thatcher era as one of an explosion in home ownership, and that that was a good thing.

We have now reached a point where we clearly need more housing, but we have nowhere to put all of it. Some can go on brownfield sites but nowhere near all. Greg Clark recently had a private members bill trying to outlaw building in back gardens. We can't just leave it to the market to decide, nor can we just sit back and blame it all on nimbies.

How we reconcile what are now two opposing views, I don't know. I want to see more home owners but I don't want to build on the Green Belt. Tackling this sort of question would give us some of the 'authenticity' many feel we currently lack.

[NigelC]

Unless we tackle the associated costs of infrastructure to support new housing we will damage the quality of life for many existing communities and future generations.
The regional assemblies tried to resist some of the Government's worst excesses in house building plans but it now appears the regional economic devopment agencies will control spatial planning with the sole remit of economic growth not sustainability.
Houses and people need roads, railways, schools, hospitals, sewage works and jobs.
Holistic solutions that respect future generations propects for a decent quality of life need to be developed. Focusing on housing and economic growth alone is recipe for disaster.

[David Sergeant]

I am surprised there is so little reference to immigration, a major reason for the problem.

I am also surprised that there is no mention of the poor performance under Labour of house building. Another major reason for the problem.

And I am surprised at the fact that this is the 4/5th "intiative" on house building by Labour. All failures.

I am not surprised that Tory contributers are having serious discussion about building houses instead of bearing in mind the posibility that this "intiative" is just a Brown stunt. Tories never seem to learn that New Labour government is not about government but about poltical one-up-manship. (If you have a problem with that, what about sending home the Russian diplomats? What result is possible apart from British business losing out? Why Hague never thought it may be a publicity stunt a can't imagine.)

[Patsy Sergeant]

Yes, David I agree with you about New Labour government being about political one-up-manship and not about governing!

[Matt Wright]

We all want as many people as possible to be able to afford a home. The question is what will work. Brown made matters far worse when he wrecked pensions because masses of people then invested in housing as a pension thus pushing prices up even further. The two main issues are planning and social change, the latter being harder to address. Taking the first - it is extremely difficult to build houses outside of development boundaries and we have a mindset in the UK of drawing very tight lines round towns and villages and saying you can only build inside those. Maybe we should examine a totally different approach of allowing people to build in the open countryside BUT only at ultra low density. What I have in mind is the rejuvenation of the countryside with many small hamlets as well as community build projects with alternative materials etc. Far from damaging the green and pleasant land it would be absorbed easily into it and bring communities back to life (shops, post offices etc) while enabling hard pressed family farms to diversify. The other issue, that of social change is varied, ranging from the issue of immigration to split households. These is harder to address but could be tackled. Firstly we could insist, like New Zealand, that people can only come to Britain if they have a skill we actually need and then only upto a certain number and for such laws to be strictly enforced. Secondly we could have fiscal and other measures centred on the family that encourage families to stay together as many would prefer to do so if it paid to. Just a few ideas to be getting on with,

Matt

[NigelC]

Houses need infrastructure (schools, hospitals, roads, rail, leisure facilities, shops etc). Is the Government preapred to invest? The builing of 10-25,000 houses around Harlow is estimated to cost £1 billion in infrastructure. There is already a recognised infrastructure deficit in the south-east.
The developers will not pay for all of this so it will be down to the taxpayer - you and me. Will you pay your share?

Or shall we build thousands of cheap homes in the wrong places without infrastructure to get some headlines.

We need to build long term sustainable communities not throw up an ever increasing numbers of houses.

NIMBYism is about protecting what is good in your community for the next generation.
Wear the badge with pride.

[NigelC]

Matt 8.30 pm,
See http://www.stopharlownorth.com/GGP.htm
for our proposals for small hamlets to regenerate the countryside north of Harlow

[Sandy Wallace]

I lived this issue as a Councillor in Aberdeenshire. I sat on both planning and (Council) Housing.

Firstly we need more land allocated for housing development and we need it allocated where the infrastructure (principally schools and arterial roads) can take it. Where we must allocate land that the infrastructure cannot take, we need MASSIVE developer contibutions to pay for infrastructure. In practice, this simply comes off the land costs. This would go some way towards reducing the market cost of housing.

Secondly, to address the shortage of Affordable Housing and to ensure mixed communities (call it inclusion or one nation Toryism, same thing) we need to impose a 50% level of Affordable Housing (on each developement) in conjunction with a Registered Social Landlord (either the Council or a Housing Association).

With these homes being built at break even cost, the landowner would get only agricultural value for that half of the land sale, the developer would make no profit but be permitted to make market profit on the other 50% and the social landlord would therefore pay a sum on each tenancy that future rents could support.

To make them attractive, tenants should have a Right to Buy by shared ownership. This also ensures hat no area becomes a ghetto of social housing, but rather evolves towards home ownership.

PLEASE - all Conservatives, defend right to buy both historically and into the future. RTB turned sink estates into communities where residents genuinely had a stake. Show me an estate with less than 5% RTB and I will show you boarded up tenancies and Police no go areas.