How can a Labour Government increase home building?

Labour has promised to build 1.5 million homes in a five-year term. This looks like 300,000 per year but construction cannot be turned on like a tap and the range of planning reforms are unlikely to have an impact for at least a year – or very possibly much longer. Homes that will be built next year are already in the planning system or even on site now. Currently the number of starts is falling, housebuilders are cutting back plans, local authorities are in a desperate financial position and housing associations are switching £100ms from building new homes to improving the ones they already have. This means that the housing development will need to be back-loaded to the end of the parliamentary term to hit the target, which would require a level in five years’ time not seen since the 1960s. 

This concern was reflected in the comments of Peter Truscott, CEO of Crest Nicholson, “By the time the planning system is changed, local plans reflect these changes, land is bought, infrastructure is provided and legal challenges are seen off, years will fly by.”

That the planning system needs a large injection of cash, and critically people, is self-evident. Labour is committed to 300 new planners being recruited, while this will help it means only one or two additional people per local authority, maybe 3 or four in the largest. It’s not just planners the country lacks but also people across the construction industry. There are currently almost 150,000 vacancies in the industry and an estimate of almost 1 million new workers needed by 2032 as many existing people reach retirement age. To address both of these shortages quickly, even if training and education is successfully expanded will require an immigrant workforce at a time when the political rhetoric is focused on reducing people entering the country.

As well as more planners we also need to overhaul the planning system. This will be controversial and time-consuming. The system has become unwieldy and expensive. More requirements added recently include net biodiversity gain and nutrient neutrality. While biodiversity, water systems, pollution, climate change, net carbon zero and the large number of other issues addressed by the planning system are important, loading them all onto new developments rather than having a much more system wide approach is unlikely to make much progress and will slow building. We can’t realistically expect the few homes built over the next ten years to rebalance the mistakes made over the last 200. 

One of Labour’s key promises to increase housebuilding is developing new towns. However new towns don’t just need to get through the planning process, houses need to be preceded by significant infrastructure works putting transport systems, utilities and other critical systems (in some instances maybe even new reservoirs, waterways and flood defences). The benefits of new towns are not likely to be felt until the second term of a government committed to them.

The actions suggested by Labour are all positive but they may have a lead-in time which will make the target of 1.5 million homes unachievable.

So what can be done to move the dial in the shorter term. There are plenty of others offering advice so I will limit myself to two suggestions. The foundation for my, probably unwanted advice, is based upon a statistic published last year by the Local Government Association (LGA) and included in a report by the Department of Levelling Up, Housing and Communities Committee last summer. 

“1.1 million homes with planning permission had not been built”

Labour should bring together housebuilders and other key players and find an urgent plan to accelerate the building of already consented homes. Many of these will be later phases of developments which are already on site. Can the approaches identified in the Letwin review (among others) increase the build rate? It might be government guarantees, it could be increasing the proportion of social rented homes in those developments, it could be modern methods of construction, it could be increasing the provision of build to rent homes, it could be accelerating the provision of utilities and infrastructure. I am sure that many others would have ideas. 

My second proposal is more of a stick. We have no tax on land. Developers often quickly demolish buildings on a site to avoid paying council tax or business rates. The Government could levy the equivalent of council tax on any homes unbuilt after, say, two years, of achieving full planning permission. It could give existing consented homes a two year amnesty from the date of the tax being agreed to incentivise developers to build out the homes they are planning for.

The construction industry moves slowly but the need for more homes is immediate, as Peter Truscott says the “years will fly by”. Labour needs to find some mechanisms to kick start and accelerate development or it could end up with better policies than the Conservatives but no increase in housebuilding.