It would be the first time. So, are we all enjoying the post-budget lull? It is quite possible that Philip Hammond will be off our TV screens for a little while (at least on things relating to his brief) as the world returns to worrying about Brexit.
In my previous post about the budget I tried to outline why I would be concerned about any policies announced that would have a long lead in time. Frankly, I’m worried the government, in its current iteration, won’t last long enough to bring in the longer term policies it announces.
So the news that a major part of the “housing budget” will be another review into turning planning permissions into homes, this time chaired by Sir Oliver Letwin, is a particular worry. It has been given a short period to assemble and write up its conclusions, with the demand that it should have published the results by the Spring Statement (March 2018).
Even then, it looks like a tall order for the government to stay in its current guise. Who knows what might happen in the next few months and, as experience has taught me, I won’t be celebrating any positive policy changes until they are enacted or implemented.
Of course Sir Oliver won’t have to necessarily commission new bits of research, he could just look into what has already been proposed and choose some options. He could look at the Barker Review, the Calcutt Review, the Lyons Review, the most recent Parliamentary briefings on housing supply, their own white paper and the Farmer Review, looking into skills shortages and demographic change. Plus plenty of others (feel free to tell me your favourite!).
Indeed, Sir Oliver has a veritable smorgasboard of options available to him. What needs to happen is for the government to actually take some of them and implement them. Which is where the problem lies.
For the government seems very keen to offer further demand measures whilst not really combatting the need for supply. Put simply the government’s approach since at least Eric Pickles’s days has been to force councils to release more sites whilst posturing and taking tough to housebuilders whilst doing very little to change the market to strongly incentivise or directly create steel toe capped boots on the ground. This has led to the situation where developers have lots of options on which site to choose, but no time or incentive to actually build much faster than they are already.
This approach was evident once again in the budget, with limited support for council building (£1bn seems like a lot of money but it spreads very thinly over the country) and lots of loan underwriting and guarantees. As if all housebuilders need is the final push to get them over the line on individual sites. If only they had share issues or assets they could borrow against.
It’s actually been a common point of my last few posts- political will is required to move beyond this and that means deciding to directly impact some negatively in order to help others. It’s as true with unrepentant city centre drivers as it is with housebuilders.
Trying to capture and reinvest land value uplifts (which is rather popular at the moment) would stop those who have land to sell from receiving the full market price. Robust compulsory purchase order powers (or use it or lose it), joint partnerships or new homes corporations will take business and/or profits away from existing housebuilders. Reducing house prices (however that is achieved) or reducing the rate of growth of house prices would impact people who already own homes.
Indeed, what the government seems incredibly shy of is actually using an arm of the state to directly build homes at scale. Yes, local authorities have been very adept at setting up joint ventures and yes, the government has some small scale schemes like the accelerated construction scheme. But at present these don’t add up enough to a significant market intervention. More funding, especially to cover start-up costs (you’d hope building would be self-funding quite quickly) are required in order to allow one bit or another to build at scale in a way that competes with existing developers.
There’s a word for this kind of decision making. That word is politics. Politicians are accountable to us as voters, but that isn’t the same thing as them needing to please each individual person by each individual decision.
So Sir Oliver, and by extension the government, don’t have to venture very far to solve the particular puzzle of increasing housing supply. Indeed, they have everything they need.
What they want to do, and what they are struggling to find is a way is to achieve, is creating supply without upsetting anyone else, particularly existing homeowners, landowners, landlords or those whose supposed purpose is to build houses on land. But in the real world that is very often simply necessary. It’s a puzzle of their own making, in their own heads and if they could see beyond it they would be able to deliver positive changes.
We’ve come full circle in a way. The government need to make a decision; they have the policy options laid out infront of them. But choosing not to choose is about the worst thing they can do. More delays and half measures make building the right homes in the right places at the right prices significantly more difficult.
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