Clive Betts, Chair of the Communities and Local Government Select Committee and Labour MP for Sheffield South East
By common consensus, we need to be building about 250,000 new homes each year to meet housing need. That reflects building replacement together with population and household formation changes.
The 250,000 figure has not been achieved for more than 20 years. In fact, in only four of those years did we build more than 200,000. In 2012/13, housebuilding actually fell to a post-war low of 133,010, including a slump to 103,290 new private dwellings from 192,180 in 2006/07. That was three years after Housing Minister Grant Shapps said that: “Building more homes is the gold standard upon which we shall be judged.”
By far the biggest drop in house-building has been in the social housing sector. As I checked back on the figures, even I was stunned to notice that between 1999 and 2008, fewer new council houses were built in the UK nationally each year than Sheffield City Council built each year when I chaired its Housing Committee in the early 1980s.
All of the indicators suggest that we are heading for a housing crisis: proportionately, fewer households can afford to become owner-occupiers than ever before – they cannot afford the deposit, let alone the repayments for the next 30 years; rents are rising inexorably above the general level of inflation in prices or earnings; house and land prices stand close to their highest multiplier against earnings; after a decade of reducing rough-sleeping to just 1,700 nationally in 2010, this winter saw a 30 per cent increase over last year to more than 3,600 and this is still rising; and rocketing homelessness is leading to individuals and families being – in effect, forcibly – rehoused tens of miles away from their jobs, schools and families.
To achieve the 250,000 new homes annually, there needs to be a whole range of initiatives on both the demand and supply side.
Firstly, there needs to be a substantial new social housing programme by councils and housing associations. They could deliver that if they were free to borrow against their existing assets and to use their current surpluses. We also need to see the Government reverse their current policy which has seen all funding for new social housing scrapped for the rest of this Parliament and priority in 106 agreements given to Starter Homes costing up to £450,000, which is well beyond the means of most first-time buyers
Secondly, there needs to be significant intervention to change the current practices of the big house-builders. They are sitting on the largest ever supply of land with planning permission (more than 600,000 plots), but are only building at a slow rate, which maximises their profits. In direct contradiction of the evidence, it is not credible for big developers and government ministers to claim that the problem lies with the planning system.
Thirdly, there needs to be a plethora of initiatives to support diversity in construction and provision. It is also important to encourage the renewal and re-birth of the small builders and developers who can be assisted by careful packaging of small sites for development over a number of years. An expansion of significant self-build schemes will also provide increased demand for small builders. It is not beyond the wit of stakeholders to enable the delivery of such schemes.
Later this year, the Communities and Local Government Select Committee, which I chair, will be conducting an inquiry into a number of those elements, looking at how we can expand the capacity of the house-building industry, as a follow-up to the inquiry and recommendations which we made in 2012.
Finally, there needs to be encouragement for large-scale build-to-rent initiatives where the investors are taking a long-term perspective. I am pleased that some pension funds and other private finance pots have begun to see the long-term opportunities, recognising that they need to have a large portfolio arising from continuing investment over many years.
None of that expansion will take place, however, unless we have apprenticeship and other training schemes which are fit for purpose. All builders and contractors need to contribute to training provision and costs to meet current and future requirements.
Unless the government changes track quickly, we are heading for a housing crisis of even greater severity than the one we currently have.