Action plan to solve the housing crisis
Major but pragmatic changes are needed to combat the UK’s housing crisis according to an economist, broadcaster and author.
Liam Halligan was guest speaker at a talk arranged by Lupton Fawcett law firm at DoubleTree Hilton Hotel, Leeds.
He has written a book called Home Truths, about why the UK faces such a chronic housing shortage and what can be done to address it.
Halligan stressed the importance of ensuring local authorities benefit from “Planning gain uplift”, so when new housing developments are approved they have cash to fund the infrastructure needed to support the additional properties.
He explained: “It means that if you sell land, you sell it either at its existing use or the state compulsorily purchases it and the gain from when planning permission is awarded is shared between the landowner and the state at the local level.
“So the local authority awarding the planning permission shares in the planning uplift, which can amount to millions of pounds.
“This money is ring-fenced to go into building the infrastructure that makes those new homes into a place where people will want to live.
“If you share the gain and the local authority is legally obliged to use that money to build new amenities, there will be far more willingness among elected officials to grant planning permission.
“We also need to provide more land more cheaply so small to medium sized businesses can build houses. SMEs don’t just sit on housing permissions because they can’t afford to.
“The Government has to get real about selling off its own land for housing.
“The NHS has a lot of central city sites which it will never use. But this land is not being sold because the Treasury says you have to get ‘best value’ for it, and no one can agree what the best value is.”
Halligan warned failure to solve housing shortages would cause social and political upheaval.
“Generation rent is getting older and angrier,” he said. “They are less likely to follow their parents’ generation in terms of voting Tory once they own their own home – because they are not being able to own.
“We’re no longer a nation of home owners in the way we once were. You can’t support capitalism if you don’t have any capital.
“Unless we solve this, popular consent for liberal capitalism is going to be severely dented.
“We built 2.8m homes in the 1950s, 1.8m in the ’80s, 1.5m in the 2000s and and 1m in the eight years since 2010. We have a backlog shortage of 3.4m-3.8m homes since the late 1960s and early 1970s.
“The average home is now worth eight times the average wage. ‘Beds in sheds’ has become a national problem, not just in London. These are slums – that’s the situation we’re now in.”
Halligan said: “My own parents were working class people who were able to buy their own home by working hard. That revolutionised their attitude to the UK and to England.
“Now however, we have the sons and daughters of immigrant communities who can’t buy, so they have no stake and no incentive to maintain order. Home ownership is a bulwark against populism.
“We are losing the social progress and societal cohesion that comes with home ownership. There’s a lot of tension at the moment. It feels like 1981 again.”
Halligan said big house building companies had far too much power.
Citing the 2008 breakdown of private housing supply, he noted that back then small companies building 1 to 100 units per year, constructed 28% of homes, medium sized companies building 101 to 2,000 units per year, constructed 40%, while big companies developing 2,000 or more units per year, were responsible for 32%.
He compared this to the figures for 2015 which saw the proportion of homes made by big housing companies leap from 32% to 60%, while the equivalent figure for small firms slumped from 28% to 12% and medium sized firms fell from 40% to 29%.
“One in three planning permissions that are granted lapse,” he said. “In London it is one in two. That is crazy.
“I think planning permissions should be planning contracts. If you don’t deliver you get fined.
“We’re in a logjam. Large volume house builders admit they don’t always want to build at once, in order to maximise local prices.
“The eight big house builders who build 60% of homes are so powerful in local areas they can drip-feed the market.”