Housing: Where’s the Plan

As we wait for the Housing White Paper, it is worth considering the economist Kate Barker’s ideas for getting more houses built.

Kate Barker produced two influential reports[1] for Gordon Brown when he was Chancellor, the first on housing supply (calling for a step change in house building to bring down the rate of house price inflation), the second on planning (which argued that it should be more responsive to market signals).

She was attacked by the Conservative opposition of the time – “Barker” became shorthand for building on greenfield land – but her views still carry great weight in the Treasury. And the Treasury view still carries great weight across government.

In September 2014 Kate Barker published Housing: Where’s the Plan? She says she has “become less convinced that it will be possible to build enough to meet demand in much of southern England, given the strength of local opposition in many places”. She also accepts that “a further radical reform of planning now would be unhelpful”.

So what is to be done to get more homes built? The book is well worth reading, a hundred well-written pages covering a lot of ground. Here are some talking points with particular relevance the White Paper.

  1. The Government must get a grip

Kate Barker does not explicitly attack ‘localism’, but she says there is a need for “strong central direction,” particularly “to get the new towns and major urban extensions that are needed”.

If there is to be “central direction,” I hope it will be explicit. The least satisfactory situation is central government pulling the strings but pretending that local government is in charge.

2. Planning per se is not the problem

The high rate of house building in the ‘50s and ‘60s “suggests that there is nothing about nationalized development rights and a plan-led system that intrinsically inhibits residential development”. In that period, “active public policy” boosted housing development, for instance the designation of 14 new towns in the 1960s.

Barker blames “subsequent changes in planning regulation, the funding of subsidized housing, and attitudes to development and the development industry” for the drop in output.

I think she makes too little of the second factor: the figures suggest that low building rates since 1979 are largely down to the drop in public sector output.

And she is too uncritical of the house building industry and its reluctance or inability to increase output. This is a major cause of the undersupply of recent decades. CPRE’s central contention on the current planning system is that it results in undeliverable housing targets. Kate Barker’s book does not have a convincing answer to the question: ‘In the absence of a big programme of state-sponsored house building, who is going to build the new homes we need?’

3. We need to build “in areas where people want to live”

This line is heard again and again from Ministers, officials and, of course, economists, and it sounds right. Who would argue that “we need to build in areas where no one wants to live”?

But predict and provide policies become self-reinforcing. We build homes in the places people want to live, create jobs for the people living there, build more houses to accommodate the people attracted to the area by the jobs, invest in transport and services to make the areas better to live in, and so on.

Economists often seem to think that the future will be like the recent past and that the job of planning is largely to anticipate and respond to market trends. But public policy can redirect markets and alter how and where people want to live.

London is booming, but when I first got to know the city in the late ‘70s, it was a place people wanted to leave. Think of the revival of cities such as Manchester, Liverpool, Birmingham or Sheffield, brought about partly by brownfield first policies and the role of the Green Belt in focussing investment within the cities. Or consider Milton Keynes and other new towns: people were not clamouring to move there when they were built; there was a strategy for making them places “where people want to live”.

I think Barker is too gloomy when she says that “despite considerable expenditure, little success has come from efforts to regenerate declining cities”. But I agree that “to tilt the economic geography of the UK from south to north” (or just to stop the southward trend) will require a concerted effort, not just a few regeneration schemes or house building on its own.

4. Housing need and housing demand are not the same thing

Kate Barker draws an important distinction between housing need and housing demand. Demand has risen both because our population has grown and because of rising incomes. But “demand is not the same as ‘need’: the latter would imply we all lived in houses that just met government-determined space and bedroom allowances”.

Governments want to satisfy housing demand, but not at any price. “To strike the right balance between meeting unconstrained demand and managing supply we need a clear view of the right environmental price.” But it is surely legitimate to suggest that we should be less willing to pay the price of environmental damage in order to satisfy demand than to meet need.

Sacrificing countryside to meet housing need is one thing; sacrificing it to satisfy someone’s desire for a bigger home, or a second or third home, is quite another.

5. The Green Belt

In some places, Barker says, it is clear that we attach a high value to keeping land open – National Parks, Areas of Outstanding Natural Beauty and so on. But the Green Belt, she says, “is often land of poor quality that fails to deliver access to open space”.

There are several problems with Kate Barker’s treatment of the Green Belt. She underplays its value for nature, amenity and vibrant cities. And on the principle that the future will be like the past, she assumes that unattractive or inaccessible Green Belt will remain unattractive or inaccessible so ought to be developed.

But the Green Belt serves planning purposes regardless of its environmental quality, and where it is poor quality there is a better solution than development: improvement. Barker is keen on tools that put a value on environmental goods, so I hope she will welcome the work of the Natural Capital Committee and consider its Chair, Dieter Helm’s essay ‘In Defence of the Green Belt. If we are to increase natural capital, we must protect and improve the Green Belt, not simply regard it as developable land.

6. Housing taxes and subsidies

My generation received free higher education. Then the argument was made, ‘why should poorer people subsidise middle class children to go to university?’ and student fees were introduced. No such arguments apply to property. The stigma of ‘subsidised housing’ is reserved for social housing, which in fact makes a decent return for the landlord. No one seems to object to non-property owners subsidising home ownership through the tax system.

Kate Barker argues that schemes to promote home ownership (starter homes, Help to Buy etc.) may stoke house price inflation and are not the best use of tax-payers’ money. In a very clear chapter on taxation, she considers a number of reforms to limit house price inflation.

Her approach is cautious: “So many people have their wealth tied up in housing that changes have to be sensitive to their reasonable expectations.” Among her modest proposals (though I am not sure the Daily Mail would consider them modest) are the introduction of higher council tax bands and charging capitals gains tax on main residencies, with the charge rolled up over a lifetime.

It is good that Housing: Where’s the Plan? addresses the ‘demand side’ factors that stoke house prices. These were excluded from the terms of reference of her first report for Gordon Brown. I hope the White Paper does not revert to treating under-supply as the only cause of high house prices.

7. The Treasury View

Full of good ideas and good questions for deciding how to approach housing (as well as some less good ideas) Kate Barker’s book ends on a technocratic note. There should be a permanent committee to consider implications of housing policy for the public finances, chaired by the Chancellor and including among its members the Governor of the Bank of England and the chief executive of the Financial Conduct Authority. It should receive independent public advice from a group of experts. The last sentence in the book is: “The costs of housing undersupply would then be brought into sharp focus.”

That would be useful. Undersupply has a high cost, not least to the individuals who are undersupplied. But I hope that any such committee, even one chaired by the Chancellor and packed with high-ups from the financial world, would also consider the costs of poor quality and poorly located developments.

And I hope that the Housing White Paper will aim not only for more homes, but also for high quality, well-located homes and places.


[1] When I joined CPRE, in 2004, much of our work was devoted to contesting Kate Barker’s reports. We produced first rate reports on the interim report on housing supply, Europe Economics’ A Basis on Which to Build; on the final report, Nick Schoon’s Building on Baker; and on the review of land use planning, Roger Levett’s Deconstructing Barker. All are worth revisiting.

4 Responses to “Housing: Where’s the Plan”

  1. 1 Helen Leith January 25, 2017 at 1:41 pm

    View story at Medium.com

    Hi Shaun – not sure if you have seen this article from Ian Mulheirn.

    • 2 sspiers January 25, 2017 at 4:14 pm

      Thanks, Helen, I linked to Ian Mulheirn’s blogs in an earlier draft. They are well worth reading, but I would avoid any suggestion that because demand is suppressed it should be discounted. I believe that we have been building too little for many years, but the nature and scale of the housing shortage is certainly up for argument, and we are hoping to do some work on the numbers.

  2. 3 Andrew Carey January 26, 2017 at 9:44 pm

    “where it is poor quality there is a better solution than development: improvement”
    There was a recent development proposal on the Green Belt near Ponteland, about 4 houses per acre, cycle paths, ponds, improved footpaths and mixed woodland were intended. The land in question is intensely farmed agricultural land, drawing a public subsidy, no public footpaths whatsoever, and one rather dangerous adjacent road for walkers.
    The CPRE opposed it.

    • 4 sspiers January 29, 2017 at 3:10 pm

      Andrew, what you are describing is not the ecological improvement I had in mind; it is a form of development. What you describe has some virtues, but it is still development in the Green Belt – houses + cars. I may be wrong (CPRE’s country branches lead on local planning issues) but as I understand it the proposal is also incompatible with the emerging local plan.

      Regarding intensive farming, Brexit will have a big impact on how we farm. I hope we will end with an agricultural support system that promotes better farming practices. If farms are inaccessible and ecologically barren, let’s improve them – but not by building on them!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: