House Building Tops the Political Agenda

A shortage of new-build homes and a increased demand due to changing demographics means that house prices have risen dramatically since the Labour government came to power in 1997. It could have been expected that such a steep increase in the house price index would have led to an increase in house building but construction has fallen steadily since the 1960s. The main reason for the reduction is that council house-building has virtually ceased since its 1960s heyday.

The government’s Office for National Statistics predicts that 233,000 new households a year will be looking for homes by 2016, but house building is currently running only at about 165,000 homes annually. Commenting on this, Kevin Williamson, chief executive of the National Housing and Planning Advice Unit, said "If we don't meet the needs of our local communities we will have overcrowding and a failure to help people meet their aspirations."

Ruth Kelly was expected to tell Conference that her department’s diagnosis is that councils are not working hard enough to find land for developers. That’s why this year's Housing Green Paper set out a range of carrots and sticks for councils, such as:

• Housing grants rewarding councils identifying land for development
• The threat to overturn local authorities' residential planning decisions
• Using more public sector land for development

"The combination of these measures ought to be effective," said John Slaughter, head of external affairs at the Home Builders Federation. "It depends upon the government's will to make the system work because it has not historically been so easy to deliver at a local level. The government needs to sort the problems out," he added.

The other target of the government's promised reforms are those house builders that hoard building land but do not build on it. Kelly is expected to announce that developers will be expected to start building within time limits, or risk losing planning permission. House builders, though, reject the accusation that they are sitting on land. "97% of sites are under construction within three months of receiving planning permission. We don't see the need for this policy," said Slaughter.

The final plank of the government's housing strategy is to provide more ‘affordable’ housing –homes targeted at lower paid employees like nurses, council workers, transport staff and police officers, as well as those generally on lower pay levels.

The Green Paper set a target of 25,000 "shared ownership" homes to be built every year, backed by money from the government's Housing Corporation. Under shared ownership schemes, the lower paid buy part of a property and a housing association, mortgage lender, or government agency owns the rest. However, the House of Commons Public Accounts Committee said, earlier this year, that these scheme cost £500m a year and are wasting money.

Despite this, the government has promised housing associations £8bn to build 180,000 "affordable" homes, with the rest of the money needed coming from the associations' own resources. A National Housing Federation spokesman said "The government has set a target and the crucial thing is that the investment is there to back it up." The housing associations also question whether £8bn (approximately £44,000 per home) will be enough to build this housing.

The message from experts seems to be that the governments measures have a chance of working, but don’t expect big changes short-term. "Current regional plans considerably undershoot the level of demand that we are forecasting," said Williamson, of the National Housing and Planning Advice Unit. “The fact that we are becoming more prosperous means that we are demanding new homes, or even second homes," he added.