Planning for the Future: Lessons on housing from the past

21/03/2024

The United Kingdom is in critical need of additional houses. A 2023 Centre for Cities think tank report estimated the backlog to be 4.3 million homes, and this dramatic shortfall in supply is causing ruptures across the UK’s socio-economic and political landscape. 

Home ownership rates have collapsed amongst the younger generations, and one analysis found that the last time UK house prices were this expensive relative to earnings was in 1876. 

Housing experts are under no doubt about the core driver behind this issue, with a recent Competition and Markets Authority report concluding the “complex and unpredictable” planning system is responsible for the persistent under delivery of new homes.

Both major parties have recognised the pollical importance of resolving this issue, with housing commitments expected to feature heavily in forthcoming policy manifestos. However, recent attempts to increase housebuilding and make home ownership a realistic prospect have fallen short. Will voters be convinced by renewed pledges? 

The Conservative Party promised to build 300,000 homes a year in England, and the Government is keen to stress that the last four years have seen the highest rates of housebuilding in 30 years, with just over 212,000 new build homes in 2022-2023. However, the target remains a long way off from being met and recent attempts to reform the planning system have been abandoned or stalled due to political difficulties. 

Recent proposals from Levelling Up Secretary Michael Gove include directing councils to prioritise brownfield developments and boosting shop conversion to create more homes. While welcome steps, with Government documents predicting they could add thousands of new homes to the country’s housing stock, these moves do not and would not address the root of the issue.

The recent Spring Budget was another missed opportunity. With tax cuts the overriding political priority, rumours of a 99% mortgage scheme or significant changes to stamp duty failed to materialise. 

While certainly a lot easier to do in opposition, the Labour Party has used housing issues to park its tanks on the Conservatives’ lawn. They have promised to build 1.5 million homes within five years of a Labour government, reinstate mandatory housebuilding targets and to review rules about building on the green belt.

Amid other policy proposals defined by a sense of caution, and a prevailing commitment to fiscal discipline, Labour’s offer on housing is notably ambitious. In his response to the Budget, Sir Keir Starmer argued that the Conservatives will never again “be allowed to pose as the party of home ownership and aspiration”.

However, critics highlight the similarities of Labour’s proposals to the Government’s current target, albeit one that has been consistently missed. Others question whether Starmer can be trusted to deliver on these promises, fears exacerbated by the recent policy U-turn on his party’s totemic annual £28 billion green investment pledge. 

Despite these legitimate concerns, Labour’s appears steadfast in its commitment. In her recent Mais Lecture, the Shadow Chancellor Rachel Reeves placed planning reform at the centre of Labour’s economic approach, describing the country’s planning system as “the single greatest obstacle to our economic success”.

This rhetoric and these policies are safer territory for Labour given the support for these moves within the party’s core electoral coalition – predominantly younger, urban voters who are much less likely to own their own home. The key question is whether Labour is able to sway enough voters at the next election in more construction-averse, traditionally Conservative constituencies, and crucially maintain this support if a future Labour government pursues ambitious but potentially divisive reforms.

Ultimately, both major parties must better reflect on previous failed attempts to implement planning reform. These have often been derailed by vocal and committed local opposition, so finding creative and pragmatic ways to incentivise and build support for housebuilding within local communities is imperative. 

It will also be essential to focus on building a foundation of national support for any such reform. While January’s GDP figures give some hope that the UK will soon emerge from a technical recession, economic malaise remains an important electoral issue. This presents a valuable opportunity for both parties to sell the economic benefits of planning reform as a key lever to address the UK’s interlinked growth and productivity problems.

With the country crying out for several million more new homes, sticking with the failed status quo is not an option. A failure to act could alienate millions of voters, fuelling existing disillusionment and apathy, or even – as Michael Gove has warned – undermine democracy itself.

The stakes therefore could not be higher, but thankfully, with disruption comes opportunity. In a year of significant electoral turbulence, will our political system finally be able to kickstart the planning reform that the country, and the economy, so desperately needs?