Housing: Affordability

Baroness Ford Excerpts

Wednesday 22nd January 2014 Lords Chamber

Asked by

[Baroness Ford]

To ask Her Majesty’s Government what steps they are taking to increase the supply of affordable housing.

[Baroness Ford (Non-Afl)]

My Lords, I am pleased to have secured this debate this evening. I should immediately remind the House of the housing interests that I have declared on the register. I am a director of Taylor Wimpey plc, the housebuilder, and Grainger, the residential landlord, and, as the House probably knows, I have previous form as chairman of English Partnerships, the predecessor agency to the HCA, and most recently of the Olympic Park Legacy Company.

Housing is fundamentally important to us as individuals and as a society, and once again the issues of the supply and, critically, affordability of housing have found their way to the top of the political agenda. We hear frequently that we live on a crowded island, and standing on the District line today, I could certainly relate to that, but I also use domestic flights frequently and as I look out occasionally, I am struck by how little of our country is developed. In fact, only 12% of the UK is developed but, as we all know, this 12% is very highly concentrated around our great cities and suburban areas, and it continues to be where demand lies for more housing, creating more and more pressure on land, transport and public services.

The fact is that we cannot separate successful economic areas from demand for housing and vice versa, which is why the intervention from Sir David Higgins, chairman of HS2, last week was particularly interesting. His hypothesis is that HS2 would start to move the economic centre of gravity away from London and attract high-value businesses out of the capital. He suggests that, among other things, this would begin to stabilise house prices in London. That remains to be seen but it starts a debate that is well worth having and intelligently makes the important link between housing and transport infrastructure. He is attempting to think long-term, which is how we must think if we are to make the breakthrough we need to increase the supply of affordable homes.

Housebuilding is highly cyclical in nature and very sensitive to changes in the banking environment and the mortgage market, so we have fallen into developing housing policy that mirrors that cycle and is often reactive and short-term. We react to today’s problem. Many very worthy policy initiatives have been undertaken over the past 20 years but, of themselves, have not led to the breakthrough in affordability and overall supply that I think we all recognise is required.

We do not need to look any further than Kate Barker’s excellent 2004 analysis to understand the scale of the problem. All of the issues that Kate set out still remain. The link between house prices and earnings has deteriorated still further in the past 10 years, and not enough affordable homes are being completed. Yet we know how to solve this because we have done it before. Housing completions in 2012 totalled 143,500. In 1968, completions totalled almost 430,000. In the peak year in the previous century for housebuilding, 1968, we delivered three times as many houses as we did in 2012.

More than half of those completions were from the private sector. The remainder came from councils and development corporations as well as an increasing contribution from housing associations, but this was not an accident. The consistently large supply of homes post-war and until 1968 was a direct result of the largest and most systematic ever release of development land that our country has ever seen. That land release continued to supply up to 200,000 homes a year until as recently as 1990. I am talking about the new towns programme that began with the designation of Stevenage in 1946. The housing statistics over that period show the affordable homes that were built by the new town development corporations but, critically, many of the private completions were also built on new town land due to deliberate policy rightly to create mixed and sustainable communities, so we accomplished scale across all tenures.

It is self-evident to me that the key to increasing supply is systematic, planned release of land. If we are serious about tackling supply, variety of tenure and affordability, we need to revisit the approach that served us so well from the immediate post-war period right up until 1990, when the programme begun in 1946 naturally started to come to an end. If you strip out the new town programme, private completions have always, and steadily, delivered about 130,000 houses a year if you smooth it over the cycle. It is therefore clear from the experience of the past 30 years that the incremental amount of homes that we can add to current stock through what I would call the normal planning regime is around 160,000 a year; this is taking private housebuilders and housing associations together. That adds less than 1% to the existing stock each year, which is plainly not dealing with the issue of supply and affordability, as Kate Barker pointed out a decade ago and we all see, day in, day out.

When Kate Barker proposed that we needed to build 250,000 homes a year, there was immediate opposition to this figure, notwithstanding that we had easily accomplished this almost every year—in fact, for 27 out of the 30 years between 1950 and 1980. However, 10 years after her seminal review, no political consensus has emerged on the way forward, which is a pity as it seems to me that the only way to deal thoroughly with this issue is through long-term planning and a cross-party approach.

Encouragingly, there seems to be recognition of that in recent months. Whether it is the Government’s suggestion of garden cities or the Labour Party’s announcement of a new generation of new towns, it feels as though there is a clearer understanding that if we are to do more than add incrementally to our housing stock and really tackle the issues of price and variety of tenure, we need to significantly release land for planned, thoughtful development.

As I said, we know how to do that. The development of the English new towns was not always perfect—we know that—but we learnt as we went along and the template has subsequently been copied in many other countries. They were also phenomenally successful in terms of public finance. I would point anyone who says that government cannot afford to make the direct investment in high-quality new communities to the return that the Treasury has enjoyed over decades from continual land sales in the new towns; as the last ever chairman of the Commission for the New Towns, I have direct experience of this.

We have created only a few development corporations in the past 20 years, and I had the pleasure of chairing one of them. The Queen Elizabeth Olympic Park is being developed by a mayoral development corporation, but one that recognises that there are existing communities around it and embraces those communities through its planning system and membership of its governing body. It is a modern corporation that accepts the challenges and opportunities that development in an established community naturally brings. We are all realists. We understand that there will be challenges in building new communities, but the Queen Elizabeth Park is a great exemplar and is being immensely successful. Planning consent is in place for almost 10,000 new homes around the park. By the end of this year, only two years after the Games, nearly 3,000 new homes will be occupied—not just starting to be built, but occupied—in the park. The next phase of building, of more than 800 homes, begins in June, and the next two phases are already out to the market, adding a further 1,500 homes. This demonstrates what you can do when you have a planned, thoughtful, systematic release and, critically, you have the community with you.

I have become increasingly convinced that this is how we do it. Whether it is on brownfield land, surplus public land or on greenfield sites, the principles are the same. If we want to convince communities to embrace development, it needs to be of the very highest quality. It needs to be sustainable and affordable. It needs to offer real community benefits and not burden already creaking infrastructure or public services. Experience has shown us that the very best way to do that is through larger-scale, long-term, thoughtful development, appropriately financed.

I ask the Minister tonight whether the Government have any intention of adopting this approach, taking a long-term view and committing the finance to enabling infrastructure that is required to open up large-scale developments. I contend that we know how to do this. The time is right to do it again.