New Housing Supply

Ben Everitt Excerpts

Monday 5th June 2023 Commons Chamber

[Ben Everitt (Milton Keynes North) (Con)]

It is a genuine pleasure to be involved in this debate and I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), who is not currently in his place, on bringing the debate to Parliament. As my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) said, this is something that needs cross-party consensus, and I think that broadly we have achieved some degree of consensus over the course of the debate. That is important because successive Governments over the past four or five decades—perhaps even longer—of every colour and political persuasion, have tried to resolve the housing issue. Unfortunately, the interventions they have made have been probably no more than tweaks, which have further distorted the complex feedback system that is what we call the housing market. It is not really a market in the traditional sense. Indeed, as my hon. Friend the Member for Carlisle (John Stevenson) noted, it could at best be described as a series of local markets, distributed pretty randomly around the country.

Most of the interventions that Governments have made over the last half century or so have been demand-side. We have had far too many demand-side interventions, which have just driven up prices and driven away affordability. We are simply not building enough houses in the right places and the shortage of housing supply has a direct impact on house prices. The cost of home ownership and renting has been rising steadily, outpacing wages and inflation. In the UK, the gap between house prices in high demand areas such as London and the rest of the country has doubled over recent years. So our market is broken. Land prices follow economic activity and drive up house prices.

[Bob Seely]

I apologise for intervening yet again. Developers restrict build-out in order to keep land prices high. Is not the answer a “use it or lose it” rule, or to put pressure on developers, or to find a market mechanism that makes developers build more quickly? There are 1 million outstanding permissions, 500,000 of which are on brownfield sites.

[Ben Everitt]

I am grateful for my hon. Friend’s intervention. I think he might be zeroing in on a particular aspect of the picture that I have painted of the broken market. The behaviour—or perceived behaviour, in some cases—of developers and builders is not necessarily the cause of issues that I have been discussing; it is more a symptom.

[Kit Malthouse]

My hon. Friend is making a very good speech. On the numbers given by my county colleague, my hon. Friend from the Member for Isle of Wight (Bob Seely), at the current rate of building, which is 200,000-odd homes a year, outstanding permissions would account for four or five years’ supply. That is in an uncertain planning environment, where seeking planning permission, as I illustrated earlier, is a huge gamble. Does my hon. Friend the Member for Milton Keynes North (Ben Everitt) agree that it is more likely that land prices are driven by the existence of the viability test, which means that you cannot overpay for land, rather than land prices being driven by the value of the property—that is, downwards? That means that land is at an unrealistic value.

[Ben Everitt]

Absolutely. I could not agree more. In any regulated environment, the market players require, and are incredibly hungry for, clarity, consistency and certainty. The system is so complex, and subject to so many historical and, to be frank, future changes; there is not the clarity, consistency and certainty needed by the market players—the people who will provide the houses. They do not have the confidence to put bricks and mortar on the ground. We are calling for massive reform, but we need certainty, which we will put to good use. It should be massive reform first, and then some certainty. I am grateful for the interventions.

The market is broken. Land prices follow economic activity. This is the critical point: what was once a symptom of the need to level up is now a cause. When we have gone through all the pain of getting through the planning process and getting houses built, very often we end up with identikit estates of massive, four-bedroom houses that look exactly like the suite ofb estates in our existing stock. That does nothing for mobility between our existing sector, which is of course about 99% of our stock, and the new build sector. It does not make moving out a viable option for people who are under-occupying former family homes in the existing sector. New build homes are not genuinely affordable and attainable for young, local, first-time buyers, and they are not appropriate for elderly people who are looking to downsize and live in retirement living. There are multiple issues, but fundamentally we are building the wrong kind of houses in the wrong places.

My hon. Friend the Member for Northampton South (Andrew Lewer) touched on the subject of small and medium-sized enterprise builders, labour and material shortages, build cost, inflation, and access to finance, so I will not go on about those, but one of the key barriers to mobility between existing stock and new build stock is stamp duty. Stamp duty is a tax on social mobility. It is crippling mobility in the sectors that we need to drive economic activity. We need to set people free in terms of their labour mobility as well.

I will skip the bits of my speech about the planning system and resourcing planning departments, for reasons of time. I want to end with a reason to be optimistic and hopeful. We have a huge opportunity. We are pouring billions of pounds into left-behind communities through the levelling-up fund, the high streets fund, the shared prosperity fund and the towns fund. All of that is based on the concept of levelling being about opportunities for people who need somewhere to live. So we need to revisit the algorithm and recast the targets. We need to put much more emphasis on where we create and stimulate demand through the billions of pounds the Government are investing through levelling up and make it sustainable, so that communities can benefit from the economic growth from the levelling-up agenda but be sustainable, because people are living and building families and communities in the places near where they work.