New Housing Supply

Kit Malthouse Excerpts

Monday 5th June 2023 Commons Chamber

[Kit Malthouse (North West Hampshire) (Con)]

I will do my best, Madam Deputy Speaker.

I draw Members’ attention to my entry in the Register of Members’ Financial Interests, tangential though it may be. I congratulate the hon. Member for Stretford and Urmston (Andrew Western) on his speech, much of the contents of which I agreed with.

Some four years ago, when I was Housing Minister, I decided to hold a housing summit in my largely rural constituency—220 square miles of beautiful rolling Hampshire downland, much of it an area of outstanding natural beauty. About 150, shall we say, more senior members of society showed up for the event in a village hall, and it was obvious from the outset that I was heading for a beating. I began my remarks by posing two questions to the assembled group. I asked them first to put their hands up if they had a child or grandchild over 25 still living at home, and about half of them did so. I then asked them to put their hands up if they had bought their first home in their 20s, and about two thirds of them did so.

Having thus posited the problem, we went on to have quite a civilised conversation about where houses should be going in my constituency and, indeed, in much of the south-east—for these people had come from far and wide. In truth, the message to people who are resistant to or nervous about housing development—even to the small number of verifiable nimbys among us—is that whether they like it or not, the houses are coming. A generation that has been denied access to housing will eventually come of age and be able to vote for councils and councillors, Members of Parliament and Governments, who will deliver what that generation has been denied and put those houses in place.

[Mark Pawsey]

How many sites have been allocated following that meeting?

[Kit Malthouse]

I am pleased to say that my constituency overall is forecast to take something like 30,000 homes over the next 10 years or so. There are some questions to be asked about where the houses are going and what they are going to look like, but those are fundamentally the only two questions that we have to ask. We are building a lot. Indeed, I hope that over the next 10 years, Andover, the main town in my constituency, will get close to double the size that it has been in the past.

This is not just a problem for those individuals who are denied housing; it is a problem for the nation as a whole. We can see the impact of restrictions on housing and the inability to access housing elsewhere. In the United States, for example, a brain drain is taking place from major coastal cities such as San Francisco, New York and Washington DC as young, highly productive people who cannot access housing are leaving in large numbers. In this country, we might see that spreading to other parts, but because we are a smaller country geographically, we will see other impacts. We have seen lower household formations over the last 20 years than we have before, along with a declining birth rate, and more and more young people are choosing to live and work overseas. The history of human economic achievement has shown us that the closer we gather and crowd together, the more productive and innovative we are, so there is going to be a long-term impact for us overall, economically as well as individually.

Now, how do we deliver those houses? I do not think that anybody believes that we should not be delivering 300,000 houses today. When I was Housing Minister, I had a church totaliser on my whiteboard showing me where those houses were going to come from and how we were going to get there. For me, there are broadly three things that we need to do. The first involves the planning system. It has long been an obsession of wonkery that the planning system needs to be swept away because it is not working, yet local authorities tell us that 92% of applications are approved and that it is functioning. They do, however, express a frustration with it, which is that the system as it is currently configured has become a huge game of poker. Developers, councillors and local people are gambling on what is going to happen, and somebody in a suit, male or female, from Bristol—the planning inspector—will be the final croupier who decides who wins the game of poker. That is just not good enough. As the hon. Member for Stretford and Urmston said, certainty is what produces results.

So for me, the first step is the abolition of the Planning Inspectorate, alongside setting hard targets for local authorities but giving them an absolute right democratically to choose where those houses should go in their area. Hopefully that will be brownfield, and some of it may indeed be garden villages. It is a great sadness to me that the Oxford-Cambridge arc seems to have been abandoned by the Government; I had huge ambitions for that part of the world. If we can create certainty by putting local authorities in charge, with those hard targets, they will know that they have their fate in their own hands and we can just get on and build.

The second element of the planning system that needs to be removed is the viability test. Many developers over-densify and hide behind the viability test. They do the local community out of its rightful contribution from the uplift in value because they show a spreadsheet of whether a development is going to make money or not and they justify adjustments here and there. That is particularly the case in London, where it is simply impossible to overpay for land. The viability test says that anyone who has overpaid for land can just build a 44-storey skyscraper that will pay for their effective overpayment and largesse. If we get rid of the viability test, we would get an actual market for land and it would be possible to overpay. We would then see realistic values and get more land coming through.

Finally, one of the key elements for the acceptance of housing in local areas, alongside the need for the restoration and strengthening of neighbourhood planning, is a strong sense of aesthetics. I certainly see this in my constituency. I have joked in the past that if they would only build thatched cottages in my constituency, we could build thousands of the damned things. Aesthetics matter. When we look at some of our historic towns and cities, we see that they have been scarred by previous generations building rubbish stuff. The houses that were built in the 1960s and ’70s have largely been—or will largely be—bulldozed and replaced. Hardly anything from that era will be deemed to be a conservation area, unlike so much of the mass development created by the Victorians. If we get the aesthetics right, along with providing local people with the certainty that they are in charge of their destiny on housing, acceptability will rise.

Let me give the House an example. Anyone who has the joy of going to Stamford in Lincolnshire—I did not mention to my hon. Friend the Member for Grantham and Stamford (Gareth Davies) that I was going to mention his constituency—can see a game of two halves. They will find developments in the classic tradition that look like Stamford, and people queue round the block to buy those houses. On the other side of town, they will see developments that look like the same old rubbish that is built anywhere else in the UK, and they will scar that beautiful town for many generations to come.

We need a rigid aesthetic code looking at vernacular architecture. We need to put local authorities in charge, rather than having arbitrary decision making by the Planning Inspectorate. We need to get rid of artificially inflated land values through the abolition of the viability test. We also need some hard numbers that will add up to 300,000, or possibly more, as the hon. Member for Stretford and Urmston said. Then I think we would stand a chance of answering the question that we have to answer for the next generation: will their life be better than ours? If we can do all that, the answer may well be yes.

--- Later in debate ---

[Andrew Lewer (Northampton South) (Con)]

I thank my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) for securing this debate on such a pressing and important topic, which I have been involved with, in one way or another, for 20 years in elected office. I was pleased to lead a Westminster Hall debate on the related topic of the future for SME house builders just the other week, and today’s debate provides a welcome opportunity to hammer home some of the points I made then.

As a Conservative, the idea of the UK as a property-owning democracy is one about which I feel very strongly, and it worries me deeply that, for many younger people, home ownership is increasingly out of reach. Unsurprisingly, given my chairmanship of the all-party parliamentary group for SME house builders, I have a strongly held view that the sector can play an important role in helping to address the dual problems of housing accessibility and affordability across the UK.

The Home Builders Federation reports that, in 2020, the SME house building sector delivered about 22,000 homes. To put that in context, according to the Federation of Master Builders, SME builders could deliver 65,000 homes by 2025, compared with 12,000 in 2021, given the right conditions.

For those who are not aware of how vital the SME sector is to housing delivery, let me explain. SME developers typically carry out smaller developments built on trickier sites, and the SME sector tends to go where volume house builders cannot. As well as this, they often face less vocal opposition, as they deliver brownfield housing up and down the country, instead of the large-scale developments that often do not have the infrastructure to go along with them and which are responsible for so much so-called nimbyism. The sector delivered 39% of all homes built in England in the late 1980s yet, 40 years later, it barely manages 10% of our annual housing completions.

The rising cost of materials is causing difficulties for developers across the board, which is why I welcome initiatives such as the one developed by Travis Perkins, based in my Northampton South constituency, that enables SME house builders to access building supplies and materials directly without facing lengthy pre-approval checks. Another issue for SME house builders is access to finance, on which my APPG is soon to deliver a report. That includes difficulties in the Land Registry process for recording changes of property ownership. Labour shortages are another issue, as labour is crucial to the whole process.

[Kit Malthouse]

It is extremely important to recognise that small house builders, which were largely wiped out in the 2007-08 crash, have not re-emerged. Does my hon. Friend think the Government should look at the generation of new house builders—in the ’70s we had Lawrie Barratt and the chap behind Redrow, these big house builders—in the same way that they are looking at the generation of new scientists and new companies that promote science and technology? They have a strategy and funding all of their own, but I have yet to see anything that would stimulate new house building companies for the future. Does he agree that is something the Government should look at?

--- Later in debate ---

[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.

--- Later in debate ---

[Rachel Maclean]

I will not at this point, if the hon. Gentleman will forgive me, because I have a lot to get on the record.

My right hon. Friend the Member for Haltemprice and Howden has passionately advocated for new towns. We agree that an ambitious pipeline of housing and regeneration opportunities is crucial. I am a representative of a new town, Redditch, which currently houses about 70,000 people, so I know how successful and how important those developments can be. That is one of the reasons why we are already supporting delivery at scale along the lines he suggested through several funds, including the garden communities programme, which will support the delivery of more 3,000 homes by 2050, most of them in the north, the midlands and the south-west.

To pick out a couple of examples, Halsnead garden village in Knowsley will deliver more than 1,600 new homes in Merseyside, along with new businesses. Another, West Carclaze garden village, will support up to 1,500 new homes in an innovative and sustainable new community that promotes the health and wellbeing of its residents. My right hon. Friend the Member for Chelmsford noted the fantastic development in her local area, and I look forward to continued active discussions with her about the proposals in her Affordable Housing (Conversion of Commercial Property) Bill.

We must also work to unlock large complex sites through initiatives such as our housing infrastructure fund, which my hon. Friend the Member for Carlisle has welcomed in his area. The fund delivers the infrastructure needed to ensure that new communities are well connected and supported by local amenities.

New towns, as my right hon. Friend the Member for Haltemprice and Howden rightly asserted, can deliver high-quality, sustainable urban development and make an important contribution to housing supply. However, they require considerable resources and co-ordination, a long-term vision or masterplan, strong local support, enabling infrastructure and a significant capacity and capability commitment that is often beyond the abilities of local authorities.

For all those reasons, the Government believe that new towns can be part of the solution, but not the whole solution, to alleviate housing demand. They should be considered alongside regeneration opportunities to make the most efficient use of brownfield land and maximise the benefits of existing transport infrastructure. All our reforms are based on the principle that we will deliver housing only with the consent of communities and elected representatives at all levels. We know that wherever development takes place, local people will express the same concerns, so we have to get it right.

[Kit Malthouse]

Would the Minister at this point like to address the issue that a number of us have raised about the removal of hard targets and the uncertainty that that creates, particularly for the industry? For example, as she will know, gearing up to deliver 300,000 homes a year is a huge logistical exercise that requires massive capital investment to produce bricks, building machines and all sorts of stuff. That requires a very long horizon of certainty of delivery. If there are no targets, how is she going to give that certainty to industry?

[Rachel Maclean]

My right hon. Friend will, I hope, hear the remarks about that later in my speech.

Unfortunately, I cannot do justice to all the questions that are being asked, but I will touch on the importance of a healthy and diverse housing market, including the SME builders that were rightly mentioned by my hon. Friend the Member for Northampton South. We have launched the levelling up home building fund, which provides £1.5 billion in development finance to SMEs and modern methods of construction builders. Our Levelling-up and Regeneration Bill makes changes to the planning system to make it much easier for SMEs to operate.

Every Member has spoken about the importance of a modern, responsive and transparent planning system. I think it vital that our reformed planning system helps to bring certainty to communities and developers. That will enable them to take those positive steps towards building more housing, regenerating their local areas and supporting economic growth.

To address the point on which my right hon. Friend the Member for North West Hampshire challenged me, he will know that we have just concluded a consultation on the NPPF. A number of those policy questions are live and the Government will respond as quickly as possible to provide that certainty to the market and to local authorities. However, it is a huge consultation and it is important that we get it right.