Planning and House Building

Neil O'Brien Excerpts

Thursday 8th October 2020 Commons Chamber

[Neil O’Brien (Harborough) (Con)]

On my way here in the mornings, I go past an abandoned factory site right next to the railway station in Market Harborough. It was given planning permission in 2004, yet it is still derelict. If I were Housing Minister, I would be focused on giving councils the powers and tools they need to unstick those stuck sites long before I came to look at anything to do with this housing algorithm. What people object to in my constituency is not that we are building more houses. We have a quarter more houses in the Harborough district than we did in 2001—we are pro-development. What people object to is being told that in the Harborough district we will double our housing target, whereas Leicester’s will be slashed by a third, with its decrease perfectly cancelling out our increase, no extra houses built and the only thing being achieved is a sprawling outwards of that city, despite the fact that it is full of brownfield land that should be developed first. This is the wrong approach.

This formula is flawed is so many different ways. It is driven by population forecasts, so we see what is sometimes called the “Matthew effect”, named after the gospel, whereby to those who have, more shall be given, meaning that because somewhere took houses before, it is going to get even more now. That is fundamentally flawed, a fact acknowledged in the consultation, yet it is there in the formula and still driving a big part of the problem.

The second part of the problem is that the so-called affordability in this formula is nothing of the kind. It is a ratio of workplace-based median earnings to median house prices. What we are doing—because people commute into cities, and that makes their workplace-based earnings look higher and affordability look better—is comparing the house prices in an area with the incomes of people who do not live in that area. That cannot be intellectually defended and it is one reason why we see the anti-urban bias in the formula.

We are then using earnings to house price ratios. Geoffrey Meen at the University of Reading—one of the doyennes of this field, whose modelling is always used by the Ministry of Housing, Communities and Local Government—says that this “reveals little information” and that

“increases in the ratio over time do not necessarily imply a worsening of affordability… For these reasons, price to earnings ratios are rarely advocated in the academic literature”,

and yet we are using them. If instead we were to look at total income—not just earnings—and all housing costs, including the costs of people who are social renters and private renters, who are more common, of course, in cities, we would see that the housing problem, the affordability problem, in this country is concentrated in cities. That is where the poll shows that people are worried about there not being enough housing, so instead of sprawl we should have a more urban-focused approach.

A sprawl-focused approach is bad for the environment and for the Prime Minister’s target of net zero. In cities such as Liverpool, Manchester, Leeds, Bradford, Sheffield, Nottingham and Leicester, the household emissions are 15% lower than the national average. The transport emissions are 35% lower—there is more walking, more cycling and more public transport—and yet they are being asked to deliver 37% fewer houses than they are delivering at the moment, so that is bad for the environment, exercise and health, because people who live in cities walk twice as much as those who live in villages, and there is more cycling. It is also bad for productivity because the places we are slashing the housing targets for are those that are seeing faster productivity growth. Successive Governments have been trying, whether with the northern powerhouse, the modern industrial strategy or now levelling up, to target urban growth to get the productivity of our great cities going again. That is what we were trying to do instead of just going back to a south-east-centric, shire model of growth and what we had in the 1980s.

In conclusion, Ministers should fundamentally rethink this formula so that it actually hits the target. Yes, we should build more houses, but we should do it in the right places. We have to reflect the advantages of building in urban areas and bring in caps, because if we have huge increases, the pace of change is part of the problem. People do not object to change. They do not object to more houses—in fact, they want more houses—but they do not want to see the character of their area change overnight. That is why we need caps back in the formula. There are so many good things in the White Paper. Ministers have so many good things to talk about. I wish we could solve the issue of the flawed housing algorithm, so that we can get on with doing all those good things.