9 Aug 2010

If targets don't work, maybe bribes will

Grant Shapps is this very morning doing the media rounds, chirrupping about one of his pet initiatives, which is offering councils money for allowing new homes to be built within their boundaries. This is not new money. Rather it’s taken from “existing revenue grants” - i.e. money that central government already pays to local government. So there is a downside here as well. Councils taking on less than average amounts of new housebuilding will, in effect, be getting penalised.

All the old shibboleths are being wheeled out.
• "Homebuilding is good for the economy and good for communities." If so, why is it so unpopular? And why would councils need all this encouragement?
• "Housebuilding is at its lowest level since 1924 - we can’t go on like this.”
• "The council house waiting list stands at 4.5 million in England alone — it doubled under Labour.”

Again and again, policy is being set within these very narrow terms of debate. The reason the council house waiting lists have expanded so dramatically is because private housing has become so damned expensive (it's a tax haven, after all) and private rented housing is so damned insecure. In contrast social housing, now being built to higher standards than private housing, and where rents are subsidised and tenure is for life, has become an aspiration. The wonder is that there are not far more people on the waiting lists. Building a few more social houses each year isn't going to have any effect on this state of affairs whatsoever.

And just what is the "correct" level of housebuilding anyway? How can Shapps boast that he has dismantled Labour's target approach, and yet at the same time have the nerve to say that we are not building enough houses. Isn't that just like being told that there is still a target in place but we won't tell you what it is (Hint - it's more than were built in 1924). Is there a national population target? No. Is there an occupant density standard? No. So how the hell can anyone say there are not enough homes being built?

In the absence of any credible yardsticks against which a target can be set, the debate keeps coming back to this waiting list for council houses. "It's 4.5 million and rising." This is the lynchpin of the not enough homes argument. But, of course, it's nothing of the sort. Rather it's a sad reflection of the fact that the ownership of private housing is now out of reach to many millions. They accept that the best option for them now is social housing and so they join the queue. All quite logical. But unless private housing becomes a whole lot cheaper (which probably means some politically inexpedient taxes on property ownership), the social housing queue will stay at much the same length however many social houses we build. It's not really a problem we can build our way out of.

What would be nice is to have some adult debate about this, rather than the constant repetition of these circular arguments about the "need" for new homes.


  1. Private housing is expensive because it isn't taxed enough. Kinda like saying a particular bucket is overflowing because it's not got enough holes knocked through the bottom.

  2. If so, why is it so unpopular? And why would councils need all this encouragement?

    Ehhh nimbyism

  3. NIMBYism is popular shorthand for why people are anti-development. But it doesn't actually explain what makes people anti-development. Nor does it begin to address what could be done to about it.

    It's always characterised as personal greed v the common good, but this only makes sense if there is common agreement on what the common good actually is. Here there isn't.

    And there is no reason why development shouldn't appeal just as much to personal greed, which is partly what Shapps initiative is moving towards. Why stop at rewarding the local council? Why not bribes for the inconvenienced neighbours as well?

  4. "NIMBYism is popular shorthand for why people are anti-development. But it doesn't actually explain what makes people anti-development. "

    I don't know what you are really looking for. Most of the housing to be built is to be built on greenbelt type land, where everyone who lives their will likely be "oh no not on my fields"

    The same excuses are given every time, road capacity, "it will spoil my view of the fields" local services stretched etc.

    So it really is just plain old nimbyism.

  5. I think another factor is the perverse incentives the government give people with regard to social housing. Get pregnant when you are young and you are assured a home, if you were forced to live with your family many people's actions would change. Also the quality of them is too good for properties many get for free. Changing the incentives could increase the number of people per occupied house therefore addressing any apparent housing shortage.

  6. Chris,

    I think you are absolutely right. The problem is that all these factors are inter-related: population, migration, property taxes, occupation densities, two-tier provision and perverse incentives to both own property (and hang onto it) and to get a foothold on the social housing ladder. Not to mention the poor state of the existing housing stock.

    Teasing out what actions are best in terms of the common good are not easy, but it's a debate that needs to happen. It's happening in some arenas but as far as housing is concerned it seems to begin and end with the mantra: We need more social housing.

    Maybe we do, maybe we don't. Bear in mind some countries - Sweden is a notable example - have very little social housing provision. They support people with money and let them decide how best to spend it.

  7. I'm not sure whether you genuinely believe we don't know how many more homes are needed, or if you're just drawing attention to the contradiction of a government policy that says "there's no target for the number of homes" and "we're not building enough homes".

    If it's the former, I'm unconvinced. The 2007 housing green paper threw the much-quoted number of 3 million new homes by 2020 out there, without any evidence cited. However the now-departed NHPAU did some pretty rigorous analysis and, to summarise horrifically, they said "yeah, about 3 million, or a bit more".

    In terms of the causes of NIMBYism, I've no hard evidence to back it up, but having seen it at close hand it does appear to me that (at least in rural areas) people turn against a development on a very local basis - it's about building on the fields that they enjoy views of. (They subsequently justify it in terms of the impact on the local school, the junction or sewers that won't cope with the increase, whatever, but at least to me that doesn't usually seem to be the real reason.)

    In terms of counteracting the NIMBY effect, I found Matthew Taylor's proposals in Living Working Countryside very compelling. Basically he said instead of building on the edge of existing settlements, which causes the NIMBYism described above, but also has problems because you're never building enough to generate a new parade of shops, you build a new linked settlement. Perhaps only a few hundred yards away, but you protect the fields between the existing settlement and the new one, and actually improve things for the existing residents because you probably upgrade some fairly dull farmed field into public open green space, with utopian pathways for walkers and cyclists to traverse the short distance twixt the two settlements... So, none of the problems of people (quite rationally) opposing development right next to them that is likely to hit the price of their home, and none of the social problems of bolting a featureless extension onto the edge of a town. But you do get a whole load of extra housing.

  8. PS - I'm the most recent anonymous, but I'm different from the earlier anonymous.

  9. NHPAU rigourous? I hardly think so. I have blogged about this before at




    More like extrapolating past trends into the future. Ask yourself a similar question. Is there a road shortage? And if there is, how could you tell?

  10. Hmm, I'd not read those critiques of the NHPAU before. But, having the advantage of hindsight, I don't think I'd rely on the example you use of Ireland. We now know that Ireland has experienced a much bigger house price correction than the UK, which suggests that at least part of what was keeping them up pre-2008 was a bubble. Building more homes won't necessarily make them instantly more affordable, but it changes the fundamentals, the balance of supply and demand - it might take a big event to trigger the revaluing, but having more houses means that when the trigger comes your prices will fall further.

    (I know that there are bigger issues in the Irish economy that makes it more complicated than just supply vs demand in housing; but then again it was more complicated than that on the upswing too, when you pointed to it as a proof by counter example that building more won't keep prices down.)

    (Another aside - I think that we have two separate but related problems with house prices in the UK. They're too high overall, but they are also too volatile. The boom-bust cycle is deeply unhelpful, and some pretty vulnerable people can find themselves suffering with, e.g., negative equity.)

    Here's another example, that again I'm no expert on, but I believe Germany has relatively low and stable house prices, They also have an oversupply of housing. More anecdote, proves nothing of course, but maybe gives part of a clue.

    I'm sure you're right about there being an interplay between housing supply and migration. So yes, some proportion of the new homes will be "soaked up" by it causing an increase in inward migration. But I guess I don't believe that that proportion is 100%. So some of the new housing supply will be available to the existing population (or migrants that would have come anyway) and hence can act as a downward pressure on housing costs.

    I don't know about roads, but I'd say there are some clear signs that some people need more housing in the UK - high housing costs relative to incomes, instances of overcrowding, street homelessness and sofa surfing...

    None of which is to deny that some of the other measures you mention are worthy of attention - the a taxation system could surely do more to keep housing prices more stable, and perhaps lower - but I can't see how you can hope to properly address so much human misery without increasing the quantity of housing available to them.