Building the homes we need
Sajid Javid outlines what the government is doing to make the housing market work for everyone, and calls on building companies to do more
It’s great to be here at my first National House Building Council (NHBC) annual lunch.
I know you’ve always given a warm welcome to my predecessors, and it’s a real honour for me to be asked along today.
If nothing else, I get to thank the NHBC in person for the amazing impact you have on British housing.
The standards you set and enforce and the assurances and the certainty you provide for buyers are a vital part of the market.
I’m looking forward to working closely with you in the years ahead.
This time last year Greg Clark was standing here.
We swapped jobs back in the summer; he’s now in charge at the Business department.
Meanwhile Liam Fox has taken over responsibility for international trade.
And Justine Greening is in charge of skills and universities.
So I like to tell everyone that the Prime Minister needed three people to replace me!
Mind you, I sometimes feel like it would take three people to do this job!
After all, fixing our housing market is a very serious challenge.
There’s a graph in my office, on the wall, showing housing completions since the end of the Second World War.
And the line on it wiggles this way and that and has various peaks and troughs.
But there’s no denying that, since the 1960s, the overall direction of travel has been down.
Year after year, decade after decade, we’ve been building fewer and fewer homes even as the population of these islands has grown and grown.
In the past few years we’ve seen numbers pitch up as the various reforms we’ve put in place have started to bite.
2015 saw more completions than in any year since the recession began.
And, just this morning (24 November 2016), the latest official figures showed a 10 per cent year-on-year rise in new-build starts.
Now of course I welcome any and all progress.
But the numbers we’re talking about are nowhere near good enough.
Last year, almost 190,000 new homes were completed and put on the market.
That does sound pretty impressive.
But even if the number of people coming to live in this country falls, we’ll have to build at least 220,000 homes a year for the next decade just to keep up with population growth.
220,000 new homes every year, just to stand still.
To maintain the status quo.
But we all know we need to do much more than that.
Because the status quo is simply unsustainable.
Of course, the system does work for many of us.
I own my own home; I imagine many of you in this room do too.
You’ve got a valuable asset, one that’s not set to depreciate.
But for people who haven’t got their foot in the door of the housing market, the situation is pretty desperate.
The average house price right now in England is almost 8 times the average income.
And that’s at a time when many first-time buyers need a deposit of 20% or more before a mortgage provider will even talk to them.
The average couple renting in the private sector now spends nearly half their combined income on rent.
That’s money they’re not saving for a deposit.
Prices have been rising faster than wages for years now, under successive governments.
So, for many, the goal of owning or even renting your own home isn’t just out of reach.
It’s moving further away all the time.
And even some people who have managed to get a foot on the housing ladder are, nonetheless, only just about managing to get by.
This isn’t just bad news for people at the sharp end.
It’s bad for the whole country.
An unaffordable housing market stops people going where the jobs are.
It pushes young people out of their communities in search of a home.
And it stops companies – including companies like yours, represented here today – hiring the best talent.
Meanwhile, the annual cost of Housing Benefit is now in the region of £25 billion.
That’s a huge amount of money that’s not being spent on health, education and other frontline services.
It’s no exaggeration to say the picture can look pretty bleak.
Well, I have no intention of allowing it to stay that way.
And nor should anyone else in the housing industry.
There are a lot of things we can take away from the Brexit vote, the election of Donald Trump, and the rise of so-called populist parties across Europe.
But the biggest lesson is that the people we are supposed to be serving do not feel like the Establishment has their best interests at heart.
They work hard, they play by the rules, they want to get on in life.
But, from where they’re standing, government and big business are ignoring their needs.
We’re all talking a good game, but none of us are making a difference in their lives.
We’re tinkering at the edges when what’s needed is radical change.
I have people coming to me with reports and reviews saying “don’t worry; we don’t actually have a shortage of quality, affordable housing in this country”.
People telling me that everything in the market is healthy and functioning.
But the real life experience of so many people tells a different story.
Walk down your local high street this weekend and, wherever you are in the country, you’ll see the same thing.
Young couples staring into estate agents’ windows, trying and failing to find a way onto the property ladder.
Stop and talk to them and you’ll hear the same story again and again.
They work long hours. They’re saving as much as they can.
But owning their own home remains a distant dream.
The people of Britain are not in the mood to be fobbed off with promises, excuses and statistics.
They want action.
They want a housing market that works for everyone, not just the privileged few.
And it’s up to us – government and industry – to deliver it.
Now, I’m not afraid to say that part of the problem is at my end, in central government.
I’m proud of the work that Eric Pickles and Greg Clark did at Communities and Local Government.
Brandon Lewis also achieved an incredible amount during his two years in charge of the housing brief.
But there’s no point denying that successive governments, all the way back to the 1960s, have just not done enough.
As a politician I know exactly why that is.
It’s simple: there’s always an election around the corner!
And that means there’s always a reason not to make the tough choices that could prove unpopular.
But you know what?
Deciding whether our children and grandchildren should have homes is not a tough decision!
Do you want your kids to be priced out of the market?
Do you want them to think that home ownership is a relic of a bygone age?
Do you want them to be working ever longer hours simply to pay the rent and keep a roof over their heads?
I know I don’t.
Making the housing market work for everyone is not just an economic imperative.
It’s also a question of basic humanity.
So as Secretary of State I’m going to do everything in my power to turn this situation around.
We’ve already reformed the planning system, leading to a record number of permissions being granted for new housing.
We’ve doubled the housing budget to more than £20 billion over the next 5 years, including the largest investment in affordable housing since the 1970s.
More council housing has been built since 2010 than in the previous 13 years.
And the Neighbourhood Planning Bill, currently before Parliament, improves and expands on what has already been shown to work.
But there’s still much, much more to be done.
That’s why we’ll soon be publishing a White Paper setting out reforms that will get more of the right homes built in the right places.
I’m not talking about small tweaks, building a thousand homes here or a thousand homes there.
I’m talking about major, long-lasting reform that will carry on delivering homes well after I’ve left office.
Of course, you don’t have to wait for the White Paper to see details of serious, substantial investment in housing.
As you’ve just heard from Isabel, yesterday’s Autumn Statement included a £2 billion pilot of accelerated construction on public sector land.
£1.4 billion to get started on an extra 40,000 affordable homes.
And a £2.3 billion fund to help create the infrastructure that will unlock sites for 100,000 new homes.
Getting the infrastructure right is absolutely vital if new developments are going to be successful and, crucially, be welcomed by local communities.
They need the roads, the utilities, the internet access, the schools, the doctors’ surgeries, the shops, the sports facilities…
The trouble is, at the central government end, that’s covered by at least 5 different departments.
Transport, Business and Energy, Education, Health, and Culture…
The biggest owner of public sector land, by the way, is the Ministry of Defence, so that’s a sixth department.
Housing benefit falls under a seventh department, Work and Pensions.
And of course it’s all led by my department, Communities and Local Government, department number eight.
That’s already almost half the Cabinet.
Yet for too long housing has been seen as an issue for just the housing minister to deal.
We can only deliver housing on the scale that’s needed and at the speed that’s required if every department does its bit, pulls its weight and recognises the importance of tackling this challenge.
That’s why I’m delighted to be leading a cross-government task-force, a new task force set up by the Prime Minister, that’s solely focused on joining up Whitehall so we’re all pushing in the same direction.
We had our first meeting earlier this month and I’m looking forward to plenty of success in the months and years ahead.
Even with this urgent drive to get things done, it will still take time for these changes to take effect.
It’s a bit like turning around an oil tanker.
But the situation is serious.
What’s needed is action this day.
And with me, that’s exactly what you’ll be getting.
Where local councils come forward with sensible, robust local plans – and are willing to take the tough decisions – I will back them all the way.
For example, Birmingham City Council has put forward a plan to meet some of its local housing need by removing green belt designation from a small area of land.
The plan is supported by the independent Planning Inspectorate.
But it’s fundamentally a local decision made by local people.
They’ve looked at all the options. They’ve considered all the implications.
They want to build homes for their children and grandchildren.
And Westminster politicians should not stand in the way of that.
That’s why, earlier today, we lifted the central government hold on the Birmingham Local Plan.
I think I’ve shown that, here in government, we’re doing everything in our power to give you, the house builders, the tools you need.
All I ask in return is that you use them.
I know this is where some of us will start to disagree!
I’ve seen a lot of you nodding while I laid much of the blame at the government’s door.
Now we get to your door!
Because this is the bit where I say that house builders, particularly the big market leaders, also bear some of the responsibility.
I spent 20 years in international business.
At heart, I’m a business person just like you.
I know you have shareholders to worry about, long-term cash-flow to consider, bottom lines to watch.
I understand the situation you’re in.
Since I was appointed I’ve met with many of you in private, and I appreciate that a lot of you would like to build more homes.
After all, everyone in this room got into house building in order to build houses!
You don’t want to see hardworking people lose out.
We’re all on the same side.
We all have the same aim.
We’re all friends.
And friends are honest with each other.
Which is why I cannot look the other way when I see land-banking holding up development.
Some of you have conceded to me, in private, that it happens.
Some of you still deny it’s an issue.
But there’s clearly something going on.
The number of plots approved for residential development each year rose by 59% between 2011 and 2015.
But the number of building starts rose by just 29%.
In 2012, permission was granted for more than 195,000 homes.
Yet 3 years later, 40,000 of those homes still hadn’t been completed.
That’s a town the size of Hartlepool, just waiting to be built.
Of course, this is a free country.
I believe, passionately, in free markets.
If you own land and you don’t want to build on it, well, that’s your decision to make.
But you can’t expect me and the government to go out on a limb and not see a return.
If you want us to pull out all the stops to create the sites, you have to build on them.
The permission gap has to come down.
The build-out rate has to go up.
I was delighted to see the Home Builders Federation announcing plans to publish build-out rates.
When that happens it will bring some much-needed transparency to the system.
And I hope it will also convince some builders of the need to get more done more quickly.
Because there is no doubt that fixing the housing shortage is one of the great social and economic challenges of our age.
Yet the solution is astoundingly simple.
We just need to build more houses more quickly in the right places.
We all know what we need to achieve.
The only question is whether we have the will to make it happen.
I know I do.
I believe you do too.
And I’m looking forward to working with all of you to get Britain building.