Housing the next generation

Speech by Planning Minister Nick Boles at an event hosted by Policy Exchange.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Nick Boles

[This version of the speech excludes party political content].

Last September, the Prime Minister declared that our mission is “to build an ‘aspiration nation’”, in which we “get behind people who want to get on in life.”

“It’s what’s always made our hearts beat faster,” he said. “It’s not just an economic mission” - but “a moral one” too.

I listened to that speech as one of David Cameron’s newest and most junior ministers.

And, though I find the Prime Minister’s message inspiring, implicit in it was a challenge that keeps me awake at night.

No aspiration is more deeply embedded in the British psyche than the desire to own your own home.

But the prospect of doing so has been slipping ever further out of the reach of millions of hard-working people.

This is a result of our decades-long failure to build enough houses.

And the root cause of that is our decades-long refusal to release enough land for development.

Of course, there are other problems affecting the housing market in the short term: most of all, the lack of finance for buyers and developers since the credit crunch.

These the government is already tackling.

FirstBuy, which helps reduce the deposit first-time buyers need to find to just 5% of the price of their new home, will invest £460 million, matched by housebuilders, to help 27,000 people by 2014.

NewBuy enables other households to access 95% mortgages for new build homes, and the Prime Minister announced on Monday that we will bring forward further measures to increase the availability of affordable mortgages.

Meanwhile, my colleague, Mark Prisk, is deploying £570 million in the Get Britain Building fund to get building going on sites that already have planning permission, and using the £225 million fund that the Deputy Prime Minister announced to accelerate the delivery of housing on large sites like Cranbrook in Devon and Ebbsfleet in Kent.

But, in the long term, the original source of our housing crisis is the failure of past governments to provide enough land for development.

As planning minister, it is my job to persuade local authorities to make more land available so that more homes can be built and the price of new homes comes down - and thereby reverse the trend that has been heading in the wrong direction for decades.

Now can you understand why I sleep a little uneasily?

The 2011 census revealed that, in the ‘noughties’, home ownership in England fell, for the first time in 60 years: from 68% to 63%.

Why? Because houses became too expensive.

The homelessness charity, Shelter, has shown that if the price of food had risen as fast as the price of housing in the last 30 years, a supermarket chicken would now cost £47 - and a jar of instant coffee would cost £20.

In the 1990s, the average person setting aside 5% of their income each week could save up for a deposit on a house after 8 years.

Today, it would take the same person 47 years.

Some say that this trend is inevitable, given a growing population, rising incomes and a finite supply of land.

But in Germany real house prices have remained constant since 2000.

And in the Netherlands, which has shared the UK’s rapid growth in population, real house prices rose by a little bit more than a fifth in the same decade.

So why did they nearly double in the UK?

The answer is simple.

We’ve built too few houses to keep up with the rapid increase in the number of households needing a place to live, especially the dizzying increase in the number of people living on their own.

There are several reasons for this growth in the number of households.

Some we should celebrate - like the fact that people are living longer.

Others we should regret - like the high rate of divorce or the immigration policies that led to a net influx of 1.7 million people into England in a decade.

But all of these changes have happened and all of the people concerned have the right to a decent home.

In 2008, Shelter estimated that we would need to build 240,000 new homes a year in England to cater for all of these new households.

In February 2012, Alan Holmans from the Cambridge Centre for Housing and Planning Research updated these estimates using my department’s publication of new projections of the number of households.

He concluded, that, to keep pace with this trend, we now need to build 270,000 new homes a year, leading to a net increase of 250,000 a year as 20,000 of them would replace existing homes that have to be demolished.

I don’t know whether Mr Holman’s projections will prove accurate.

But I do know that the house-building that took place during the ‘noughties’ fell woefully short of what was necessary.

Despite a decade of easy credit and an explicit target to build 213,000 new homes a year in England, an annual average of only 147,000 new homes were completed between 2000 and 2010.

In the same period the population went up by 3.4 million and, from 1998 to 2008, the number of households went up by 1.7 million.

On average, in each year of the ‘noughties’, the Netherlands built over 4.4 new homes for every 1,000 inhabitants and the French built over 5.6 for every 1,000 inhabitants. In England, we built just 2.9.

This is in spite the fact that, between 2000 and 2010, total mortgage debt in the UK more than doubled - from £500 billion to £1.2 trillion.

This is because this debt just fuelled a massive boom in prices - and did little to boost the supply of new homes.

Those homes that were built got smaller and smaller, as land prices went up and up.

From 2001 to 2003 the new houses we built in England were smaller than the ones we’ve already got - and 30% smaller than the new houses being built in the Netherlands, a country that is more densely populated than ours.

For housing, as in so many areas of our national life, the ‘noughties’ were a wasted decade.

Loads of money sloshing around, lots of top-down targets, but very little to show for it.

So now we have to build even more houses to make up the ground lost and to keep pace with future growth in the number of households needing homes.

And that’s assuming we continue to tighten our grip on immigration so that net migration falls below 100,000 a year by 2015.

Now I do really understand why the idea of a lot more house-building makes people nervous.

And I certainly don’t want to see more open land developed than is absolutely necessary.

But unfortunately there is no painless way to make homes affordable for working people earning ordinary wages.

“What about all the empty homes?” people ask.

And they are certainly right to suggest that we should make full use of our existing housing stock.

But most empty homes are only empty for short periods while they change hands or are renovated or are caught up in probate after the last owner’s death.

There are around 259,000 houses that have been empty for more than 6 months, 50,000 fewer than in 2009.

The government has already invested £160 million and that, together with a share of the £300 million additional spending announced in September’s Housing Growth Package, should help put over 15,000 empty properties back into use by 2015.

Nobody wants to see good homes standing empty.

But they can’t make more than a marginal contribution to the hundreds of thousands of new homes that we need every year.

“What about all the brownfield land?” people then ask - and they point to the Campaign to Protect Rural England (CPRE) estimate that England has enough brownfield land to support 1.5 million homes.

We all want to maximise the number of homes we build on previously developed land - not least because such land tends to benefit from existing links to our road and rail networks.

But even the CPRE admitted that we would only get 450,000 new homes out of brownfield sites in those parts of the country where most of the new homes are needed - London, the South East and the South West.

And achieving that number would require us to build on every scrap of brownfield land.

The fact is that we are already building most new homes on brownfield land: 76% of all the homes completed in 2010 as against 56% in 1997.

We simply can’t squeeze much more out of brownfield sites.

To restrict new house-building to brownfield land would leave us a long way short of the number of new homes we need.

So “what about the developers’ land banks?” people then ask.

And again, I do understand why it riles people that their local councils have to find new sites for development, when the major house-builders are sitting on land with permission to build hundreds of thousands of new homes?

But I’m afraid this concern is also misplaced, resting on a misunderstanding about how the British house-building industry works.

At the end of September 2012, on sites of 10 or more units, there were 487,000 units with detailed planning permission.

About 246,000 of them were on sites where no building has even started - and the Growth and Infrastructure Bill that I am taking through Parliament with colleagues will make it easier for developers to renegotiate the unaffordable Section 106 agreements that have made many of these schemes unviable and caused them to stall.

Most sites with planning permission are for schemes of 150 units or more which developers generally build out over 3 to 5 years.

If we are going to have any prospect of getting our current house-builders to build the number of new homes we need, we need them to have a pipeline of sites representing 3 to 5 years’ supply.

That’s over a million units.

The problem with developers’ land banks is not that they exist - but that they are currently much too small to feed the level of house-building that we need.

So I am afraid that we have a simple choice.

We can decide to ignore the misery of young families forced to grow up in tiny flats with no outside space.

We can pass by on the other side while working men and women in their twenties and thirties have to live with their parents or share bedrooms with friends.

We can turn a blind eye while the dream of a property-owning democracy shrivels.

And shrug our shoulders as home ownership reverts to what it was in the 19th Century: a privilege, the exclusive preserve of people with large incomes or wealthy parents.

But I don’t believe that anyone really wants to go down that road.

If we believe in anything, we believe in the power of home ownership to motivate people to work hard, raise strong families and build healthy communities, to put down roots, take responsibility for their surroundings and look out for their neighbours.

As David Cameron said, “We get behind people who want to get on in life, the young people who dream of their first pay-cheque, their first car, their first home - and are ready and willing to work hard to get those things.”

We have to accept that we are going to have to build on previously undeveloped land.

And to resolve that we will make these decisions locally, and that we will build beautiful places like we used to.

That way England can remain the green and pleasant land we all love.

We start from a good position.

Because, contrary to media myth, we’ve got plenty of undistinguished, undeveloped land to spare.

By overlaying satellite imagery onto Ordnance Survey maps, the Centre for Ecology and Hydrology’s 2007 Land Cover Map shows that 8.9% of England is built up or developed as gardens.

That means that over 90% is not.

Our National Parks, Sites of Special Scientific Interest, Areas of Outstanding Natural Beauty together account for around 30% - more than 3 times the amount that is built on.

If we include the green belts that stop our cities sprawling without limit then that goes up to around 40% of England is protected from development - more than 4 times the area that is built on.

Then there are ancient woodlands and other irreplaceable habitats which are protected by the National Planning Policy Framework, and other important sites which lie outside the official designations, that are rightly championed by organisations like the RSPB and the Woodland Trust.

There is high quality agricultural land which all of us want to see used for the essential purpose of growing food.

And there are much loved open spaces in villages and towns, which local people understandably want to keep intact.

Nothing that I have said and nothing that this government has done will undermine the protection of National Parks, Sites of Special Scientific Interest, Areas of Outstanding Natural Beauty and the green belt.

Or stop good agricultural land being used for farming.

Or prevent councils from identifying ancient woodland and green spaces that local people want them to protect.

And nothing that I have said and nothing that this government has done involves telling communities how many new houses they should accept or where they should be built.

Regional top-down housing targets caused enormous resentment and as we have seen failed to deliver the goods - house-building has fallen to its lowest peacetime level since the 1920s.

So we have already revoked the regional strategy for the East of England.

And, having considered the responses to the consultation on the environmental report, I can announce today that I have decided to revoke the equivalent edict for Yorkshire and the Humber while saving the policies to protect York’s green belt.

I will be making decisions about the other regional strategies in due course, once the consultations on other environmental reports have closed.

But the localism that Eric Pickles has unleashed is not and never has been a one-way street.

As he has always said, with power comes responsibility.

The National Planning Policy Framework spells it out very clearly.

As they draw up their local plans, councils must assess their local housing need in an objective way.

And they must identify immediately developable sites sufficient to supply all of the new homes that are needed over the next 5 years.

Now, many councils are embracing this duty with energy and imagination.

But some are dragging their feet.

And a few are looking for ways to evade their responsibilities - or slough them off onto their neighbours because the politics of house-building is just too difficult.

Well, that is not acceptable.

Councils which do not produce credible plans to meet local housing need will find that the presumption in favour of sustainable development will trump local decisions.

And they will have to explain to local residents why their failure to produce a robust local plan exposed their communities to speculative development in places where it is not welcome.

I will not defend and the government will not support those local councils who abdicate their responsibility to meet their fair share of our common housing needs.

I am not going to pretend that it will be easy for them.

Councillors will have to find a way to persuade the people who elect them that substantial further house-building is in the interest of the whole community, including those who are living there now.

And we are giving them the tools they need to go about this.

The first thing that people want is input into the plans for development in their neighbourhood.

And not just perfunctory consultation that is acknowledged but then ignored.

But real involvement and a vote on the outcome.

So that’s why we’ve created the option of a neighbourhood plan, which is drawn up by representatives of a defined community and subject to a referendum of all their neighbours, before it can be adopted and form part of the statutory plan.

300 localities are already pursuing a neighbourhood plan - from Thame in South Oxfordshire to St James’ ward in central Exeter to central Milton Keynes.

The trailblazer is Upper Eden in Cumbria, where I was on Monday.

Their neighbourhood plan will be the first to be put to the test in a local referendum in March of this year.

The second thing people want, aside from local input and local control, is a share in the benefits that new development can bring, whether that takes the form of a boost in the local authority’s tax revenues or an investment in new community facilities or better infrastructure.

So that’s why we’ve introduced the New Homes Bonus that gives local councils over £8,000 over 6 years for every new Council Tax Band D home that gets built.

Councils received £430 million in New Homes Bonus in 2012 to 2013 and are provisionally set to receive £660 million in 2013 to 2014.

But we need incentives, as Policy Exchange has pointed out, that are even more local - so that the people who have to live with new housing developments get a direct benefit from them.

So today I am pleased to be able to announce that in areas that charge the new Community Infrastructure Levy neighbourhoods which accept new development will get 15% of the revenues from the Levy (up to a maximum of £100 per existing household).

And because I believe, and this government believes, that neighbourhood plans are the key to unlocking more house-building, those communities that draw up a neighbourhood plan and have it approved by local people in a referendum will receive 25% of these revenues with no upper limit.

If you want to re-roof your village hall, build a permanent home for your community shop, refurbish the municipal swimming pool, implement a new landscape design in your local park or save your local pub, look no further.

Jump on the bandwagon and get yourself a neighbourhood plan.

This government believes in localism.

We believe that if you give people power, they will use it responsibly.

If you explain to them what their community and their country needs, they will do their bit to make sure it is provided.

And if you give them a stake in a future in which beautifully designed homes with easy access to green space are, once again affordable for working people on ordinary wages, they will do what it takes to bring that future about.

From my perch on the lower branches at the Department for Communities and Local Government, I look around the great wood that is the British government and I see other ministers battering away at the barriers that hold people back with gusto and grit.

Iain Duncan Smith reforming the benefits system to ensure that work always pays.

Michael Gove giving schools control over their own destinies while ramping up expectations of the standards that they will achieve for their students.

They are an inspiration and a goad.

An inspiration because they are ministers who have identified a shocking injustice in the way our society works and are fearless in their determination to “spread the privilege” of a good education and a decent job.

A goad because we are more than half way through this Parliament, and it’s now up to me to make sure that our reformed planning system provides enough land to build the houses that England’s next generation so desperately needs.

When it does, I’m sure I will have no problem sleeping at nights.

Published 10 January 2013