Speech given by Greg Clark to the National House Building Council (NHBC) in London.
A turnaround decade for housing
Thank you, it’s an honour to speak to so many of you today – in a momentous week for housing, especially at an event hosted by the NHBC. Your timing couldn’t be better after the Spending Review, so that I couldn’t possibly come empty handed.
The NHBC is a credit to the industry – an example of how standards can be raised and maintained independently of government.
Not only does the NHBC certify houses, it also helps insure them – providing warranties on around 80 per cent of all the new homes built in this country:
A model of taking direct responsibility that ought to be applied more widely.
We can be proud that as other countries seek to establish similar organisations, it is to this country that they look for inspiration.
The same cannot be said for every aspect of our country’s record on housing.
The first decade of the 21st century was not our finest hour:
- housing bubble that burst with devastating consequences
- industry in debt
- sites mothballed
- workers laid off
- skills lost
- the lowest level of peacetime house building since the 1920s
- post-war low in house building by the private sector – and by councils
- shrinkage in the stock of affordable housing
- sustained fall in home ownership
- chaos in the regulation of lending
- and a planning system grinding to a halt
The roots of this failure run deep.
Through decades of a complacency about different components of the housing market.
Decades of political inertia.
And decades in which this country consistently failed to build enough homes.
The Prime Minister has spoken of his determination to make this our turnaround decade.
A decade in which we eliminate the budget deficit. But also the housing deficit.
This may not be a familiar term, but if the level of house building falls below the level of household formation then a housing deficit is exactly what we have.
And, furthermore, a housing deficit that builds up into a housing debt – one that cashes out not just in house price inflation and falling ownership, but contributes to economic instability, social inequality and stunted opportunities.
For the good of us all – and especially of the younger generation – we must, and will, put this right.
Progress to date
So, five years into this turnaround decade, what progress have we made?
Most importantly, there’s been a significant recovery in the level of house building.
This can be seen across of a variety of measures, there’s no shortage of competition for housing statistics on any given week, but on this occasion let me refer to NHBC figures.
In 2009, they registered 81,000 new homes; this year they expect to register 160,000.
This is based on a pretty consistent 80 per cent share of the market and approximates to a doubling of building levels during this period.
And good progress continues to be made. The most recent year of figures shows a ten per cent increase in registrations.
In fact, the net supply of housing has shown the biggest annual increase in almost three decades.
This hasn’t happened by accident. From the start, we did what was needed to get the house building industry back on its feet:
- by stabilising the banking system
- through financial guarantees for development; and in helping first time buyers
- over 230,000 households have been helped into home ownership through government schemes
- over 100,000 through the various strands of Help to Buy
- the number of first time buyers is at a seven-year high – and now stands at double the low established in the previous decade
- crucially, we’ve increased the stock of affordable homes. Over 263,000 affordable homes have been provided in England since April 2010 - nearly one third of them in London.
I might also add that twice as many council homes were built in these five years than during the previous 13 years.
We reformed the planning system. I want to express my gratitude to many people in this room who supported us in this reform.
They said it couldn’t be done, but the National Planning Policy Framework is now four years old – and bearing fruit.
In 2010, most local authorities didn’t even have a Local Plan. Instead they had 1,300 pages of central planning guidance. And thousands more from the Regional Spatial Strategies.
We removed this smothering blanket of verbiage and replaced it with the NPPF – a clear and accessible document of just 52 pages.
Now, the great majority of local authorities do have a Local Plan – and we will ensure that the rest are in place by 2017. Moreover, these are better Local Plans.
Those adopted since the NPPF set targets equivalent to 109 per cent of national household projections – versus 86 per cent for pre-NPPF plans.
Planning permissions in the year to the 31 March 2015 were up 13 per cent on the previous year and 64 per cent on the year to March 2010.
Overall, we now permit around a quarter of a million new homes every year; which, if built out, would be enough to close the housing deficit.
The ongoing challenge
But there’s more to do.
Of course, planning for all the homes we need isn’t enough. We have to build them too.
We must therefore go further and faster to ensure that this happens.
Since the election this year, my department has continued with the most effective measures of the previous parliament.
We’ve pressed ahead with the release of publicly-owned land for development.
And we’ve introduced the Housing and Planning Bill, which is in committee stage as we speak.
This Bill includes:
- provision for 200,000 Starter Homes by 2020
- an automatic register of brownfield land
- and measures to speed up the CPO process
- measures to support the extension of the Right to Buy from council tenants to housing association tenants
Instead, we’ve agreed a deal with the housing associations to get on with the job without delay. In return, the government will ensure that the proceeds of Right to Buy sales are used to build new affordable homes for rent and purchase.
The housing associations have set an example here for the whole industry:
- a willingness to move forward in order to build the homes we need; a readiness to be part of the progress we all hope to benefit from
- to get to where we need to be, we must give something in return
- and all parts of the industry do have something to give
We need to see a re-diversification of the sector. A big role not only for the housing associations, but also for councils, self builders, custom builders, small-and-medium-sized enterprises and overseas companies in that sector.
This doesn’t mean a smaller role for the biggest players in the industry.
Quite the opposite.
To house a growing population we need more houses from everyone.
This is not a zero-sum game.
If we tried to play it that way, zero would be the sum of the progress made.
The Spending Review
Of course, a government shouldn’t ask others to move out of their comfort zones if it isn’t willing to do the same.
For any Chancellor of the Exchequer, Chief Secretary to the Treasury, or Conservative government, intervening in the market and committing public money is not something done lightly.
Yet we are determined to invest in what matters most to Britain’s future.
As the Chancellor said yesterday in the Commons: “in this Spending Review we choose housing.”
Specifically, we have secured over £20 billion from the Spending Review to support our wider ambitions to deliver one million new homes and to double the number of first time buyers.
Individual measures include:
- extend the Help to Buy: equity loan scheme to 2021 – supporting the purchase of more homes
- in London, a doubling of equity loans to 40%, providing the capital’s aspiring home owners with a better chance to buy
- and a £1 billion Housing Delivery Fund to support small and custom builders
- there will be £8 billion for a total of over 400,000 affordable homes – the largest affordable housebuilding programme for many decades
- and we’re making major investments in large-scale projects – including Ebbsfleet Garden City, Bicester, Barking Riverside and Northstowe
So, while the Chancellor has made clear his determination to close the budgetary deficit, he was equally clear that this will go hand in hand with action on the housing deficit.
Both are required to make this the turnaround decade.
Both more and better
Ladies and gentlemen, in the last five years both we and you have pulled house building up from the record lows of the previous decade.
In the next five years we intend to push it up further, to levels not sustained for many decades.
But this is not the limit of our ambitions.
The challenges that I’ve described in this speech were many decades in the making.
And so, as our focus moves from rescue to reform, we must address the deep structural weaknesses in the way that this country plans and builds for the future.
This work is already underway through reforms like the NPPF, and the work must go on.
Though the investment announced in the spending review is vital and necessary – we must also move to a future in which we which we can provide new homes without constant intervention from the centre.
In which demand for housing can be met as readily as demand for other goods in our society.
This goes beyond numbers alone.
As well as building more homes, we must build better homes.
Indeed, better streets and neighbourhoods too.
I am proud that we have made – and will continue to make – such progress together on quantity.
But let’s not waste the chance to also make progress together on quality.
We must redouble our efforts.
To achieve our objectives we don’t just need the commitment of the government and the industry, but of the nation as a whole.
Ultimately that means convincing people that development is a force for making places better not worse.
Therefore, the task before us is build both more and better.
And, together, we will.