While taking on the NIMBYs, the Government risks being outmanoeuvred by the right
Arthur Fyfe-Stoica, Public Policy Analyst and Public Affairs Manager
In taking on one of the greatest contemporary political challenges, the Labour Party’s bullishness on housing has been a welcome change in tact - and one that’s long overdue in British politics. For decades, we’ve seen not just mounting frustration with the planning system, but, perhaps most crucially, a failure to deliver the housing the UK needs.
This keenness to see shovels in the ground, however, risks missing the wood for the trees, and requires revisiting why the government has pledged to deliver 1.5 million homes in the first place. That is, of course, to increase the affordability of housing, not to grow the construction industry. Rather, raising living standards and engineering sustainable growth lies in the densification of our spaces, to bring housing costs down and enable people to pursue opportunity. When so much of the public is concerned about the cost of living and their monthly bills, anticipating a windfall from construction and planning deregulation risks falling into the same trap as the Democrats, where the economy grew but it had no salience with voters. Indeed, many people across the UK have seen construction and stagnation co-exist.
It‘s the runaway costs of housing that have eroded people’s incomes and forced all but the wealthiest away from the most productive centres of our economy. Whether the government delivers 1.5 million homes or not won’t matter, because the real yardstick for measuring progress on housing in 2029 won’t be one of quantity. It will be the house price to wage ratio. Only an argument that is couched in taking on the affordability crisis at its most extreme and making the money in people’s pockets go further will connect with the voters Labour needs to win. Failure to make that case successfully means creating more space for the Reform party’s intuitive but unsustainable argument that the solution to the housing crisis lies in cutting immigration to the tens of thousands. Rather than losing its case shadowboxing the NIMBYs, the government risks being outmanoeuvred by the right.
Today’s long-awaited changes to the National Planning Policy Framework are a much-needed course correction following multiple initiatives from the Conservatives that sent housebuilding into a trough. In many ways they get the basics right, such as requiring all local authorities to have up to date local plans and forcing them to choose where homes are built rather than if they’re built at all. But a “brownfield first approach” or building on the “grey-belt” will bring little relief as the majority of these types of land are located outside the South East and will be needed for varied land use, not just residential.
There have also been welcome reforms to allowing upward extensions and reducing the burden on planning authorities to approve new homes if they align with local plans. But if the affordability crisis is to be solved, it requires a targeted injection of housing that matches the geography of demand and densifying our suburbs. Without permitting redevelopment with more housing density, it will become increasingly difficult for London to reach its target build rate of 2.3% per year, and many neighbourhoods will remain the preserve of the wealthy. But this will be essential for helping people see their housing costs fall quickly, and our cities and their satellite towns become more equitable.
The emphasis on construction for the sake of construction has often been exaggerated in its impact on the economy and removed from voter’s experience of the economy. Unlocking homes will create some growth, but the real economic dividend will not be the sugar-rush of more concrete and cranes, but building where demand and social need is highest - delivering a major boost to the UK’s strongest asset, our human capital. Our urban centres are engines for human potential, bringing people with skills and ideas together to innovate, build dynamic businesses, amenities, and services. This will deliver sustained growth and productivity gains, as the labour market will be more responsive to economic needs, significantly raising living standards and wages. Enabling densification in urban centres can share the benefits of agglomeration of cities such as Birmingham, Leeds and Manchester, which aren’t as productive as they should be. Falling housing costs will also translate into more disposable income, better housing mobility and higher overall wages.
Beyond building to deliver affordability, it’s key that the general public feel that more construction can have a positive impact on their lives. Here, the government could lean into the negative political perceptions of big developers by distilling levies such as Section 106 which are prohibiting construction into a simple windfall tax as they deliver necessary homes. The revenues raised from this would add significantly to the Treasury’s coffers, either to boost public services or cut taxes, or they could be left to local communities to profit from enabling local developments.
It’s clear that the Government is taking major steps forward in taking on the crisis of a lack of homes in the UK, but its path of reform looks to optimise the features of the planning system rather than take on the crisis of affordability directly. Early on in the political cycle, Labour has spent much of its political capital on articulating how it will reach 1.5 million homes, but many voters remain unconvinced that any of these will help them at all in making ends meet.
Instead, housing and planning reform must be rooted unflinchingly in building to bring housing costs down where it is most needed within urban areas. The failure to do this has had deeply damaging distributional consequences for people on low incomes. The government should use its mandate and articulate a vision for a more equitable society, one that brings children out of temporary accommodation, and where we work with the grain of our economy to create opportunity for all.
