What a strange policy

But if Miliband needs a golden policy key, housebuilding looks set to be it. Build a million homes to cut housing benefit waste, employ hundreds of thousands, create apprenticeships, breathe life into the real economy, stop house price bubbles, replace those right-to-buy social homes. Building is not just good policy, but the best symbol for optimism.

Why not just issue more planning permissions so that people can organise building their own homes? Or so that companies can?

If you\’re going to build a million new homes then you\’re going to need to issue a million new chittys. But if there\’s a million new chittys issued then people will build homes anyway.

46 thoughts on “What a strange policy”

  1. Ooh, that’s an easy one. So he can take the credit.
    And because left to their own devices builders will build homes people want. But the government wants rabbit hutches with a load of expensive ‘green’ gimmicks.

  2. And when they’ve built these million homes what happens to all those apprentices and other 100s of thousands? Back on the dole with no useful skill sets for other industries accompanied by lots pf gnashing of teeth at the heartless building industry.

    And of course gearing up to this scale is no mean feat and will take a couple of years at least; that’s after all he contracts have been written, received EU State aid clearance, tendered and let, another year at least if the State aid project I’m working on is anything to go by.

    Typical lefties, never let reality get in the way of a good fantasy.

  3. At the height of the famous 30s building boom, the British economy only produced 250,000 new homes a year.

    And let’s remember how that boom worked: the state built new infrastructure and didn’t get in the way of people building houses on green fields.

  4. Oh, and of course the state could afford to build new infrastructure because there was no welfare state and there was no government debt. Pre-Keynes governments didn’t run huge deficits the whole time so when there was a slump there was money to pump-prime.

  5. Based on Labour’s two plans, 1m new homes costs between £25bn and £80bn. The government is also constrained by its planning permission laws, so when someone proposes that there should be a million new homes, the simple question is: Where?

  6. Oh, and of course the state could afford to build new infrastructure because there was no welfare state and there was no government debt.

  7. Anthony is correct. If you try building anything more substantial than a shed on your own property, you immediately find yourself assailed by clipboard-wielding Council jobsworths and jealous neighbours out to stop you. The instinct to stop people building things cuts across the political spectrum too, as the Torygraph’s dismal and dishonestly named “hands off our land” campaign showed.

  8. Blue Eyes – Oh, and of course the state could afford to build new infrastructure because there was no welfare state and there was no government debt.

    Will this myth never end? In the period 1920-30, govt debt was consistently above 150% of GDP. After the introduction of the welfare state (and the end of WWII) debt came down. Everybody, repeat after me, when Keynes was writing, govt debt was massively high, much higher than now.

    Think of another argument.

    http://www.ukpublicspending.co.uk/uk_national_debt_chart.html

  9. “The monopolists” (e.g.developers & landowners)” by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commodities much above the natural price and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate.”

  10. @ Blue Eyes
    In the early 1950s, MacMillan ordered “a bonfire of regulations” and housebuilding rose to over 300,000 a year of proper houses from under 200,000, mostly prefabs under Attlee’s Labour government.
    Cameron and Pickles have proposed a minor relaxation of planning controls and has been so assailed by lefties and jobsworths and their media allies that Pickles has backpedalled.
    What we need is just to cancel Attlee’s density rules and some greedy builders will build twice or thrice as many flats per acre as they think you should build houses (multi-storey you could easily get six times as many) in bits of London and the housing shortage would start (just start) to fade away.

  11. @ Blue Eyes and Luke
    The 30s “ribbon development” did not depend upon the state building new infrastructure – the houses were built near existing roads. So you are both introducing a completely irrelevant argument.

  12. The only explanation for this way of thinking is that people of no ability can lay their hands on power and wealth this way.

    Look at John Prescott. OK, don’t, but this man is now a millionaire with a vast property portfolio and was, for many years, in a priviliged position. Now he is a Lord in a place he believes should be abolished.

    Could he achieved one scintilla of this without first becoming a Labour-supporting trade unionist?

    There is simply no logic in believing that to get anything done, you first have to take money off people using an incredibly complex and inefficient method, drag it through a quagmire of bureaucracy, manage it by people who no nothing about it and then recruit people to get it done on insanely expensive contracts.

    Using the Gove method, even the plasterers would be on

  13. As an individual, the way around overpriced housing in the UK is to spend £10k-£20k on a top-notch, very intensive, residential language course suitable for a European country with a better climate and house prices £100k cheaper. Other than language I can’t see what’s stopping a lot of people packing up and leaving. It’s not like it’s much easier to get to Manchester from Brighton to see family (say) than it is from Eindhoven.

  14. Tim may be right that a relaxation in regulation is all that is needed. But the underlying cause of all the obstruction is the astonishing degree of peoples personal wealth tied up in the inflated value of property.
    A major building boom would risk pulling down property prices, tipping a vast tranche of households into negative equity, and making the banks fall over again. Nobody wants to take the risk.

  15. But the underlying cause of all the obstruction is the astonishing degree of peoples personal wealth tied up in the inflated value of property.

    Most of it is bullshit wealth, though. They’re theoretical millionaires, and the wealth could never be realised.

  16. @ Blue Eyes
    “Ribbon Development” is overwhelmingly southern. When I was young , we didn’t get that many commuters outside cycling range in my neck of the woods (or primeval forest). Woking is only “Oop North” if you live in Sussex.
    The Piccadilly line extension is trivial in the context.

  17. Not forgetting that the problem with housing is very localised. Only certain areas have the problem. What needs to be done is to encourage people to move to the areas where housing isn’t a problem. But too many own houses rather than rent and too many are in council/housing association homes that do not allow them to swap with another council and too many don’t want to move because of their human right to a family life. Solve these intractable problems and the housing problem disappears.

  18. Tim N: “As an individual, the way around overpriced housing in the UK is to spend GBP10k-20k on a top-notch, very intensive, residential language course suitable for a European country with a better climate and house prices GBP100k cheaper. Other than language I cant see whats stopping a lot of people packing up and leaving. Its not like its much easier to get to Manchester from Brighton to see family (say) than it is from Eindhoven.”

    I don’t think language is the only barrier, not everybody works in a geographically mobile industry. If it was simply a matter of moving from a place with high to low prices, then there would large flows of people out of London to places like Wales and northern England.

    No language barrier, no problems with recognition of professional qualifications, no getting used to a different legal, tax and administrative system, can still drive the car on the correct side of the road… but obviously there are other barriers, or more people would be doing it. Difficulty finding jobs in economically depressed areas perhaps? But I’m not convinced people are even looking for said jobs. Doubts about quality of life? Preference to be closer to support network? (For me this would be the biggest factor, useful for everything from job search to childcare.) Wonder if there’s any survey data available, as it would be interesting to know what’s stopping people filling all the cheap, empty houses available in those parts. Far easier than learning a new lingo and starting a new life overseas. Colder though.

    Incidentally, are there 20k language courses out there? That’s enough to buy a decent house in some parts of the UK! But I agree that it could be a good investment. Ten years ago I thought that EU accession would be a good time to learn an East European language and buy up somewhere out there. Plenty of border areas in Czech Rep, Slovakia, Poland must have good potential even just as commuter-zone overspill from Austria and Germany (am sure I read somewhere Vienna’s public transport system now include bits of Bratislava). I didn’t act on it, but an ex-work colleague got into the Hungarian property market with similar ideas – suspect he’s been quite badly stung on it post-2007.

  19. Surreptitious Evil

    Solve these intractable problems and the housing problem disappears.

    Well, yes, that’s the problem with ‘intractable problems’.

  20. DBC, what those who argue that landowners “hoard” land never seem to explain is why would anyone do this in a normal economy (ie, when the value of money is not being destroyed and where central banks are not encouraging speculation). Absent such a distortion, any landowner who has potential building land who chooses to keep it “off the market” is incurring a cost. This particularly applies to developers who have bought land with borrowed money, or funds raised from others. The longer the period of “hoarding”, the higher the cost. By the logic of your argument, anyone who has something (like land) that others want to buy and who does not immediately sell it is “hoarding”. I might as well claim that I am “hoarding” my skills because I refuse to sell my labour services immediately rather than wait for a better offer.

    The argument that people “hoard” land and therefore gouge the consumer is no less wrong, in my view, than the idea that speculators “hoard” gold, or wheat, or oil, or whatever. This ignores the fact that in order to acquire said “hoards” in the first place, they had to buy these things from willing sellers.

    As Tim says, the heart of the issue is in the state restriction of land via planning laws. Of course, if demand continues to rise, then the rise in the value of land is a function of supply outstripping demand, in which case the prices for land are simply communicating information. Which is what prices are supposed to do.

    End of lecture.

  21. I don’t think language is the only barrier, not everybody works in a geographically mobile industry. If it was simply a matter of moving from a place with high to low prices, then there would large flows of people out of London to places like Wales and northern England.

    I was thinking more along the lines of moving in the early stages of a career, i.e. when you’re about to buy your first house. People don’t flow from London to Wales because there is no work in Wales, but they could go from London to Frankfurt, for example. Yes, different legal systems, taxes, etc. but you go young, effectively emigrate. I reckon for a lot of people, language would be the main barrier. Put it this way, if they spoke English in France, I doubt you’d see young professional engineers buying £150 terraced houses in shitty areas of Manchester.

    Incidentally, are there 20k language courses out there? That’s enough to buy a decent house in some parts of the UK!

    I find that hard to believe…even in the shitty area of Wales I am from, 20k would get you nothing. When I left Manchester in 2003, 20k was what you’d need for a deposit on a reasonable property.

  22. @JP
    Many thanks for rescuing the conversation from going off at a variety of tangents: you are certainly focusing on the main issue. However you talk of a situation absent the destruction of the value of money and banks not encouraging speculation.This situation is never going to arise. Would have thought that banks would not be able to prevent money going into land and property when there is an increase in the money supply for any reason,including commercial prosperity, private and public infrastructure, government spending .The only remedy would surely be ,wait for it, a JS Mill LVT that only operates when land prices start to inflate.
    Anything else, such as trying to flood the market with planning permissions (how is that going to happen in central London: there’s not any vacant land?) or the Henry George L V T, is going (see John Davis#18 above) to cause an almighty house price crash which will ,we know from experience, bomb out the world economy.
    So its John Mill or oblivion basically.(The Mark Wadsworth LVT/ Citizens Income cross subsidy system is also worth looking at.)
    Good to see you are still fascinated by LVT.
    BTW The quote given by me was not by me (as I am sure you know).

  23. Tim Newman>

    Anecdata, but out of my class at primary school, something like 75% are now living overseas. The ones who stayed here are mainly those who have had help with housing from their parents. Those who left made the calculation you’re talking about and came up with the same answer.

  24. If it was simply a matter of moving from a place with high to low prices, then there would large flows of people out of London to places like Wales and northern England.

    I’m not discounting your argument as a whole, with which I am in complete agreement, but Tim N did specify “a better climate”.

    And whilst he didn’t specify it, he probably had at the back of his mind “and nicer food and a better education system and those little pavement cafes that work in Florence / Barcelona / Lyons but are frankly risible in british drizzle – however much one tries to pretend otherwise.”

  25. @DBC Reed: you’re nearly right, but the developers and landowners don’t have a monopoly, whereas the planning officials do, and the commodity kept understocked is not land but Planning Permission.

    So yes, the monopolists do sell their commodity at well above the natural price, with results we can all see.

    And Tim is right.

  26. @ Andrew Duffin

    “So yes, the monopolists do sell their commodity at well above the natural price”

    Well no, they don’t. They don’t sell it at all. The bastards aren’t even corrupt enough to cash in. They just do their thing, broadly as commanded, and allow the mighty windfalls to go to those landowners who get the permissions, and the banks who loan us all the money that pays for them.

  27. The government could either:

    a) compulsorily purchase greenbelt land, build houses on it and sell it for a profit.

    b) auction planning permits for certain designated bits of greenbelt.

    Either policy would result in lots of house building, stimulate the economy and provide a windfall for the treasury.

  28. @AD
    This is very strange: Henry George, JS Mill and before them Quesnay and Turgot were all writing before the era of planning permissions and they identified the tendency to hang on to land while its price rose back then in a purely laissez faire environment. Not forgetting Adam Smith, the secular patron saint of this blog, whose LVT no doubt inspires Tim W but which the ASI hardly ever mentions.(Funny that!)

  29. Must say, it completely eludes me why this bloody LVT keeps cropping up. The discussion’s about building homes, not raising revenue. As Tim says, the answer’s to issue more planning permits & have the finances available to build.
    And on the last item. There will be 3 new maisonettes going up in Essex & 1 house to maisonette conversion. That’s taken 2 years of f****g about with the banks. Continual moving of goal posts. Despite DBC Reed’s obsession with land banking, the developer’s being paying interest on money borrowed to buy the land & house that’s seriously hurt. They should have been finished, sold & occupied by now. Banks would have had their money back & been able to lend it somewhere else.

  30. SadButMadLad Apr 30, 2013 at 3:41 pm

    Tim, you need to go to Burnley.

    What has poor Tim done to you to deserve a comment like that?

  31. Speaking as a (fairly) young person, theres no way I’d emigrate to mainland Europe – leaving aside the other issues it’s full of all those beastly foreigners.

    I did seriously consider Australia – I’ve right of residency (I was born there) and I could probably get fairly well paid work in the mining industry. So, why didn’t I go? It’s a bally long way away, and thus keeping even slightly in touch with uk family and friends wouldn’t have been cheap (nor would have been shipping the classic car I’ve owned since I wasn’t far out of nappies).

    Job hunting for only averagely skilled manual jobs (I’d have been looking for quarry plant fitter type work) from the other side of the globe didn’t sound much fun either, but turning up and looking could gone expensively rather wrong too.

    As for house prices/planning permission – the government is between a rock and a hard place. House prices are too high, but any significant (i.e. more than about 10%) drop in prices will leave so many people in negative equity that as a minimum the labour market will cease to be slightly mobile, and enough people may well default to make the banking system fall over again. As far as I can see the most painless solution is probably a slow one, where the government gradually ramps up building in such a way that houses hold to their current headline prices while inflation brings their actual price back under control. Not a nice solution, but probably more painless than most of the alternatives.

  32. There are definitely risk/reward factors for moving overseas that tend to work against the well-rooted, and favour the more ambitious and adventurous types.

    In the past it would be the desperate, more than the free-spirited, who sought a new life overseas. I think young people struggling to get on the housing ladder count as “fed up” more than “desperate”, and the people in this country who really are in a desperate state are the ones least equipped to make a better life abroad anyway. Can’t just sail over the pond and seek out a low-level manual labour job like they could in the 1880s…

    The gremlins ate an earlier attempted reply to Tim N, but I was going to say “Burnley and Hull” re the “where can you buy somewhere liveable for 20-30k” question. SBML has semi-preempted me!

  33. Surreptitious Evil

    Must say, it completely eludes me why this bloody LVT keeps cropping up.

    Because DBC Reed is a regular commentator on this blog? FFS, this was at least a vaguely appropriate thread for once. Well, it was about housing, at least.

  34. I’m guessing Toynbee, like Murphy and Reed (Passim) has absolutely no experience of the Construction Industry whatsoever, beyond probably writing disapproving letters to Costain or Persimmon over wolf-whistling 25 years ago.

    ‘But if Miliband needs a golden policy key, housebuilding looks set to be it. Build a million homes to cut housing benefit waste, employ hundreds of thousands, ‘

    How in God’s name will building houses cut Housing benefit waste – are we going to give the houses away – are they going to be doled out like contemporary Belarus on the whim of some Labour functionary?

    ‘create apprenticeships, breathe life into the real economy, stop house price bubbles, replace those right-to-buy social homes. ‘

    Good luck with getting the Legions of diversity co-ordinators and such like onto a building site. I think one day of hard graft laying bricks, even were most of them to have the capability would kill them off.

    I also fail to see how ‘breathing life into the real economy’ is even vaguely relevant when the bulk of the problem is provided by the huge amounts of money pissed into the unreal economy of the Non productive Public Sector – what the devil will housebuilding do to counteract that?

  35. theProle: Have you considered coming for a short time, a year or so? You could probably store your car and you’d make an absolute mint. If you work fly-in-fly-out (and why wouldn’t you with no local ties) you can put $1500 a week in the bank. They’re absolutely desperate for workers, you’d have no trouble finding something if you’re physically fit and responsible.

  36. Johnathan Pearce

    DBC, I am still interested in LVT because I see it as an erroneous idea that is held, tenaciously, by people who seem to assume that one can differentiate between movable and immovable goods, and imagine – wrongly – that there is something uniquely different about land. There isn’t.

    While the Earth’s surface is fixed in size, the amount of it that is habitable is not – that depends on whether Man can economically justify spending the resources (reclamation etc) to increase the amount of usable, habitable land. This comes down to prices.

    So if prices for land in central London are high, with or without artificial constraints such as planning laws, that is simply the market’s way of showing that demand outstrips supply, and therefore that those who want a place should move elsewhere, or encourage more high-rise buildings, etc. How else is the allocation of scarce resources to be achieved? The logical alternative is state direction.

    Even with an LVT or other taxes, if land is made more scarce than otherwise would be the case by planning, that scarcity remains. LVT merely redistributes some of the wealth effects from that scarcity; it does not remove the scarcity itself. An LVT will not necessarily prompt a wave of new house-building and rentals.

    LVT is designed to strip what is deemed an “unearned” profit from landholding from the rise in the value of “unimproved” land (no different from taxing a man for the “unearned” benefits of having a high IQ or strong physique).

    However, in practice in an old economy such as the UK, disentangling the improved and unimproved is next to impossible, from what I can see, and imposing an LVT will bring about a number of distortions and new sources of unfairness (such as cases where inheritance taxes are concerned, and so on).

    We have jousted about this issue before, so we have to agree to disagree. I think the LVT advocates are wrong (although I like how Georgists do at least want to cut income and capital taxes and defend free trade).

    Here is a good item on George:

    http://www.econlib.org/library/Enc/bios/George.html

  37. Have not house prices fallen by at least 10 per cent outside of the SE England bubble? The banking system has not crashed as a result.

    Prices in SE England and London could comfortably fall by 10-15 percent with no serious problems. Most property owners will have ridden the bubble for years and will have plenty of fat to trim in their inflated assets (asses).

    Bring it on.

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