In 1977, Olivia Newton John sang a love song, Making a Good Thing Better. Forty years later, Labour has just published its own version: a green paper that could be subtitled ‘Making a Bad Thing Worse’.
We have a national housing crisis, largely as a result of a dysfunctional town and country planning system, and many of Labour’s new proposals would make it worse.
One of the barriers to housebuilding is the ever-rising affordable housing tax on housebuilding. Labour wants to increase it. Market housebuilding would become less profitable, so there would be less of it.
Affordable housing would be redefined by reference to local incomes instead of local market prices, so the gap between the cost of provision and the return would get larger. If the cost of producing anything increases, at the margin people will produce less of it.
Been a busy week in the housing sector with James Brokenshire, so a reminder that our poll question this week focuses on Labour's proposals and asks:
— PropertyWeek (@PropertyWeek) May 1, 2018
Are Labour’s affordable housing proposals achievable or will they ultimately deliver less housing?
The target is one million ‘genuinely’ affordable homes over 10 years. That is 100,000 ‘genuinely’ affordable homes a year. That is more than half of all current annual housebuilding.
That one-million target is split: 100,000 ‘genuinely’ affordable homes in the first five years; so 180,000 a year for the next five years. That would be more than annual housebuilding production.
After Labour’s last 13 years in power from 1997 to 2010, its outgoing chief secretary to the Treasury famously left a note for his successor: “Sorry, there’s no money.” There is still no magic money tree, and no indication here how these homes are to be funded.
It is difficult to see any private sector rush into housebuilding to meet these numbers when all that is promised is higher affordable housing costs and an increasing range of arbitrary regulations.
Already (even before this green paper) we are seeing landowners asking for ‘Corbyn Clauses’ to be built into strategic land documentation with developers, asking for the right not to proceed if the public levy on the development achieved makes the return on the land required unacceptable. Better to hold it for the next generation.
Even without Labour achieving office, its policies have the potential to reduce the supply of land for housing.
Our restrictive planning system in its present form is indefensible. But it takes a rare talent to think deeply, and then come up with a package of proposals that will make it still worse.
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