Government response to housing supply report

Government response to Kate Barker's housing supply report is on the way

Yvette Cooper, Minister for Housing and Planning at the Office of the Deputy Prime Minister, in a speech at the United Kingdom's annual planning convention, reminded her audience that more than a year ago (March 2004) Kate Barker produced her final report on the many important issues raised by Housing Supply.

Ms Cooper seemed to suggest that opposing forces were running a campaign against the Government's plans for building more homes.

But to stop building new homes, she said, was the most unsustainable thing we could do.

For encouragement she turned to Sir Digby Jones, who made it clear on behalf of the Confederation of British Industry that they were giving full support to the Government's drive to expand the volume of house building.

Sir Digby is said to share the views of Kate Barker that 'reduced housing supply constrains labour mobility, damages the flexibility and performance of the British economy and has negative impact on business location decisions and competitiveness', - a quotation from Ms Barker's interim report.

Ms Cooper was also gratified at the campaign for affordable housing being run by the Royal College of Nursing.

But what is actually being done about the many ideas that Kate Barker put forward about easing if not removing constraints on housing supply?.

In her interim report, she came to the correct conclusion that land supply is the key constraint.

Yvette Cooper's boss John Prescott knows this very well, for he frequently complains that for every new dwelling he secures in the expanding field of 'social housing', the land price is such that he has to ask the Treasury for a subsidy of GBP100,000 to make it affordable.

In her final report, Kate Barker observed in a passage on 'causes of undersupply' that though high cost areas are often where additional housing brings the most benefits, it is often easier to build houses in areas that have a lower benefit and a lower cost.

This is the policy that Mr Prescott appears to have adopted for the time being, low cost homes built on low cost land.

As Yvette Cooper pointed out, if we don't have enough homes, it is the vulnerable who will suffer most.

"Lack of housing pushes up rents in the private sector as well as increasing pressure on social housing and homelessness.

Many of the new homes we need to build must be affordable homes and social housing.

"So", she continued, "as we prepare to set out the Government's response to the Barker review later in the year, our challenge is not just to get the policies right but to build a wider consensus in support of the new houses that the next generation needs." According to the Barker report, she said, "the planning system is still failing to deliver the homes we need.

In particular, Kate argued that the planning system was not taking account sufficiently of the signals in the market - whether in low demand areas or high demand areas - when deciding how much housing was needed.

And she pointed to many areas where problems with land supply mean that they are not even delivering the housing numbers agreed in the local plans".

But the Minister assured the planners at the RTPI conference that work is under way across the government in response to the Barker review.

"Before the summer we will begin consulting on possible changes to planning policy to improve local delivery and enable the planning system to take better account of market signals about housing need".

This is no doubt related to Kate Barker's recommendation in her final report, when she commented that planning at present tries to 'make the market' without consideration of the consequences, for example the effect of planning decisions on house prices and affordability.

"Regions", she said, taking her lead from John Prescott's policy of strengthening regional government, "should establish market affordability targets that make these trade-offs [between house prices and affordability] clear.

To assist in this process", she recommended, "a regional planning executive should be established in each region.

The executive would be responsible for developing an independent evidence base and for advising on the scale and distribution of housing demand required to meet the region's market affordability target".

The regional planning executives have now been established and given the powers they require to co-ordinate land use and housing supply.

The idea is that land should be released for development in response to 'defined indicators of housing market disequilibrium'.

Maynard Keynes would have approved of the academic turn of phrase.

Overcoming infrastructure constraints The sort of problem that arises in the process of land development, only too familiar to house builders, is quoted by Kate Barker under the heading 'overcoming infrastructure constraints'.

"Imperial Wharf, London - planning permission for the second phase of Imperial Wharf, a mixed-used development with 1,665 homes, was delayed while the developer negotiated with the Strategic Rail Authority over the provision of a new station to address transport constraints faced by the site.

Negotiations lasting five years were finally completed in 2003, with agreement that a new station, adjacent to the site on an existing West London rail line, would be funded by the developer".

"Ashford, Kent - large housing sites identified in Ashford, one of the four growth areas in the Sustainable Communities Plan, have been delayed by the need to find a funding solution to carry out improvements to Junctions 10 and 10a on the M20, that are necessary to allow access to the sites and prevent congestion on existing roads.

The efforts of public agencies to co-ordinate private developers, and partially to fund these improvements, have helped to ensure that the necessary road improvement work will go ahead, enabling the residential development to take place.

However, housing development cannot come forward until the works are completed, estimated to be 2010".

These examples demonstrate that the rulings of regional planning executives, at present unelected, imposed upon elected local planning authorities, will not necessarily be effective in resolving the type of issues that arise in the practical business of land development.

Yvette Cooper said in the course of her speech that people needed to be convinced that the planning system could deliver the sort of places that people want to live in.

Many house builders are convinced that the planning system as it stands is the chief obstruction to this end.

The Minister was however frank about the consequences of failure to take effective action to remedy the situation in the light of the Barker inquiry.

"Little wonder", she said, "that people find themselves priced out of the market.

By 2002 just 37 per cent of new households could afford to buy a home, compared to 46 per cent in the late 80s.

If we carry on with the levels of house building we have seen, then it will not be long before less than a third of new households are able to afford their own house." The house building industry will be keenest of all to know just how the Government proposes to prevent things getting even more difficult for the rising generation, let alone reverse a trend in housing economics that has been developing over many years past and has now become acute.

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