The Message From Liverpool
So now we know. The overarching theme of the next general election and of the Labour government that will most probably emerge from it will be housebuilding. This was the nub of Sir Keir Starmer’s speech to the Labour Party faithful at the party’s annual conference in Liverpool on Tuesday (10 October) – and indeed of the speech by Shadow Chancellor Rachel Reeves the day before (in which she forgot to talk about inflation). In contrast, Mr Sunak did not mention housing once in his speech to the Conservative Party faithful in Manchester last week.
Sir Keir is promising “a decade of national renewal” – a phrase which implies that he intends to be in power for at least two parliaments. He vowed to build “the next generation of new towns” and a total of 1.5 million new homes (presumably over five years – so 300,000 new homes a year: a level not recorded since the 1960s) and promised to set “a bulldozer” to restrictive planning rules. He later said that he would take on even his own MPs who adopt NIMBY attitudes. On the contrary, Sir Keir is a YIMBY – Yes In My Back Yard!
And yet it was only last month that Labour peers voted down an amendment to change nutrient neutrality rules, which would have allowed tens of thousands more homes to be built each year. A Tory amendment to the Levelling Up and Regeneration Bill would have seized on Brexit freedoms to ditch the EU-inspired “nutrient neutrality” rules that have been used to stop developments on the ground that they might pollute rivers.
Labour shifted its position after an outcry from nature groups, including a hysterical outburst from the Royal Society for the Protection of Birds which accused the government of “lying”. The Home Builders Federation (HBF) warned that the estimated number of homes being blocked by nutrient neutrality rules now stands at 153,000, up from a previous estimate of around 100,000 last summer. The HBF predicted 41,000 more homes will join the backlog each year – 112 per day – until changes are made to legislation.
Parts of England’s hallowed Green Belt will be re-designated as the Grey Belt under Labour. Sir Keir cited car parks in the Green Belt as being impossible to build on under current planning rules. Under Labour, scrubland and asphalted areas will be released for development – though I cannot imagine that recycled car parks will provide sufficient land for 1.5 million homes.
Even Kate Andrews, the economics editor of the Tory-inclined Spectator, described the message from Liverpool as a “game-changer”. At last, she wrote in the Daily Telegraph, a British political party has understood the magnitude of the UK housing crisis. New polling from the Land, Planning and Development Federation (LPDF) reveals that 69 per cent of voters are worried about the availability of housing in the UK.
Labour has recognised an important problem. Today’s young adults spend more on housing and are less likely to own their own home than any generation since the 1930s. Owner-occupancy has plunged amongst 25-34-year olds (so-called “family-formers”) from 70 percent in the mid-1990s to less than 40 percent now. One quarter of young adults are spending over 40 percent of their disposable incomes on rent.
The Arguments Against
This week, Labour underlined its green credentials and its commitment for the UK to attain carbon net zero by 2050. Ed Miliband seemed more gung-ho on “green energy” than ever. Labour will reverse Mr Sunak’s relaxation of the decarbonisation timetable. And yet they plan to cover huge swathes of grassland (a natural carbon sink – remember the “net” part of the equation) with bricks and mortar. There is clearly some cognitive dissonance in play here. How much carbon will be emitted in building a new town – or even in the production of the building materials required for that purpose? I think we should be told.
The first objection to a massive new housebuilding programme is that it will take land that could be used to grow food out of production. That impacts food security – about which I have written extensively in these pages.
The second is that buildings emit CO2 and prevent the sequestration of CO2 in the ground. You cannot argue that we need to build more homes and to reduce our carbon emissions to zero. It’s either one or the other.
Thirdly, new homes, and even more so new towns, require new infrastructure including roads, a water supply, electricity, doctors’ surgeries, schools and shops. One of the baffling aspects of the British planning system as it stands is that local authorities, which grant planning permission for new developments, have some say over the location of schools but no say whatsoever about the location of medical facilities. That is the preserve of the Department for Health in Whitehall. It’s not just a matter of getting planning permission, it is a question of joined-up urban planning policy.
Fourthly, we are constantly told that we need the natural environment to maintain and improve our mental health. We need more green spaces, not fewer. What about the rewilding and re-forestation agendas?
Perhaps I would be more upbeat about Labour’s prospective housebuilding bonanza if the state of British architecture were not so depressing. “Affordable homes” are dwellings that are poorly insulated, sloppily built and invariably ugly. “Executive homes” (is there are more depressing moniker in the English language apart from flat-packed and bubble-wrapped?) are normally hideous constructions with mock-Tudor gazeboes, “Juliet balconies” and incongruously protruding garages. Most of everything in between could have been designed by industrial draughtsmen, not architects.
The 10,000 hectares or so of prime agricultural land in Cambridgeshire that will now be condemned to accommodate 500,000 new eggbox homes over the next five years will, in any case, probably flood by the late 2030s as the Fens are reclaimed by the North Sea. You can survey the site if you travel by train from Cambridge to London King’s Cross. But flood risk does not seem to be on Labour’s radar.
Is It Time To Invest In The Housebuilders?
With all this talk of future housebuilding you might have thought that the shares of the UK’s leading housebuilders might be flying high – but that is not the case. The UK’s top ten housebuilders are: Barratt Developments, Kier Group, Taylor Wimpey, Persimmon Group, Galliford Try, Bellway, Redrow and Willmott Dixon (private). Their shares have largely flatlined of late as rising interest rates have impacted property prices – though some have done better than others. (NB Bellway PLC). That is not likely to change fundamentally in 2024, though it might thereafter.
There is also the issue of the national skills gap – there is a shortage of qualified bricklayers, plumbers and electricians. If the people arriving in Kent in small boats are qualified brickies or carpenters they should be granted work permits pronto. Does the building industry have the capacity to build 300,000 houses a year? We don’t know.
Moreover, if first time buyers cannot obtain affordable mortgages then the property ladder will be removed from those at the bottom. Ultimately, it comes down to finance. A relaxation of the planning rules does not automatically mean a bonanza for the housebuilders.
No one in Liverpool (or in Manchester the week before at the Torys’ jamboree) uttered the word “eco-towers”. The idea is that entire cities could be built with the footprint of a football pitch – though they might stand half a kilometre high. They would contain all amenities required by their residents and would be energy-efficient given solar panels, windmills and bespoke waste-to-power incinerators. Such vertical cities would not require cars. The objective would be to minimise the footprint of the built environment while increasing the number of new homes.
There are a number of eminent architects who are working on this concept. Ken Yeang is a Malaysian architect and ecologist who is a pioneer in sustainable design. He is known for his eco-towers which make use of grass rooves, rainwater harvesting, and renewable energy systems. His eco-tower projects include the Menara Mesiniaga tower in Kuala Lumpur, Malaysia, and the Solaris 1 building in Singapore.
Kheir Al-Kodmany is professor of urban planning at the University of Illinois. An Iraqi-American architect, he is a specialist in sustainable design. He is the author of several books about eco-towers, including The Vertical City. Al-Kodmany has designed a number of eco-towers around the world, including the Eco-Tower complex in Hamburg, Germany, and the Pearl River Tower in Guangzhou, China. He argues that since there will be an additional 2.5 billion urban dwellers worldwide by 2025, we need to rethink how we plan cities. Planners must integrate tall buildings with efficient mass transit systems, pedestrian-friendly neighbourhoods, cycling networks, attractive plazas and open spaces, well-landscaped streets, spacious parks and engaging public art.
Norman Foster is a veteran British architect who is world famous for his modernist designs. His eco-tower projects include the Hearst Tower in New York City and the Masdar City development in Abu Dhabi, United Arab Emirates. (I have often reflected on the paradox that modernist architecture is most widely accepted in socially conservative cultures).
Stefano Boeri is an Italian architect who is known for his “vertical forests”. His eco-tower projects include the Bosco Verticale in Milan, Italy, and the Liuzhou Forest City in Guangxi Province, China. These buildings accommodate thousands of trees and plants, creating green oases in the urban landscape.
Such an approach requires a certain amount of thinking outside the box – something our politicians are reluctant to do. Sir Keir Starmer did not propose a grand national development scheme or a Ministry of Urban Planning. Each new town and housing estate under Labour will emerge piecemeal from a hopefully streamlined planning process – but there will be no grand unifying theme. Expect more in the vein of Ebbsfleet Garden City (which lies just north of the A2 in Kent). This is an ambitious but unexciting project which was close to George Osborne’s heart – though a good use for an abandoned lime pit.
Another option favoured by the current Conservative government is to bring back pre-fabs – pre-fabricated homes built mostly of wood in factories. These were favoured by the Labour government after the Second World War. Though a few of these post-War pre-fabs still survive, they had an unenviable reputation. £1.5 billion has been set aside to support firms specialising in modular builds, despite two major providers – Ilke Homes and Urban Splash – falling into administration, leaving the taxpayer millions of pounds out of pocket.
Another player in modular homes, TopHat, began building a second factory in Corby, Northamptonshire last year. Covering 650,000 square feet, financed by £75 million from Goldman Sachs, the new plant will be capable of producing one house every hour. Note that this company is still not profitable.
One of the reasons for the shortage of rented accommodation is not a lack of supply but the Tories’ persecution of landlords. The decision by George Osborne in 2015 to limit tax relief on mortgage interest payments makes buy-to-let uneconomic for many landlords, especially in a climate of rising interest rates. I don’t understand why buy-to-let investments are not given the same privileged tax status as personal pensions – which is what they are in most cases.
And why does the UK tax system reward single-person households when these are evidently much less energy-efficient? At present, a sole occupant of a house or flat can claim a 20 percent discount on their Council Tax bill. Rather, we should be incentivising people to co-habit. A household of two is more energy-efficient, and probably happier, than a household of one.
Or again, the tax system discourages the construction of granny flats which are subject to additional Council Tax (nor is the cost of constructing them tax-deductible). Surely, it is much preferable for elderly folk to live under the watchful eye of their children than to put them in residential care homes at state expense.
It seems that some of Labour’s big ideas on the economy are influenced by the British-America-Italian economist, Mariana Mazzucato. Ms Mazzucato is Professor in the Economics of Innovation and Public Value at University College, London where she is the founding director of the UCL Institute for Innovation and Public Purpose.
She is the author of a number of influential books which have formulated a case against what left-inclined thinkers call “late capitalism”. These include The Big Con, a critique of the management consulting industry; Mission Economy, which argues that we must rethink the role of government in the economy; The Value of Everything, a scathing indictment of the contemporary global financial system; and The Entrepreneurial State, in which she attempts to explode “the myth” of a lumbering, bureaucratic state versus a dynamic, innovative private sector.
For that reason, I doubt that a Starmer-led government will just award contracts to the big British housebuilders and let them get on with it. There are likely to be forms of public-private partnership. Many of the newly built homes will remain under public (“social”) ownership. But ultimately, finance available to the housebuilding sector will depend on the state of the British economy.
As the Labour Party conference concluded so the International Monetary Fund (IMF) came up for air with its bi-annual gloom-fest on the British economy. According to the IMF, Britain will have the lowest growth and the highest inflation of all the G-7 economies next year. Interest rates will remain elevated for “at least” another five years. Mercifully, the IMF’s prognostications are almost always wrong – because they are predicated on out-dated, excessively negative data.
We also learnt this week that the British economy grew by just 0.2 percent in the year to the end of August – another anodyne outturn. That said, tax revenues have been robust this year and the Chancellor may have more “headroom” for pre-election tax cuts than previously thought. No doubt things will become clearer after the Autumn Statement, scheduled for 22 November.
One of the oft-repeated tropes of the Labour Party conference this week was: “Can you think of anything which has improved in the UK during the last 13 years of Tory rule”? (We’ll ignore the fact that for the first five years the Tories were in coalition with the Lib-Dems).
I reflected on this, and I suspect that this will become the mantra of the upcoming general election. I would honestly say that more or less everything has got perceptibly worse. From the decline in manners as civility wanes to the ubiquity of litter to the abominable levels of customer service provided by banks to the state of the NHS to the condition of our motorways to the endless sterile culture war to the mindless state of the national discourse to the wokery of the BBC (more evident this tragic week than ever, as I shall expound soon). And so much more.
OK – I will admit to one good thing: the Elizabeth Line, which has revolutionised my journey to Heathrow from my house in Kent. And Amazon Music Unlimited stroke Spotify means that I shall never need to buy a CD again.
But these will not be enough to save the Tories from their inevitable fate. Even though it’s not all their fault. We had the financial crisis followed by a regime of austerity; the five-year argy-bargy over Brexit which wasted so much time and energy when we should have been concentrating on how to boost our productivity; a pandemic of an unpleasant respiratory virus – 27.4 million of us contracted it and 230,000 Britons died of it (though many of those would have died anyway); and then a war in Europe with soaring energy prices which unleashed a tsunami of inflation and an ensuing cost-of-living crisis.
No doubt the Tories will have time to reflect on exactly what went wrong after the election. But whether Sir Keir and his team will be able to supercharge UK growth and productivity in the second half of this decade remains doubtful.
Listed companies cited in this article which merit analysis:
- Barratt Developments (LON:BDEV)
- Kier Group (LON:KIE)
- Taylor Wimpey (LON:TW)
- Persimmon Group (LON:PSM)
- Galliford Try Holdings PLC (LON:GFRD)
- Bellway (LON:BWY)
- Redrow (LON:RDW)