Build, build, build: can Labour solve the UK’s housing crisis?

Labour talk a good game on infrastructure and housing. But as they’re finding out, governing is a lot harder than making rhetorical flourishes from the back benches or the campaign trail.

Last week, the UK government announced its planned revisions to the National Planning Policy Framework. Debate has focused on Labour's plan to deliver 1.5million new homes over the course of the current parliament. Local targets, scrapped last year by the previous Conservative government, are back. There has also been much discussion about building on 'green belt' land and a nebulous new idea, 'grey belt'.

There is no doubt that the UK has a housing crisis. According to official figures, in England in 2023, the average house price was £298,000, while average annual disposable household income was £35,000. In other words, average prices were equivalent to 8.6 times average income. (The disposable household income ratios were 5.8 in Wales, 5.6 in Scotland and 5.0 in Northern Ireland.) In the most in-demand areas, in London and south-east England, the price-to-income ratio is even higher - perhaps 12 to 15.

This has all sorts of implications for society. Many people are deprived of a stable home, forced to rent (at ever-increasing prices) or priced out of having their own place altogether. That also means delays to starting a family, another driver in lowering the birth rate and leading to an ever-older society. More and more capital is tied up in property rather than being utilised for alternative, productive investments.

The question is whether Labour's plans will actually turn things around. For starters, 300,000 new homes per year is both rather optimistic and too low. There is already a massive shortfall in the number of homes being built, particularly with the UK's rapidly rising population, and Labour's new targets won't be enough to turn things around. Yet the house-building industry is also highly sceptical about whether there are enough workers to build substantially more homes than are built already.

All that in turn depends on Labour succeeding in facing down local opposition to new construction, which will be far from easy. After all, if you've moved to a village to enjoy a rural lifestyle and suddenly there is a plan for 2,000 new homes on your doorstep, you are no longer living in a village but a small town – quite possibly without any additional infrastructure to cope. Centrally imposed targets simply bypass local democratic choice. When Conservative spokesman Kevin Hollinrake claims that the plan is part of a ‘war on rural England’, it may be over the top, but it will still chime with many angry about other attacks such as the changes in inheritance tax on farms.

Lobbying councils and local MPs to preserve places in aspic while others struggle to afford a home is wrong - but equally, there is merit in allowing locals to point out when a new development doesn't make sense. As Liam Halligan noted in the Telegraph at the weekend: 'Housebuilding for those living nearby is a noisy, messy business. New developments then put more pressure on often already overcrowded local schools, hospitals and roads, all of which undermines local house prices.'

The question is: why wouldn't people block new homes? What would be in it for them? One proposal would be to allow local authorities to share in the 'planning gain' in the value of land when it is approved for development, allowing new services to be provided. It would certainly provide some incentive. Both the previous and current governments have recognised this when it comes to building the zillions of electricity pylons and wind turbines required to achieve a 'green' energy system by 2050 by offering savings on energy bills for those affected by new infrastructure. But Labour wants the state to get all the planning gain, which would disincentivise building in the first place.

On the other hand, back-of-an-envelope figures suggest there is plenty of room to build if we allow the building of suburbs on 'green belt' land – meaning the kind of homes people actually want, with back gardens and room to park a car - rather than ever-greater densification of cities. Green belts sound lovely, but the green space people crave most is outside their back door. And if Labour seriously wants more homes, it needs to start training the workers that will build them as soon as possible.

But these are not the only constraints on building. Environmental concerns routinely delay approval of projects - what’s a housing crisis compared to the fate of a colony of newts? - or even block development altogether in areas affected by the demand for ‘nutrient neutrality’. As Ross Clark points out: ‘One of the reasons why there are 1.2 million would-be homes which have been granted planning permission over the past decade, but which have yet to be built, is that pettifogging green rules are standing in their way.’ How many smaller developers decide the bureaucracy makes applying for planning permission too much hassle? Even if building goes ahead, environmental issues end up adding additional expense - from endless impact assessments to the notorious ‘bat tunnel’ on the HS2 line, which has cost an astonishing £100million.

But while Angela Rayner and Steve Reed may complain in The Sunday Times that ‘bats and newts are getting in the way of people who desperately need housing’, Labour’s whole mission is infused with environmental thinking and attacked the previous government for attempts to water down the nutrient neutrality rules. The government is being tied up in its own contradictions.

There is also what Patrick O'Flynn calls 'the elephant in the room': immigration. He notes that the UK actually has nearly 20 per cent more homes than in 2001. 'For any normal country in any normal time that would have been more than enough to deal with the net household formation that accompanies family breakdown and longer life expectancy. But while rates of housebuilding have been normal, something abnormal has been going on simultaneously: a vast expansion of England’s population via a reckless experiment with mass immigration.'

Something's got to give. To get to a situation where there are sufficient, affordable homes for everyone who needs one, we need to deal with supply by freeing up land for development, cut the red (and green) tape, and ensure we have the capability to build them. But we also need to have an honest conversation about demand. We need an economy that is more productive, not one simply sustained by an ever-expanding workforce of imported labour.

The Labour government has got off to an appalling start and the hopes for a brighter, wealthier future are being drowned in new taxes, spending cuts and ‘net zero’ madness. Making a serious dent in the housing shortage would be a real achievement - it's far from clear that Labour's current plans will get us there.