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What will happen if we don’t build 250,000 new homes a year? Matthew Warburton - 18/07/2013

missed_target_300Nearly ten years ago Kate Barker's review of housing supply in England estimated that we need to build 250,000 homes a year to slow house price inflation to the European average and meet housing need.

 

In not a single one of the years since then has this target been met, and the cumulative shortfall has now passed a million. This week Shelter published 'Solutions for the Housing Shortage' which analyses the reasons why supply continues to lag and sets out proposals to boost output to the number needed.

"There is no silver bullet" argues the report - a balanced approach is needed, containing a number of elements, including more public spending and steps to tackle structural weaknesses in both the land and construction markets. But nothing particularly radical and not much new is proposed - the necessary powers and policy instruments are mostly already there. The key ingredient missing is the political will to use them.

Shelter's recommendations include boosting government spending on affordable housing from the £3 billion approved in the Spending Round to £12 billion and either simply lifting council debt caps or taking the more radical step of moving council housing off the public balance sheet.

A new programme of Garden Cities and New Towns is proposed, together with green belt flexibility - allowing selected green belt development matched by equivalent additions to green belt land elsewhere, backed up with wider use of compulsory purchase powers and community land auctions to ensure the release of the necessary land. Steps to encourage self-build and smaller builders are proposed to reduce the stranglehold on sites and supply currently held by a few large companies.

Overall, the report makes a convincing argument that reaching the 250,000 target would be a relatively uncomplicated and feasible objective for any government minded to adopt it. The problem is that, despite reassurances at this year's CIH Conference that housing is "right at the top" of the Government's agenda, it is by no means clear that this Government sees boosting new housing supply to 250,000 a year as either necessary or desirable, let alone feasible in the current fiscal climate.

We know that it regards increasing public spending on housing as incompatible with its deficit reduction strategy. It has rejected top-down target-driven approaches to planning for housing, leading, it has been argued, to councils scaling back plans for new development.

There are also rather tricky political issues involved in signing up to a national house-building target aimed at reducing house price increases - which involves over time a redistribution of wealth from existing owners to other households. If the argument for investing in housing is to be won, more needs to be done to spell out the consequences - economic and social - of failing to grasp this nettle.

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