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Lyons – councils must rise to the challenge Matthew Warburton - 20/10/2014


Last Thursday, Sir Michael Lyons published his much-awaited report on how to increase the supply of new homes to 200,000 a year by the end of the next Parliament. With 171 pages and 39 recommendations it is a comprehensive and serious contribution to better understanding of why the English housing market is failing and what might be done about it which repays reading by anyone concerned about housing, not just those aiming to shape Labour Party policy. 


ARCH readers will be disappointed to find that it does not take up our demand for the abolition of HRA debt caps, but it would be a mistake to conclude that there is little of value in it for stock-owning councils.  On the contrary, there is far to much to be fitted in to a single blog and I plan to spread my consideration of the report over several instalments in the coming weeks.


Why, asks the report, are we now building only around half the number of new homes each year that the nation needs, and half as many as we were building 50 years ago?  Two major causes are identified. 


The first, as Kate Barker showed a decade ago, is that not enough land is being made available for new homes. Not, the report is clear, because of those who sit on planning committees, or those who advise them,  but because not enough is being done to address the public's concern that houses are often built in the wrong place, for the wrong people, and without adequate attention to the pressures created for the existing infrastructure.  Councils will find this diagnosis a refreshing departure from the instinctive reaction of governments, developers and media to blame planners and planning procedures.


The second major obstacle to expanding housing supply is the diminished capacity of the housebuilding industry.  Fifty years ago, the public and private sectors together built over three hundred thousand homes a year.  Private housebuilders, large and small, played their part, together with councils, many of which built through their own direct labour organisations. 


Construction DLOs are now close to extinction, but the composition of private sector supply has also changed. In the 1980s there were on average 10,000 active small builders (building 500 units or fewer) responsible for 57% of output.  Now their number has shrunk to less than 3000 and they produce less than 30 per cent of new homes. 


The volume housebuilders now responsible for nearly three quarters of all new homes have a business model that limits supply to what can be easily sold.  Part of the solution to the housing shortage, argues the report, must be to find ways to encourage new entrants to the housebuilding industry, to grow capacity and end the dominance of the volume housebuilders.


Councils can and should, argues Lyons, return to a significant role in commissioning and building social housing, both by making use of the capacity of HRAs, and through the New Homes Corporations mentioned at the Labour Party Conference a few weeks ago.  But the implications for councils go much wider - they point to wider public and community involvement in the planning and delivery of new or expanded settlements - and not just in the narrow sense of land-use planning or development control.  And they also point to the need for councils to look at growing local construction capacity as an economic development priority. 


These are all issues to which I will return in future blogs.

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