Labour plays its hand on building more homes

As we regularly write about on this blog, housing looks like being a major issue at a general election for the first time in a generation. It’s now consistently a top 5 issue for voters, with even secure homeowners worried about where their children are going to live.

After decades of inaction from successive governments, it finally seems Westminster is starting to catch up with public concern.  But if they are to win over an increasingly cynical public all parties will need show how they actually propose to solve the problem.  So far, we’ve seen more rhetoric and piecemeal measures than concrete and coherent plans. To fill this gap, back in May Shelter and KPMG outlined a programme for the 2015 government, outlining how they could solve the housing shortage in one Parliament.

Today, Ed Miliband outlined Labour’s answer with the launch of the Lyons review – and it’s notable that he chose a swing seat, Milton Keynes, in which to do it.

So how does the review measure up?

On the whole, it’s very encouraging.  Many of the recommendations outlined in Shelter/KPMG’s report in May have been adopted. These include a Housing Investment Bank, New Homes Zones and ambitious targets for Garden Cities based closely on our Wolfson Economics Prize submission. Together they represent a credible platform for building the homes we need as a country.

Most importantly, the review identifies England’s dysfunctional land market as the heart of the problem, with some practical solutions and policies offered on how this area can be reformed. This a bold and clear sighted attempt to get to grips with the real reason we don’t build enough homes: the high price of land. If we can get reform of the land supply market right it could push house building into another gear – one that can build more, better and more affordable homes.

Alongside urgently needed social housing, it’s also promising to see the review back lower-cost routes into homeownership for young people facing high house prices. Products like Part-Buy, Part-Rent homes are needed to meet the needs and aspirations of a growing middle market, and our polling shows these are popular with the public. That same polling showed that Lyons’ idea of ‘local homes for first time buyers’ can also prove popular. This continues a growing trend of parties seeking to tap in to the ‘homes for who?’ question: two weeks ago David Cameron  announced a starter homes policy which would ban buy-to-let and foreign investors from buying new homes for first time buyers.

That said, there are still gaps.

More detail is needed, particularly on how desperately needed affordable homes can be paid for. While innovative financing and prioritising investment in housing within existing budgets can cover some of the bill, it’s unlikely to be sufficient by itself. Realistically, it just won’t be possible to build the homes we need as quickly as we need them without extra investment to get affordable supply moving while longer term reforms bed in. Money will need to be found: we suggested a minimum of extra £1.25bn a year.

And then there’s next steps. At the moment this is still talk, rather than action. We want to see the Labour Party promise to deliver these measures in full if they win power. After all, in thirteen years in government they built nowhere near enough homes. None of what Sir Michael says will mean much unless it is accompanied by the political will and investment necessary.

On to the election

Thankfully, over the past five years we’ve seen each of the main political parties begin to grapple with this issue in their own particular way. The Lib Dems committed to building 300,000 homes a year, and the Conservatives made ‘Building for Britain’ a central part of the 2014 budget. Influential commentators in and around all three parties are urging them to seize the political opportunity the housing crisis presents.

But they must go further. To date, the Lyons Review represents the most detailed answer to the fundamental questions of housing supply. The coalition parties are due to publish the Elphicke and House review later in the year: we look forward to all parties showing their hand and making the firm commitments our chronic housing shortage demands.