Published: 2 Feb 2022 by Alastair Harper

Today is the launch of the Levelling Up White Paper. And the chance for a new approach by the government and beyond on how we think about housing policy. 

The White Paper contains a promise to build more social housing and rebalance the rights of renters. The government has set the goal, though perhaps not the tools that will get us to it. These we need fast as it comes the same day we hear that house prices have surged higher than ever for over a decade. A decade that has ended with a million households waiting for a social home. It is the right time to think differently. 

Between 2010 and 2020 there was a dominant theory of housing. This theory led to the government doing the same thing over and over again, optimistically expecting different results. This approach was based on a single simple argument – if you just built enough homes, homelessness would end.  

Contradictory policies led to our housing system

The idea is similar to the theory of trickle-down economics. If you built enough homes, all the other problems would take care of themselves. If more homes were built, more homes would be freed up. The private rented sector would decrease as a result; down the chances would flow until homelessness would end. A rising tide lifts all boats. But, to cut a decade-long story short, things didn’t quite pan out. 

Right now, over 126,000 children are homeless. They are stuck in inappropriate temporary accommodation at the cost of their education, wellbeing and health. Around 13 million people are stuck in the private rented sector. This has doubled over the last 20 years. Renting should be a viable choice for those who want to be flexible. But that’s just not reality right now. Given that over 50% of people renting have no savings, they are closer to being homeless than a home owner.

Why was this the outcome of the drive to build more homes? Because the government’s focus was on delivery of any housing supply. Rather than focusing on the homes people actually need. Over the last decade, much was done to encourage more home building. The Help to Buy scheme, for instance, launched in 2013, opened up more supply in a way that was supposed to make that supply cheaper.

The plan was that young people would get a leg up into ownership. We’ve written a blog on Help to Buy and how this scheme was mostly used to subsidise developer costs. On top of that it was only accessible to the minority of renters who had enough savings. For those struggling in the housing emergency,  it was a dead end. And as a recent House of Lords report has shown, it actually increased house prices. 

Home ownership a dream for all but the privileged

The Help to Buy scheme is finally due to end this year, having spent an annual £23.4 billion of taxpayers’ money. Money that could have built an awful lot of genuinely affordable social homes, but it did not. As children waited in insecure housing, a great deal of time and money was wasted on a policy that made homes more expensive and ownership an even more impossible dream for all but the privileged. 

This isn’t a new observation. People have made this point repeatedly over the last decade. So why did they not change direction? Perhaps the government undermined itself by having different departments with contradictory goals.

The Housing Department may have wanted to reduce the cost of homes by increasing supply, but over in the Treasury, the spiralling cost of housing actually made the country look better off on their spreadsheets. The Treasury were happy to support policy proposals like Help to Buy, because they perhaps understood that these would inflate house prices.  

Help to Buy wasn’t the only scheme taking us in the wrong direction. Successive housing ministers sprinted into their departmental office, keen to solve the problem at a stroke. Shared Ownership, Starter Homes, First Homes – they came off the policy production line one after another, each billed as the solution to affordable housing – and, as my colleague has eloquently pointed out, they might as well be as affordable as a superyacht.  

‘Trickle-down housing’ done at the cost of social housing

The idea of ‘trickle-down housing’ is seen for some as letting the market work and leaving the invisible hand to it. But the truth is that the government has been helping developers with tens of billions of pounds a year. And because this approach hasn’t trickled down to make housing affordable (in fact, the reverse), they have also needed to spend more on housing benefit. Much of this ended up in the wallets of private landlords because of the lack of social homes. The government’s hand in the housing market is looking pretty visible.

And that’s the main point. All of this might be just a case study in flawed thinking leading to flawed policy and a regrettable waste of public funds. But the worst thing about the failure of ‘trickle-down housing’ is that it was done at the cost of social housing. The money poured into those schemes could have revolutionised the delivery of social housing, which ran at a net loss of 135,000 social homes this decade. 

Worse still, all these other tenures classed as ‘affordable housing’ meant developers could meet their obligations through these more profitable models, rather than through building social housing. So, of course, they didn’t. At present, building new social homes in this country is a mission against government policy. Those that manage it (and many local authorities of all parties are trying), deserve a medal. 

Ready for a new approach

This is worth laying out this starkly, because we may finally be within reach of something better.

The Secretary of State Michael Gove has said that levelling up is about ensuring people can stay in the places they love without compromising on the lives they wish to lead. The devil will be in the detail of how this is delivered, but a key test will be ensuring that as areas receive investment, people are not priced out of their own communities. 

That means fulfilling the promises in the White Paper on fixing the rules for renting and, ultimately, building the new social homes needed to give people security. A housing market designed to inflate the cost of property in the South East and the capital is now seen as a political problem, not a positive. The current Secretary of State in charge of housing just might get it.

Other Conservatives on the backbenches are also clear that a new approach is needed. And the most hopeful thing is just how simple a fix it would be: clear the decks of all these failed schemes. Make the affordable home subsidy from the government apply to genuinely affordable social homes only. Fix broken rules around how we value land.  

It’s time to stop thinking that building houses – of any kind, in any place – will trickle down to benefit those who are most vulnerable. Instead focus government energy on what those people need.

The next decade needs a clear focus on the right homes in the right places. That means the next task facing Michael Gove is showing how he’ll deliver the social housing he’s promised. It’s the only way to truly level up our country. We at Shelter will work to make the case for that, and make sure we have a planning system that delivers it. 

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