Philip Hammond’s budget pledge about building 100,000 new houses in Oxfordshire came as something of a surprise to me on budget day.
As he dramatically announced:
we have agreed an ambitious Housing Deal with Oxfordshire to deliver 100,000 homes by 2031
I must admit I was somewhat taken aback.
As a local housing campaigner in Oxfordshire, fighting for both more affordable homes and also to protect wild spaces and green belt, I was surprised to hear such an ambitious figure seemingly being added to plans that are already afoot.
For the past 3 years, Oxfordshire County Council has been using a planning report that identified a requirement for 100,000 houses, so the Chancellor’s announcement sounded like a doubling of this number with no apparent justification.
Then I realised he was talking about exactly the same plans. These weren’t additional houses, they were the same ones, many of them already built. He’d simply found a way to shoehorn them into his speech as if he’d struck some sort of ground-breaking deal to kick start house building. Anyone involved in housing in the area knows how far that stretches credibility.
Background
A hotly disputed document was produced for Oxfordshire County Council in 2014 called the Strategic Housing Marketing Assessment or SHMA which called for the building of 100,000 houses based on some highly optimistic projections of economic growth in the area between then and 2031.
The figures in the Oxfordshire SHMA are deeply speculative and have been challenged by a number of campaigning bodies and experts, not least the Campaign for the Protection of Rural England (CPRE) who commissioned their own experts to assess the actual need for housing and came up with a much more modest figure of around 60,000.
These numbers were of course pre-Brexit, back in the good old days when we were still welcoming our European cousins to come here and fill the gaps in our NHS staffing numbers and other key sectors.
The SHMA itself is also subject to an impending review after the government realised that assessing housing requirements based on market conditions and economic projections were looking down the wrong end of the telescope.
New Figures
New plans in consultation at Westminster are looking to revise these figures based on the need of communities rather than the want of developers and speculators. It’s expected that under these conditions the actual figures will be closer to those already proposed by the CPRE and others.
What Hammond was crowing about in Westminster was some nebulous promises to fund infrastructure to better facilitate these plans, although the amounts he was proposing were pitiful.
The Tories already have form for dressing up old housing numbers as new commitments in Oxfordshire. Under the coalition, Nick Clegg announced grand plans for the Bicester Garden Town, giving some impressive numbers for houses that would be built as a result. The only problem was that people pretty soon pointed out that many of these houses were already planned. Some had actually already been built! But it sounded good in the run up to an election.
Most of the problems for providing houses in Oxfordshire stem from poor infrastructure in the area, particularly transport links. £150m has been promised under Hammond’s deal to deal with this, although it’s unclear if this is part of the total £215m or additional to it. Either way these amounts have already been condemned by district councils as far too little to make any real difference.
One district council leader described it as :
good but it’s still not enough
In The Wrong Place
You might think that the numbers don’t matter, that building more houses is always a good thing. But as any estate agent will tell you, it’s about location, location, location. The terms of the deal the government has done over funding in Oxfordshire effectively locks the county into building these 100,000 houses come what may and regardless of need, when the government’s own new method of calculating this will probably show they need 40% less.
And why is he doing this? Because Oxfordshire is almost exclusively Tory controlled and building houses in the area is incredibly lucrative. It’s already the most expensive area in the country, next to London, and there’s a lot of money to be made for developers. Those additional 40,000 houses won’t need to be ‘affordable’ and so are very likely to make a lot of money for speculators and property investors.
Instead of building houses where they will do the most good, in areas already demonstrating high unemployment and social need, he’s pursuing a policy driven by future economic projections. This is just box ticking of the worst kind, a waste of money and valuable resources just to give the Chancellor a big announcement in his budget and to make it look like he’s tackling the housing problem.
Anyone involved in housing campaigning will tell you that half the problem is not lack of available housing or new building, it’s a lack of available and affordable housing. In commuter belts like Oxfordshire, where land is already priced at a premium, the myth of affordability becomes even more tenuous.
What ultimately happens is that a few ‘affordable’ homes are built as part of a trade off with private developers, but their valuations are themselves overshadowed by the much more expensive ‘luxury’ and ‘investment’ homes that are built nearby. That in turn pushes up market prices and raises the price of the affordable homes even higher. For the developers it’s always a win/win. No wonder the Tories want to see more of this.
Not Affordable
Instead of tackling the underlying problems inherent in the housing market, the Tories treat the whole issue as a numbers game. This has already been criticised by housing experts as a blunt instrument along with similar criticism of schemes such as ‘Help to Buy’ and reductions in stamp duty which do very little to help with affordability. Indeed it’s even argued that these schemes actually push prices up.
In response to claims in Hammond’s budget that 300,000 houses per year need to be built to make housing affordable, Richard Disney, professor of economics at University of Sussex, said:
The simple answer is this is a number plucked out of thin air, since affordability depends on price and income.
While affordability continues to be assessed as a function of market value, rather that average income, housing costs will continue to be unrealistic and driven more by the whims of developers and property speculators than the need of the majority of the population.
As is the case across the country, new houses are mainly being built by private developers, who are really not interested in less profitable ‘affordable’ houses. The term affordable in itself is something of a meaningless slogan now, referring as it does to the National Planning Policy principle of houses sold at 80% of market value.
In areas like Oxfordshire, where the average house will cost around 12 times the average salary, a 20% reduction is as good as none at all. Try finding a mortgage provider that will lend you 9 times your salary and you’ll soon see how ridiculous a concept that is.
Nevertheless, developers are given planning permission on sites on the understanding that they will build a specific proportion of these so-called affordable houses. In return they stuff estates with mini-mansions priced well out of the reach of average workers with the explanation that this allows them to build the cheaper houses elsewhere.
Even then most developers game the system, by gradually chipping away at the number of affordable homes originally agreed, pleading that the numbers are no longer viable due to the costs and returns involved. They then agree fewer and fewer cheaper homes with councils who are essentially over a barrel by the time the builders have broken ground.
Real Solutions
If Hammond really wanted to help solve the problems of housing in Oxfordshire and beyond there are a number of things he could do.
- Compel councils with an established housing need to prioritise land for housing rather than business projects
- Disincentivise land hungry economic development in already over-subscribed business areas until housing need is dealt with
- Provide incentives for economic development in areas where there’s housing availability, high unemployment and brownfield development land
- Allow and encourage city, town and district councils to borrow extensively to fund their own in-house building projects to build council housing
- Abolish the help to buy scheme which does nothing but shore up an inflated housing market, helping to keep prices high
- Revise the definition of affordable as a proportion of average salaries rather than over-inflated market values
- End the right to buy
But none of that would help the people he really wants to keep on side. The property investors, corporate landlords and big builders who keep him and his government in power.
The housing crisis took generations to create and it’ll likely take generations to fix. Until we have a government that cares more about building homes than bricks and mortar investment vehicles, that process won’t even have started. Nothing in the budget speech suggested to me that the Tories are that government. And that won’t come as a surprise to most of us.
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