Notes on an oligopoly: What did we learn from the Lords' report on the housing crisis?

The good old days. Image: Hulton Archive/Getty.

House of Lords select committee reports are not always the most the riveting of reads. Friday’s, however, from the economic affairs committee was the exception to the rule.

“Building more homes” is a truly devastating assault on recent Whitehall orthodoxy regarding housebuilding, and reveals in great detail much of what has been going wrong. Many of the points contained in the report have been made before – but not often with the authority and heft of a cross-party parliamentary committee.

It is also brilliantly timed (more luck than judgement, one supposes) given that we have a new prime minister and a new communities & local government secretary. If Theresa May and Sajid Javid want to finally get to grips with the endemic undersupply of new homes, they would do well to start with this report.

Here are some of the highlights:

England needs 300,000 homes a year – not 200,000

The government’s commitment to building 1m homes by 2020 (equivalent to 200,000 a year) will not be enough to meet future demand and tackle the backlog after years of undersupply. “To meet that demand and have a moderating effect on house prices, at least 300,000 homes a year need to be built for the foreseeable future,” the committee says. “Otherwise the average age of a first time buyer will continue to rise.”

Note too that the government is nowhere near hitting even 200,000 a year. Completions last year were just 155,000, just over half what is now recommended.

The large housebuilders restrict output to optimise profits

Private developers alone have neither the ability nor the motivation to build all of the homes we need. The housebuilding market is “oligopolistic”: its business model is to restrict the volume of housebuilding in order to maximise profits.

The government’s reliance on the private sector to meet its housebuilding targets is therefore misguided. “To achieve its target the government must recognise the inability of the private sector, as it is currently incentivised, to build the number of homes needed,” the peers say.


Land hoarding should be penalised to stimulate quicker building

There is also too big a gap between the number of planning permissions granted and the number of homes which are built. Councils should therefore be given the power to tax developments that are not completed within an agreed timeframe. 

“We recommend that local authorities are granted the power to levy council tax on developments that are not completed within a set time period,” the report argues. “This time period should be negotiated when planning consent is sought and be varied according to the size and complexity of a development.”

Local authorities should be allowed to borrow build social housing

The government is too fixated on home ownership at the expense of other tenures, and the current cap on council borrowing to invest in social housebuilding is “arbitrary” and should be scrapped.

The committee points to the government’s recent abandonment of its target to achieve a fiscal surplus in 2019-20 and the current low cost of borrowing. “There is no set limit on the amount a local authority can borrow to build a swimming pool,” it notes. “The same should apply to housing.”

Councils should also be encouraged to enter partnerships with housing associations, whose efforts to build more homes have been undermined by reductions in social rents.

Public land is not being released quickly enough

There is surplus public sector land enough in London for at least 130,000 homes – across England there could be enough for 2m. But the government’s efforts to release this for residential development have so far been “ineffective”.

The report recommends that a senior Cabinet minister should be put in charge of this process in future, and the National Infrastructure Commission given responsibility for keeping tabs on the number of homes that are actually built on it. Importantly, the requirement to achieve the best possible market price – often the cause of delay – should be “relaxed”, the committee says.

 

How likely is the government to adopt any of these ideas? On Monday, in her last speech before becoming prime minister, Theresa May spoke of the need to do “far more” to build more homes, which sounds like she may be amenable to a change of strategy. It is not difficult to imagine her getting much more tough on the release of public sector land. And there have been hints already that the new chancellor, Philip Hammond, might be prepared to borrow to invest in infrastructure.

The biggest challenge will come from the major housebuilders, and their many hangers on in the housing and planning industry, who will fiercely resist any effort to make them build faster than they are already. There are many interests vested in the status quo. Whether they are overcome may depend, in the end, on Mrs May’s level of determination.

Daniel Bentley is editorial director of the think tank Civitas and the author of “The Housing Question: Overcoming the shortage of homes”. He tweets @danielbentley

 
 
 
 

This fun map allows you to see what a nuclear detonation would do to any city on Earth

A 1971 nuclear test at Mururoa atoll. Image: Getty.

In 1984, the BBC broadcast Threads, a documentary-style drama in which a young Sheffield couple rush to get married because of an unplanned pregnancy, but never quite get round to it because half way through the film the Soviets drop a nuclear bomb on Sheffield. Jimmy, we assume, is killed in the blast (he just disappears, never to be seen again); Ruth survives, but dies of old age 10 years later, while still in her early 30s, leaving her daughter to find for herself in a post-apocalyptic wasteland.

It’s horrifying. It’s so horrifying I’ve never seen the whole thing, even though it’s an incredibly good film which is freely available online, because I once watched the 10 minutes from the middle of the film which show the bomb actually going off and it genuinely gave me nightmares for a month.

In my mind, I suppose, I’d always imagined that being nuked would be a reasonably clean way to go – a bright light, a rushing noise and then whatever happened next wasn’t your problem. Threads taught me that maybe I had a rose-tinted view of nuclear holocaust.

Anyway. In the event you’d like to check what a nuke would do to the real Sheffield, the helpful NukeMap website has the answer.

It shows that dropping a bomb of the same size as the one the US used on Hiroshima in 1945 – a relatively diddly 15kt – would probably kill around 76,500 people:

Those within the central yellow and red circles would be likely to die instantly, due to fireball or air pressure. In the green circle, the radiation would kill at least half the population over a period of hours, days or weeks. In the grey, the thing most likely to kill you would be the collapse of your house, thanks to the air blast, while those in the outer, orange circle would most likely to get away with third degree burns.

Other than that, it’d be quite a nice day.

“Little boy”, the bomb dropped on Hiroshima, was tiny, by the standards of the bombs out there in the world today, of course – but don’t worry, because NukeMap lets you try bigger bombs on for size, too.

The largest bomb in the US arsenal at present is the B-83 which, weighing in at 1.2Mt, is about 80 times the size of Little Boy. Detonate that, and the map has to zoom out, quite a lot.

That’s an estimated 303,000 dead, around a quarter of the population of South Yorkshire. Another 400,000 are injured.

The biggest bomb of all in this fictional arsenal is the USSRS’s 100Mt Tsar Bomba, which was designed but never tested. (The smaller 50MT variety was tested in 1951.) Here’s what that would do:

Around 1.5m dead; 4.7m injured. Bloody hell.

We don’t have to stick to Sheffield, of course. Here’s what the same bomb would do to London:

(Near universal fatalities in zones 1 & 2. Widespread death as far as St Albans and Sevenoaks. Third degree burns in Brighton and Milton Keynes. Over 5.9m dead; another 6m injured.)

Everyone in this orange circle is definitely dead.

Or New York:

(More than 8m dead; another 6.7m injured. Fatalities effectively universal in Lower Manhattan, Downtown Brooklyn, Williamsburg, and Hoboken.)

Or, since it’s the biggest city in the world, Tokyo:

(Nearly 14m dead. Another 14.5m injured. By way of comparison, the estimated death toll of the Hiroshima bombing was somewhere between 90,000 and 146,000.)

I’m going to stop there. But if you’re feeling morbid, you can drop a bomb of any size on any area of earth, just to see what happens.


And whatever you do though: do not watch Threads. Just trust me on this.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason. 

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