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 is a civic pride for the digital age”: why we should why we should willingly let City Hall have our data

He was the future once: David Cameron discusses smart cities with Angela Merkel and a German technology executive. Image: Getty.

Victorian England. From the shadows of wealth grew poverty. Slums slumped against symbols of civic pride, cowering next to towering town halls funded through rich merchant princes, whose elitist rule was insufficient to deal with too many people in too few houses with too little infrastructure.

Enter municipality. With darkness came electric light; with disease came tunnels to disperse their cause; with time came reform, regulation and the rise of town planning.

It’s over a century since those places which first industrialised became those first urbanised; yet even the wealthiest cities in the world continue to struggle with the complexities of urbanisation. In London, ten thousand die each year from pollution; in New York, six times this amount reside in homeless shelters.On the rush-hour roads of Sydney, cars stand still, and in the ‘burbs or banlieues of Paris slums still stand.

An umbrella bought during a downpour costs more than one bough under blue sky – and the truth is that, for too, long city halls have failed to forecast and so incurred greater costs. It’s a reactive culture summed up by words first head in Jimmy Carter’s budget office: if it ain’t broke, don’t fix it. Disease before sewer, gridlock before investment, collapse before rebuild – visible fix over unseen prevention

But with the world’s urban population growing by 65m every year, this has to change: there is not enough resource to manage cities reactively. Enter technology and the move to smart cities.

From Barcelona to New YorkOxford to Amsterdam, Singapore to Seoul: billions of low-cost devices are being installed into everyday objects to send and receive data: street lights recording pollution, and bridges reporting performance; traffic lights that count, and whose analysis will be counted upon, to ease traffic congestion; health wristbands understanding our heart’s needs, shop ceilings noting our heart’s desires. A web of information woven into the very fabric of cities which, when added to data from sources like mobile phones, is providing a living-breathing picture of how we and our cities operate.

This data is no longer retrospective or historic but live and dynamic. It is of such quantity, and can be analysed at such granular detail, that it can provide certainty where once there was only supposition. It is build-up before the gridlock, illness before epidemic; the crack of an ageing bridge, the first signs of smog. It is diagnostic to preventative. Umbrella under blue sky.

Those promoting the “internet of things”, estimated to be worth $11.1trn a year by 2025, will declare it a panacea – but it is not, at least not entirely. Sure, challenges regarding data quality, privacy, standardisation, and security will be overcome; 4G will become 5G will become 6G. Devices will communicate intelligently with each other – autonomous vehicle to autonomous vehicle, autonomous vehicle to bridge, drone to home. Data will become as fundamental to cities as infrastructure, and will be referred to as such.

Yet city halls in democracies, whilst infinitely better informed, will continue to make their decisions which are restricted by commercialism, framed by political ideology, and driven by short-term electoral or media pressures.


People first

From the mid-sixties to the start of this century a UK television programme called Tomorrow’s World showcased future living. For every correct prediction (mobile phones) came countless incorrect ones: the floating-bicycle, say, or paper underwear. My point is that only a small part of understanding the future of cities is about understanding technology. The majority is about understanding people and society, the people from whom the very word “city” is derived: civitas, the collective of citizens.

Gutenberg did not change the world by inventing the printing press in the 13th century – but he did enable the world to change. The technology was the printing press, the outputs were books filled with knowledge, the outcomes were the actions of the many who used that knowledge. Technology is a tool, a process towards an outcome. 

In much the same way, the Internet of Things will not change the world – but it will enable the world to change. Sensors are the technology, data the outputs, the analysis of this data and subsequent decisions, the outcome.

It is crucial to avoid the Tomorrow’s World approach. That is, racing to implement technology first without consideration of identified social, economic or environmental needs; introducing more complexity when most citizens seek simplicity. As the writer and urbanist Jane Jacobs once said:“First comes the image of what we want, then the machinery is adapted to turn out that image.”

Start with people. Form the image. Think of technology through the Greek origins of the word, techne and logos – a discourse about the way things are gained – and capitalise on collective intelligence to move towards that image.

Since cities first started to appear some millennia ago, they’ve provided incontrovertible evidence that the wisdom of crowds is far greater than the individual; that collective intelligence gained from that trinity of city institutions – citizen, government, industry – surpasses what can be achieved by any one in isolation. Where would Apple, Uber, or Google be without the government-backed inventions like the world-wide-web, touchscreen technology, WiFi or global positioning systems?

A new civic pride

Of course, an app on a smart phone that can ask a thousand questions is meaningless if nobody feels motivated to answer. Increasing urbanisation brings increasing interdependency: lives intrinsically linked, services shared. The challenge for city halls is to turn the increase in what people have in common, into an increase in common purpose, through understanding the three benefits that motivate and lead to action.

Extrinsic benefits, of status and reward, caused merchant princes to fund city halls in Victorian England: such benefits today see the ambitious putting in extra hours. Intrinsic benefits, like competitiveness or fun, that once caused business tycoons to compete to build the tallest skyscrapers, now explain why “hackathons” and “city challenges” are such a success. Then there are the pro-social benefits of altruism or benevolence, that cause millions to volunteer their time to give back and feel part of something bigger than themselves.

These motivations are of greater significance, because there are no longer people with clipboards standing on street corners asking permission to collate our views on services: it is happening automatically through the Internet of Things. Our choices online, movements offline; the travel we take, the pollution we make; our actions and interactions. We are data.

City halls can take a click-box-small-print approach to this, like so many apps. But there is opportunity to do the opposite. They can promote the fact that citizens can knowingly provide their data towards making lives better; visualise and enable citizens to see and understand their input, alongside data provided by others.

They can incentivise interaction with data, so that entrepreneurs can work back from outcomes, solve challenges, and re-localise where appropriate (we should not need a multinational to get a taxi). They can be proudly open, enabling citizens, industry and government to receive pro-social benefit by contributing to something bigger than themselves: their life and the lives of others.

This is a civic pride for the digital age. Not just localism or patriotism based on geography but the strength of connection between people and their ability to direct and determine change through data. Not just pride in the buildings and infrastructure that form our physical world, but in the quality of data that will shape our future world and move us from a diagnostic to preventative society – umbrellas under blue sky.

We should take pride in technology, yes; but that should come second to the pride in those who, enabled by that technology, drive progress. Who, through the wisdom of crowds, form an image of the future and strengthen democracy by motivating society to move towards it. Who embrace openness and help overcome the challenges of urbanisation.

Kevin Keith is a writer, researcher, urbanist, and director of the southern hemisphere’s largest open data competition, GovHack. He tweets as@KevKeith.

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