Here's how Britain's government can fulfill its promise build 1m homes by 2020

Yay! Houses! Image: Getty.

 Come May 2020 what will Theresa May’s government look back on with pride, and what will it look back on with regret?  Depending on the choices made at this early stage, housing has the potential to fall squarely into either column. At Shelter, in our 50th year, we want housing to become a source of pride for our country, not a chronic weakness.

This week, we published a new paper looking at how the government can meet its welcome commitment to build one million homes this Parliament. It will be hard, but it’s not impossible. More than anything else, it requires taking on the broken, overly-concentrated house-building market which we’ve accepted for too long without real reform, especially since the 2008 recession.

If we’re going to build one million homes this Parliament, then many of those will need to be built outside of the business model of the major developers. This should be led by new small firms, Build to Rent companies, housing associations, self-builders, public bodies and new public-private organisations such as development corporations and local housing companies.

The need for a new approach is underlined by new projections we publish today from Capital Economics. These suggest that house building will slump by 8 per cent this year, in the wake of economic uncertainty following the EU vote. This is not because Capital Economics expect the economic fallout to be terrible – they don’t. It’s because the major house-builders have a model which is vulnerable to slight changes in buyer sentiment – one which works overtime to protect their profits rather than work in the national interest. They will slow their production if prices don’t match what they expected when they bought their sites.

The big developers compete to buy land. Whichever firm offers the worst deal for consumers – in terms of the size, quality and affordability of homes – is the one able to pay the most for a site. That model is unlike almost any other consumer market, where firms compete to drive up quality and drive down prices for buyers. New homes just get smaller and more expensive.

The major developers are in no rush to expand their building levels above their historic level of around 150,000 homes per year: “over-building” could risk their margins. Currently, there’s no-one ready to fill the gap to get us to the 1m homes target.

Historic data and Capital Economics’ forecasts. Image: Shelter.

The blame doesn’t just lie with a broken building model, though. Policymakers have failed to respond to market cycles for too long as well.

Our paper sets out in detail how two successive governments failed to take advantage of the slump in land values after 2008. This fall in values could have been used to break up the big house-builder monopolies within the land market, and bring in new players. Instead, huge fiscal support was provided to the major developers – we estimate £32bn in the 2010-15 Parliament alone – propping them up and further concentrating the market into a few hands.

Government policy should focus on getting land, finance and planning certainty to new alternative homebuilders – rather than launching ever more subsidies at the big developers, propping up a broken system.

In particular we recommend:

  • A Help to Build package for small and medium sized developers focused on access to development finance and public land;
  • The government directly commissioning housebuilding by SME firms, both for sale onto housing associations but also for direct sale into the market;
  • Promoting land market transparency, to make it easier for smaller house-building firms to find and access suitable plots;
  • Giving local communities the powers to force land-owners to use their sites for new homes where there is an identified local need, and to drive down the land price to allow better quality, more affordable homes.

Along with these market reforms must come sustained investment in affordable homes and infrastructure. We therefore agree with Stephen Crabb and Sajid Javid that a “Growing Britain Fund” should be created to use the government’s historically low borrowing costs to invest in homes and infrastructure.

For some short-term government debt, yields have even been negative: the market is willing to pay the government to hold its money. Imagine if a bank offered to pay a business to invest in improved machinery that it needs – it wouldn’t hesitate. Neither should the government at this time.

With the right package of policies, it will absolutely be possible to build one million new homes this Parliament and make a sizeable dent in our housing shortage. If the government manages it, then we’ll join them in 2020 in being proud of that vital part of their record.

Pete Jefferys is a policy advisor at Shelter. This post was first published on charity’s blog. 

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To see how a city embraces remote work, just look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”