A roadmap for how to Make The North Great Again

Houses in Liverpool, 2015. Image: Getty.

The north of England has always been associated with industry, innovation, and pride in both. You can still see that pioneering spirit all over the North, whether it’s Teesside’s growing renewable energy sector, or Greater Manchester’s reputation for excellence in e-commerce and fashion.

However, that success is not as widespread as it should be. It’s been five years since then-Chancellor George Osborne called for a “Northern Powerhouse” to rival London and the South-East, yet analysis from the Office for National Statistics (ONS) suggests that gross value-added (GVA) – the value of goods produced – per head in the North still lags behind that in the South. This isn’t how you build a healthy, balanced UK-wide economy.

If we’re serious about changing this, then it’s time to talk about what simple things could set the foundations for a prosperous North. You don’t need an economics degree to understand that you’ll struggle to encourage talented employers and workers to an area if you can’t offer them the basics – things like decent homes, proper transport, and attractive areas in which to live.

That’s why Homes for the North will be joined by Kevin Hollinrake MP, Housing Secretary James Brokenshire, and Shadow Housing Secretary John Healey as we launch our new charter, Rebalancing the Economy: Building the Northern Homes We Need in Parliament this week.

We’ll be talking about the importance of devolution, transport, and the right homes in the right places for northern growth. In today’s politically turbulent times it can be hard to find something Labour and Conservatives can agree on, but we’re delighted that colleagues from both sides of the House will be coming together to celebrate something that unites them: the importance of a prosperous North.

With the right tools and right approach, the North could thrive. That’s why we’ll also be announcing an upcoming piece of research we’re working on with Transport for the North that explores how a new approach to homes and infrastructure could support the delivery of a massive £97 billion in additional GVA by 2050.

This new research, Housing Requirements to meet North of England Economic Growth Potential, builds on the findings of 2016’s Northern Powerhouse Independent Economic Review – a piece of analysis that set out how pursuing the “Northern Powerhouse Vision” could deliver a “transformational” change to the economy by 2050. This includes the creation of 1.5 million new jobs, and delivering an additional £97 billion in GVA – a massive boost that would benefit all of the UK, not just the North.

In response to this review, Transport for the North has set out how strategic transport investments in key areas could help to deliver this vision of prosperity by opening up new areas in which to live and work. Now, Homes for the North is working with Transport for the North, the Centre for Economics and Business Research and other partners to deliver the final piece of the puzzle: how building the right homes in the right places could put the North on track to achieve that “transformational” economic growth scenario.

This research will set out what, to many, just makes intuitive sense: that if you’re opening up new infrastructure links, and an area needs new homes, planning the two in tandem will result in a well-connected community where people want to live. This isn’t about ripping up the rulebook on planning – it’s about doing things smarter, and getting better results.


However, we can’t realise this vision of a rebalanced economy without a serious conversation about investment and ambition. At present, the Treasury assesses how and where to allocate investment using a methodology that relies heavily on a cost-benefit-analysis that looks at short-term economic value (ie, return on investment) rather than longer-term economic potential. This means that Treasury investment in vital infrastructure ends up disproportionately funnelled into areas like the South-East – areas that are already productive and economically strong.

This is a short-term approach that reinforces the productivity gap between the North and South. Unfortunately, we see this approach echoed in the government’s new means of assessing housing need. Objectively Assessed Need (OAN) has local authorities assess how many homes they need using data based on projections reflecting a period of sluggish economic growth – rather than accounting for future need and local ambition.

Homes for the North analysis found that this has resulted in the government underestimating how many homes are needed as a baseline in the North to the tune of 13,000 homes – which could mean a £2.37 billion loss in economic output. This is particularly troubling in light of Homes for the North research which revealed that the North needs at least 50,000 new homes a year just to keep pace with current demand.

Clearly, it’s time for the Government to take a more long-term approach to how it allocates funding for vital infrastructure such as homes and transport – looking at local economic ambition and plans, not just past trends and performance. The North certainly isn’t short on ambition and potential – last year saw Centre for Cities rank Manchester and Leeds the top two cities in the country for city centre jobs and growth.

If the Government wants to aid and assist this growth, and ensure that it is spread across the North, it’s high time that the Treasury started considering future demand and opportunity when allocating investment. We need targets, we need investment, we need the powers to deliver them in a way that works in a specifically northern context.

Our research and charter is focussed on how the North could achieve that “transformational” change to the northern economy – but it’s important that we never lose sight of the country-wide context. The lopsided nature of the economy means that many are effectively trapped in the London commuter belt, wrestling with high costs of living, housing, and commuting. A rebalanced economy would mean that people have greater choice over where in the UK they build their careers, homes, and families.

What’s more, in the first six months of 2018, the UK was one of the slowest growing economies in the G7. If the Government is to reverse this trend, it needs to start taking the North’s potential seriously. It’s time for real investment in this potential, and recognition of the fundamental importance of ‘basic’ infrastructure like homes and transport in transforming an area’s fortunes. For the sake of all of the UK, it’s high time we properly invest in the North.

Carol Matthews is chief executive of housing association Riverside and chair of Homes for the North.

 
 
 
 

“Without rent control we can’t hope to solve London’s housing crisis”

You BET! Oh GOD. Image: Getty.

Today, the mayor of London called for new powers to introduce rent controls in London. With ever increasing rents swallowing more of people’s income and driving poverty, the free market has clearly failed to provide affordable homes for Londoners. 

Created in 1988, the modern private rented sector was designed primarily to attract investment, with the balance of power weighted almost entirely in landlords’ favour. As social housing stock has been eroded, with more than 1 million fewer social rented homes today compared to 1980, and as the financialisation of homes has driven up house prices, more and more people are getting trapped private renting. In 1990 just 11 per cent of households in London rented privately, but by 2017 this figure had grown to 27 per cent; it is also home to an increasing number of families and older people. 

When I first moved to London, I spent years spending well over 50 per cent of my income on rent. Even without any dependent to support, after essentials my disposable income was vanishingly small. London has the highest rent to income ratio of any region, and the highest proportion of households spending over a third of their income on rent. High rents limit people’s lives, and in London this has become a major driver of poverty and inequality. In the three years leading up to 2015-16, 960,000 private renters were living in poverty, and over half of children growing up in private rented housing are living in poverty.

So carefully designed rent controls therefore have the potential to reduce poverty and may also contribute over time to the reduction of the housing benefit bill (although any housing bill reductions have to come after an expansion of the system, which has been subject to brutal cuts over the last decade). Rent controls may also support London’s employers, two-thirds of whom are struggling to recruit entry-level staff because of the shortage of affordable homes. 

It’s obvious that London rents are far too high, and now an increasing number of voices are calling for rent controls as part of the solution: 68 per cent of Londoners are in favour, and a growing renters’ movement has emerged. Groups like the London Renters Union have already secured a massive victory in the outlawing of section 21 ‘no fault’ evictions. But without rent control, landlords can still unfairly get rid of tenants by jacking up rents.


At the New Economics Foundation we’ve been working with the Mayor of London and the Greater London Authority to research what kind of rent control would work in London. Rent controls are often polarising in the UK but are commonplace elsewhere. New York controls rents on many properties, and Berlin has just introduced a five year “rental lid”, with the mayor citing a desire to not become “like London” as a motivation for the policy. 

A rent control that helps to solve London’s housing crisis would need to meet several criteria. Since rents have risen three times faster than average wages since 2010, rent control should initially brings rents down. Our research found that a 1 per cent reduction in rents for four years could lead to 20 per cent cheaper rents compared to where they would be otherwise. London also needs a rent control both within and between tenancies because otherwise landlords can just reset rents when tenancies end.

Without rent control we can’t hope to solve London’s housing crisis – but it’s not without risk. Decreases in landlord profits could encourage current landlords to exit the sector and discourage new ones from entering it. And a sharp reduction in the supply of privately rented homes would severely reduce housing options for Londoners, whilst reducing incentives for landlords to maintain and improve their properties.

Rent controls should be introduced in a stepped way to minimise risks for tenants. And we need more information on landlords, rents, and their business models in order to design a rent control which avoids unintended consequences.

Rent controls are also not a silver bullet. They need to be part of a package of solutions to London’s housing affordability crisis, including a large scale increase in social housebuilding and an improvement in housing benefit. However, private renting will be part of London’s housing system for some time to come, and the scale of the affordability crisis in London means that the question of rent controls is no longer “if”, but increasingly “how”. 

Joe Beswick is head of housing & land at the New Economics Foundation.