Keir Starmer’s 'big idea' is built on sand

Which is a pity, because increasing housebuilding substantially is the most effective way of 1) accelerating economic growth, and 2) raising living standards. And with an eye to improved building standards, it could also help deliver net-zero emissions, which otherwise won’t happen. So there is a lot riding on this promise.

Let’s begin by acknowledging the depth of the housing crisis in Britain. Like everything else in this decaying, blighted disaster of a nation, housing is well and truly broken. The UK has fewer homes per citizen (about 0.43) than in Italy or France (0.59), or the average among the 38 countries within the whole OECD group of industrial economies (0.49).

Decades of Labour and Tory governments at Westminster have left us with fewer roofs over our heads than the rest of the industrialised world. That, folks, it what you get for voting to stay in the so-called United Kingdom.

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What is Labour proposing to do about it? First it has set a target of building 1.5 million new homes over the lifetime of this parliament. Of course, any new building programme needs to be ramped up so we are looking at building circa 370,000 new homes a year by the latter end of this administration.

Unfortunately, in calendar year 2023, construction began on only 148,930 homes in England. This was down from 178,110 in 2022. Alternatively, if we look at homes completed in 2023, the figure was 158,190 – an 11% decrease compared with the previous year.

So Labour will have to more than double construction immediately. Think what that means – near doubling the workforce, finding the raw materials (which will then raise building costs as supply bottlenecks appear), and getting access to extra land to build on. Not impossible but not easy. Certainly not as easy as Starmer is implying. But then, he’s a lawyer, not a builder.

Getting access to the land may not be the most difficult issue. There’s a lot of land owned by big housing developers which is stuck in planning limbo. This is partly due to the Tories abolishing the onus on English local councils to allocate land for housing – doubtless because an election was in the offing and the nimby vote was crucial.

Labour instantly reinstated such mandatory targets in England. So far, so good. Labour is also promising “planning passports” which would give a green light to private developers to build, provided that their housing projects met certain defined design and quality standards.

Here’s the rub. First, the “planning passports” wheeze is just an idea to make headlines. In fact, this policy is only “out for consultation”. Expect every Labour local authority in the country to object to its powers being nabbed by Whitehall.

Even if planning passports arrive, it will take years and – paradoxically – will be wrapped in red tape. Plus the possibilities for corruption are lucrative and immense.

Meanwhile, re-imposing mandatory council housing targets sounds impressive in a press handout but is also a sleight of hand. Labour’s horde of brand-new MPs will soon be objecting to local building projects for fear of losing votes.

At the same time, severe labour shortages in construction stemming from Brexit and the end of free movement means the industry is struggling to deliver projects on time and budget. The Construction Industry Training Board is predicting that, by 2027, the industry will require an additional 225,000 workers to meet UK demand.

(Image: Stefan Rousseau/PA)

God knows where those workers will come from unless Starmer lifts immigration restrictions. He probably will – a wee bit. But not by enough to meet Labour’s housing target – although more than enough to give Nigel Farage an issue in the 89 seats in which the Reform Party came second to Labour.

But let’s suppose – against the odds – that Labour do build lots more houses. Chancellor Rachel Reeves will appear (doubtless in an expensive dress provided free of charge by Lord Alli) and proclaim that, as a result, economic growth had increased.

But extra growth achieved by building houses for the middle class or for buy-to-rent investors is absolutely not the same thing as putting roofs over the heads of the 150,000 homeless children now living in temporary accommodation, or filling the current 1.3 million-long waiting list for homes in Britain.

We need good, affordable houses, not simply economic growth for growth’s sake. This means putting affordable housing at the core of any strategy and not as a peripheral.

Two decades ago, a family in England on median income could afford to buy an average-priced house. Today, they can only afford the cheapest 10% of properties.

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Among other things, this was the result of George Osborne’s devious “Help to Buy” policy. This Tory ploy gave first-time buyers a loan of up to 20% (40% in expensive London) towards the cost of buying a new-build property. Ostensibly this was supposed to stimulate house building but it was actually another Tory swindle. Instead of building more homes, the property sector – which has provided one-fifth of all donations to the Tory Party in recent decades – merely put up house prices.

Result – circa £30 billion of taxpayers’ cash ended up increasing the profits of the property industry. Instead that cash should have gone directly to local authorities and been spent directly on new-build social housing.

Don't think matters in Scotland are any better. Housing completions and new starts fell by 11% and 24% respectively in the year end to December 2023. The Scottish Government responded to this by slashing the affordable housing budget by £200 million – an astounding 26% cut.

After a public outcry, it then announced an £80m “increase” in the money for affordable housing, spread over two years. So the cut is still an astounding 22% in real terms. At the same time, the SNP government declared a “housing emergency”. The irony was somehow lost on the Scottish Cabinet.

What to do? The housing crisis can only be solved through a concerted programme of public investment. This can be part paid for by taxing any increase in land values arising from a change in permitted land use. In addition, the publicly owned Scottish National Investment Bank can arrange a capital facility for building, mortgaged against future rents.

Building, land and service costs can be reduced dramatically by mandating European levels of urban density instead of covering every green field in concrete.

We also need genuine “emergency” action, including limiting tenant rent rises to inflation or local wage growth, whichever is lower. And the Housing Minister should be a full member of the Scottish Cabinet, not an office boy.

Labour’s housing masterplan is doomed. But the SNP government still has time to put housing at the centre of its economic and social strategy before the 2026 Holyrood election.