When will Osbourne finally get around to doing something which might just possibly improve the financial situation – instead of making excuses and throwing the blame around.

Britain is covered in infrastructure and houses. There is too much of it. Build more and you will not add to economic activity but to the crippling debt. Should we despoil the planet simply so that people can build unwanted crap? Do we need HS2 and other White Elephants ripping up the last of the Green and Pleasant? Do we heck.

What is needed is the greening of our infrastructure and its modernisation not simply adding more junk to create fake economic `activity’.

We need to share the already available productive work for full employment and then establish a state bank to facilitate useful, progressive, sustainable social investment in accordance with a democratic plan not the interests of the repulsive construction giants.

Are micro-apartments the answer to the crisis in affordable and social accommodation for London’s rapidly growing youthful population?

Googling shows initiatives in San Francisco, New York and Hong Kong demonstate that this is a feasible option.
http://blogs.smithsonianmag.com/design/2013/02/micro-apartments-are-the-future-of-urban-living/

Around where I’m living in suburban London, there is something of a minor epidemic in converting vacant office blocks into one and two-bedroom apartments.

@OP:

Construction; that thing you do outdoors?

Would it be relevant that January 2012 was the warmest January for 4 years, the sunniest for 9 (and 8th sunniest in the last century) and the driest for 6 (with only73% of the climatic average rainfall); whereas January 2013 was freezing for a fortnight with snow on the ground for most of that time?

The fact is that the construction industry has been limping along the bottom for years with house building running at levels not seen since the 1920s apart from the war years.

The stagnation of housebuilding is hardly surprising in the light of this news from last week:

Bank of England data shows that mortgage approvals fell from 55,632 in December to 54,719 in January. This is still just over half the level before the 2008 crash. Many were expecting higher figures as a result of the government’s Funding for Lending scheme. [1 Mar 2013]
http://www.cityam.com/blog/mortgage-approvals-down-despite-funding-lending

What’s really sad is that recessions push construction costs down – and there has been no effort to use that to solve a dreadful lack of infrastructure and housing cheaply. Government is, to put it bluntly, a really dumb consumer.

The world economic forum now ranks the UK 24th in the world for infrastructure. We also have a massive housing shortage.

But instead of fixing these massive economic failures, we seem intent on just making the existing problems worse by competing on low tax, low regulations and low infrastructure – ensuring our economy does more to become less diverse by attracting less manufacturing (which need infrastructure) and more financial services (which just need big glass office buildings)

Bob

Hous-building has been low in the UK for decades. The private sector has its ups and downs – but it has completely failed to fill the gap that was once taken up by public sector housing construction.

The reason for that is of course entirely reasonable. The public sector was building to house those who wouldn’t be buying because they didn’t have the money. The private house building sector has no interest in building houses it can’t sell.

The state needs to up its game and build more social housing so we have enough homes. Be it through HAs or councils or whatever – it needs to happen.

The figures for house building starts from 1990/91 to the present can be checked out at this link:
https://www.gov.uk/government/statistical-data-sets/live-tables-on-house-building

Housing starts for the years 2008/09 through to 2011/12 were lower than in any other financial year for the period from 1990/91 to the present.

Looking at the figues makes me very suspicious about those claims that planning restrictions by local government are blocking house building.

Bob

Not sure anyone really believes planning rules are the reason we woefully under-build in the UK. Tories tend to use it as a distraction argument, because they don’t really mind the underconstruction that leaves home owners with skyrocketing prices, and because it avoids addressing the real issue, which is the need for the state to build houses for poor people.

David Ellis @2:

I’m a filthy hippy myself, but you’re simply wrong about the UK being over-built. Less than 5% of the land area contains houses.

What the UK is massively over-supplied with is vast, private estates on which nothing can be built but which not accessible to the general public. The aristocracy, nouveau riche and other long-term landed interests (e.g. Oxbridge colleges) own terrifyingly large quantities of the country, and keep thousands upon thousands upon thousands of acres of land as deer parks and the like, economically inactive and private. We can’t even walk through most of them, let alone have the 5 acres it take to feed a family from one’s own land.

The point made by several others in this thread is also very much relevant; it’s not that we don’t build, it’s that we don’t build anything like enough to replace the systematic building of social housing in the post-war period, which was both enormously good for the construction sector and drove a general upward mobility of the rising-tide-lifting-all-boats type, which has been completely absent since the end of the 80s.

Margin4error: I disagree, actually. Social housing didn’t just stay with the government, lots of it was sold to occupiers at affordable rates. That’s actually a really good idea, and is something we should have kept on doing; keep putting cheap housing into the market and keep building more of it. We did the worst of both worlds; we gave one and a half generations a pretty much guaranteed expectation of affordable home-ownership starting early in their working lives, and then pulled the ladder up behind them.

Regarding planning: in theory, planning laws were supposed to limit the ability of developers to build destructive things on large greenfield sites. In practice, only a large commercial developer can successfully navigate the system (i.e. afford the very expensive lunches and other kick-backs necessary). If you want to build 500 houses somewhere, you’re much more likely to get planning permission than if you want to build a 3-bed house on 10 acres and go self-sufficient. English planners really don’t like people doing that.

The Welsh have a much more sensible attitude.

@11 Chris

I’ve been a councillor for ten years and I’ve never seen any of these lunches and kickbacks, though I’ve sat on planning committees often enough. Either I’m doing something wrong or your piece is a calumny.

Now government, well that’s another thing entirely…

Chris

Agree that the ‘right to buy’ was a massive screw up because it wasn’t matched by a commitment to replace that privatised housing stock with new-buil social housing. Great for those who already had social housing. Awful for their kids and grandchildren.

That said – as a councillor, like Cherub, I have no idea what kick-backs you are talking about or large lunches. And I’m in one of the few council areas that has seen a construction boom in recent years. I’ve had many an expensive lunch or dinner bought for me in my day job – but never even heard of one as a councillor.

To the councillors: fair enough. What, then, is the real reason (if not corruption) for the massive imbalance between applications for large, lucrative, commercial developments which are very frequently granted over massive local objections, versus small, ecologically sound family home-builds and self-sufficient projects, which typically get denied planning permission?

The only difference I’ve ever been able to see is that the commercial developers can make it worth the council’s while in some way while normal people can’t. I picked a rather Yes Minister type of corruption in the earlier comment, but another way to look at it might be “We’ll put £10 million into your new council offices if you let us build 500 luxury homes on that municipal park over there”.

I’m not saying councillors are corrupt, I’m saying the system is a victim of a massive unintended consequence. Planning laws were intended to allow for sensible development planning, but what they actually do is create a massive barrier to entry for anyone who is not a commercial developer, and thus actively inhibit sensible development.

Now, I’m also one of the people calling for more houses, but I’m not talking about commercial developments. We’ve got as many of those as the free market can bear, i.e. not many at these fucking prices. I’m talking about what we did in the post-war period which was enormously effective, sensible forward-planning: keep building new social housing. Had we kept selling tranches of it at very low prices to occupiers, and kept houses out of the commercial rental market, we’d be vastly better off: the push under Labour in the 90s towards buy-to-let was a naked gift to the rentiers class, creating (or rather massively expanding) opportunities for extractive rent-seeking.

Another aspect to that is the, what, 12% or something vacancy rate? I’m not sure what mechanisms would work, but it has often occurred to me while driving along the A406 past miles and miles of shuttered 4-bed houses that this is completely ridiculous. I’ve seen it suggested that the govt should repossess any house that stays vacant for more than 3 years, and I’ll admit I can see the appeal of such an idea. Speaking as someone who has paid better than £150k in rent over the past couple of decades and would really like to buy a house at some point in my working lifetime, which is increasingly unlikely.

@M4E

“The private house building sector has no interest in building houses it can’t sell.”

This. With the addition of “… for the profit margin that it requires”. It amazes me that seemingly intelligent people fail to spot this problem. There is only a certain market for houses at the price that developers will make the profit that they want. Why would they build houses today at a lower price when they can build them tomorrow for the price that they want.

If forced to build “affordable” houses as part of a mix, that will still be contingent on being able to sell enough at the price that they want.

@14 Chris

Those big developments would fall under a Local Development Framework for housing (now changed, we have to have 20-year plans with an undertaking to co-operate with other authorities). The LDF is based largely on Government requirements though local councils have to work out how to do it.

The smaller one-offs could be on agricultural land, which has strong planning protection. They are more likely to succeed on land allocated for housing under the LDF.

I’ve problems with planning. All those houses with inefficient conservatories because they’re classed as temporary? Bloody daft. Planning authorities started to see planning as an income stream and it all got a bit silly. We need to go back to the intention of planning law, sensible development that fits the community it’s serving.

We definitely do not need to do what the Government suggests as there are already strong presumptions that plans will go ahead. Local Design Statements can offer good planning protection against inappropriate development. All the stuff under the Localism Act is bollocks, a NIMBY’s charter.

And, write it large, the development we need should be ALMOST ENTIRELY SOCIAL HOUSING. We need a new version of the Parker-Morrison Standard so that homes aren’t tiny and inefficient and we should be looking at those land banks held by large developers and even supermarkets because they don’t need them as much as we do. (You can call that last bit wishful thinking.)

Cherub: useful update, thank you!

The smaller one-offs could be on agricultural land, which has strong planning protection. They are more likely to succeed on land allocated for housing under the LDF.

Which is the problem. I understand why agricultural land has strong protections from the big housing-estate type developers: good! Equally so with wooded land. I truly do not, and never have, understood the problem planners have with allowing people to live on the land they farm as a homesteader, or manage as a forester.

And, write it large, the development we need should be ALMOST ENTIRELY SOCIAL HOUSING. We need a new version of the Parker-Morrison Standard so that homes aren’t tiny and inefficient and we should be looking at those land banks held by large developers and even supermarkets because they don’t need them as much as we do. (You can call that last bit wishful thinking.)

Hear, hear! This bit is very much what I was on about earlier. The land problem in England (I know less about Wales and Scotland) is very largely attributable to extremely large unused estates in private hands. I blame the Enclosure Acts (or rather, Trailbaston several hundred years earlier, which started the whole process in earnest).

Welsh planners have got some of the message; the Lammas project, for example, would be functionally impossible in England.

@17. Chris Naden: “The land problem in England (I know less about Wales and Scotland) is very largely attributable to extremely large unused estates in private hands.”

You talk about this with a lot of confidence. Is there unexploited land close to Leicester where I live? Can you identify a plot where we should build?

If the unused estates were developed, how would that be done? New settlements? Extensions to existing settlements?

Apologies for the volume of questions. But I am one who believes that homes will only be created by sacrificing green space.

@4. Robin Levett: “Construction; that thing you do outdoors?”

My guess is that March 2013 will be unprosperous too. The gas and electricity suppliers must be milking it.

Here is a 2007 housing completions comparison with other European nations. The 2007 peak of the UK housing boom that never happened. Check out the absurd level of overbuilding in Ireland with a population only 8% of the UK. However, our construction collapse is from a dismally low base.

https://twitter.com/NobleFrancis/status/309692556629909504/photo/1

Charlieman @17:

There are aristocratic private estates which are 15-20,000 acres and larger (the Duke of Cornwall’s private land, for example) very large amounts of which are not in use for anything. There are huge quantities of land in and near urban areas which are owned by large portfolios, supermarkets and so on, that are waiting for a better time to sell or build: some of which have been doing so for a very long time because they missed the land value peak. There are *also* huge numbers of actual houses that are vacant and have been for long periods of time for similar reasons.

I’m enough of a hippy that an ideal outcome for the next ten years of my life would see me on a self-sufficient small-holding somewhere. I am a woodland person all the way through. You wouldn’t have to build on the woods or the farms to double the amount of houses in England. The ‘natural’ English landscape isn’t, as Professor Hutton among many others has pointed out; the lands of Britain have been heavily managed, both in terms of forestry and farming and also in terms of large scale physical alterations to the terrain, for over ten thousand years.

@17 Chris

“Which is the problem. I understand why agricultural land has strong protections from the big housing-estate type developers: good! Equally so with wooded land. I truly do not, and never have, understood the problem planners have with allowing people to live on the land they farm as a homesteader, or manage as a forester.”

Allowing smallholders to build on agricultural land would be a loophole that would be ruthlessly exploited. We’d end up like Ireland with its odd patchwork of people’s fantasy homes.

This really does not require any comment.

https://twitter.com/NobleFrancis/status/310869229001912322

Whatever happened with George Osborne’s call for a softer monetary policy to kick-start the economy?

Wasn’t the Bank of England’s Funding for Lending initiative supposed to boost bank lending for mortgages to revive the housing market?

“Bank of England data shows that mortgage approvals fell from 55,632 in December to 54,719 in January. This is still just over half the level before the 2008 crash. Many were expecting higher figures as a result of the government’s Funding for Lending scheme. [1 Mar 2013]”
http://www.cityam.com/blog/mortgage-approvals-down-despite-funding-lending

May be the Bank of England should cut interest rates?

The trouble is that the Bank of England’s Monetary Policy Committee cut the Bank’s base interest rate to ½ pc in March 2009 and it has remained there ever since.

gastro

I suspect people do recognise that basis corporate interest angle – but pretend not to to some extent because of an ideological opposition to state spending – which is thus the only means of building enough houses.

Chris

I have to say there are a couple of issues with small developments as you describe them that go well beyond issues of planning or a corrupt system.

I represent a council that has no countryside – and is building in relatively high density. It is of course very hard to drive the development of terrace town-houses or blocks of flats as small one-off developments, and anything else would fall well short of the density we need to achieve to meet needs in a tight urban space.

But the other issue is land ownership. I’m actually doing work in this area at the moment in my day job, but the issue is that you can’t as a council set out a plan for a new estate on a farmer’s field – without pushing up the price of that farmer’s field, and thus attracting a large developer to buy it. Meanwhile you can’t spur individual buyers to buy little 1-house-sized pieces of the farmer’s land as speculators, which is what they effectively are until planning permission is granted.

So a bit like coffee shops and car manufacturers – there is just a massive economic advantage to being a big corporation rather than an individual trying to do it yourself.

And this probably leads to the perception of disparity that leads you to conclcude corruption.

The idea of a construction led recovery is more of the same Ponzi Scheme thinking of the bankers. If initially there was investment in building it would create some economic activity and no doubt some would trickle down but then you’d have to pay for it and to do that you’d have to build more which would require doubling immigration to create the demand and trippling the birth rate and soon enough all natural resources will have been used up, the debt will be ten times what it was, the population three times and our cities would be slums. There is no Keynesian solution. In fact the credit bubble by which Thatcher let loose the private sector to pump trillions into the economy was a Keynesian `solution’ to the stagnation and overproduction of the seventies.

Plan A (Austerity) and Plan B (Borrowing) are a false choice offered by the bankers and their lackey politicians. Plan C (Socialist Consolidation) that places the burden of austerity where it is morally due and where it will do the most good) and protects the accumulated wealth of centuries before building a new platform on which to go forward (full employment, state bank, democratic plan) is the only honest non-demagogic approach.

David

With respect – we have have slums in our cities – we have massive levels of overcrowding in housing – and we have millions of families living with no certainty or security in homes that their private landlord can choose to kick them out of whenever they like.

If the solution to this is not to build more housing (better meet demand) then it is presumably to reduce demand (kill lots of people).

I say this because whatever social order you seem to be suggesting, I’m reasonably sure that homes will still be needed and thus will still need building.

Margin4error:

I represent a council that has no countryside – and is building in relatively high density. It is of course very hard to drive the development of terrace town-houses or blocks of flats as small one-off developments, and anything else would fall well short of the density we need to achieve to meet needs in a tight urban space.

I’ll admit, my issues with planning are not really urban

Regarding the general disparity: yes. It’s systemic, rather than individual. One might argue that the point of a planning regime would be precisely to redress that problem in the market, but to argue so one would have to agree with me that the outcome I’m talking about would be an over-all good. I’m not daft enough to think there aren’t valid arguments against my position.

And while I’m here: Cherub, point taken about Ireland, though the people I know at Cloughjordan are pretty happy with Ireland’s system rather than England’s. But for both you and margin4error, what do you think of the Welsh? They’ve done some innovative things that seem to be working, and would actually work much better in England due to the much greater size and variation of the relevant lands. The Lammas Project probably have the most useful set of information to search up, though Tools for Self-Reliance and the Dark Mountain project are also both good on the subject.

I know people will say this is not the solution, but what is wrong with building houses in factories, cheaper than traditional building, and assemble them quickly on MOD land and other land banks. Give each home a small patch of land to grow a few veggies and perhaps people will enjoy some quality of life, also make the home deliver renewable energy, get us into the 21st century please.

Chris

One aspect to planning permission probably should indeed be to redress the balance between large and small developers. Large developers are great for scale. But small developments, when planned strategically, can be valuable to communities and can be undertaken by small developers or single-property builders.

As I say, I’m working on stuff in my day job that may hopefully lead to changes in how house-building is approached – but I don’t know exactly what rules might be needed to better support small developers.

David M

Nothing wrong with pre-fabricated construction techniques as a solution at all. And more and more it is something we are seeing around the world. Standardised window units, pre-built building frame sections and other such practices are becoming more normal.

The UK has a cultural discomfort with this even though it is extremely common in non-housing construction in the UK. But in housing itself it is increasingly common across much of Europe and North America now.

As I say, I’m working on stuff in my day job that may hopefully lead to changes in how house-building is approached – but I don’t know exactly what rules might be needed to better support small developers.

One thing might be to recognise the distinction between developers (who are building to sell at a gross profit margin, typically, of between 30% and 50% according to my CITB training course) and homesteaders (who are planning to live in the thing for, ideally, a very long time). One of these things is very much not like the other.

For a start, the second one doesn’t need the land-market boom to make it worthwhile doing it, and is in fact more economically viable during current conditions rather than less. The homestead also generates immediate and on-going economic production. After first sale, commercial developments at best provide rent-seeking opportunities for mortgage holders, long-lease issuers and professional rentiers, unless you’ve got the kind of unsustainable land-value escalator we had in the 90s/ early 00s going on. Which we clearly don’t.

I wish you all the best in your day job work, in the hopes that it leads to a better outcome!

@m4e #31:

Nothing wrong with pre-fabricated construction techniques as a solution at all. And more and more it is something we are seeing around the world. Standardised window units, pre-built building frame sections and other such practices are becoming more normal.

The UK has a cultural discomfort with this even though it is extremely common in non-housing construction in the UK.

There are a number of issues with prefabs and system-built housing that might be unique to the UK. One is that the vast majority of the immediate post-war prefabs were built as Council housing, and the association continues. Another is the various problems associated with individual building systems that have been prominently reported because of the scale on which they were deployed.

I think the British are brilliant at talking a good talk but never delivering, too many Chiefs and not enough Indians!

Nostalgia for the ancients among us: pictures of those 1940s prefabs built for the housing crisis created by the bombing during WW2
http://news.bbc.co.uk/today/hi/today/newsid_9361000/9361586.stm

The prefabs certainly lasted. By news reports, the last of them were being scheduled for demolition in January 2011.

Interesting report here: http://www.policyexchange.org.uk/publications/category/item/cities-for-growth-solutions-to-our-planning-problems

Not that any of our political party’s will allow anything to be done about it, of course.

#27 `I say this because whatever social order you seem to be suggesting, I’m reasonably sure that homes will still be needed and thus will still need building.’

Homes will of course always be needed. But you have tried to paint me as the cynic when the true cynic is you. If you think that there is any possibility of sustainable economic growth arising from a mad house building policy you are very much mistaken. Once the houses are built they are built all that is left is to pay the financial and environmental debt and the only way more will be required is if you keep the population increasing at an insane gallop. It is a Ponzi Scheme. In reality there are far too many houses here already built on the back of the insane 30-year credit bubble huge number of which remain uninhabited and that could be shared out. Go to Ireland if you want to see the results of a country destroyed by developers building houses in the back end of beyond for nobody to live in. People who own houses and can’t sell them now won’t thank you either for driving them into even deeper negative equity.

37

“People who own houses and can’t sell them now won’t thank you either for driving them into even deeper negative equity.”

C’mon. Why is the government proposing a tax on spare bedrooms for those receiving housing benefit? Why is the government proposing to reduce planning restrictions on conversions of offices to flats?

News report in the Guardian on January 2013:

Rent rises trap generation who will never afford their own home

Stagnant wages, increasing rents and rising house prices mean would-be homeowners unable to save deposit for first property

34

“I think the British are brilliant at talking a good talk but never delivering, too many Chiefs and not enough Indians!”

That’s tosh. Consider the likely reflections of a teenaged boy at school weighing up options for a well-paid job with a secure future. In the news:

“Banking giant Barclays paid 428 workers £1 million or more last year”

“Manchester City have no desire to revive their interest in Wayne Rooney despite the uncertainty over his future at Manchester United, with the player’s reputed £300,000-a-week salary pricing them out of the market.”

Chris

Thanks for wishing me luck. I’m going to need it. And yep, some distinction would be positive, though on a legal basis it is hard to establish a rule that might effectively prevent a person selling a house.

Robin

We also associate old with good in a way that other cultures don’t. Or more accurately, we associate the idea that something might get to be old as being of value, while other countries tend to be more comfortable with a building that will one day be replaced by another. But yes, that post-war period of rapid house building has fed the negative view of pre-fabrication in a way that Center Point doesn’t manage to counter.

David

What exactly is your solution to the fact that we have an increasingly transient population of families with no family home then?

There are several points worth noting. Despite the collapse in building starts, the builder’s profits are holding up nicely. They were in a bit of a state a few years ago, but this was mostly caused by excess debt rather than low profits. Now they’ve clawed back this position, they’re doing OK.

The housing market is a classic example of market failure. Under pretty well every economic theory, a housing sghortfall would automatically lead to an increase in construction. It’s not happening, and isn’t going to happen. It would be going too far to cause the current situation a cartel, as there’s no evidence—indeed I don’t think it is happening—for direct collusion. There are only a handful of big names in the buisiness: although there are plenty of small fry they are simply too small to materially affect the situation.

What we have is a situation where it takes almost as much effort to build the one or two bedroom houses/flats that are needed as the three or four and above executive houses the builders want, the profit on tjhe latter is dispropotionately greater.

As a side issue, this is why the builders are moaning about planning, as it’s these type of developments that are most likely to get turned down (I can’t remember the exact fugures but between 80% and 90% of all planning permissions are granted, some after appeal) OK, many such permissions are trivial, but the planning system, though perhaps in need of reform, is to the major impediment it’s made out to be.

Further to the main pointPolly Toynbee in the Guardian (sorry, can’t locate teh article) reported a conversation with a builder who said that he could easilly double construction, but that if he did, they all would, and profits would half, so they be working twice as hard for the same money.

The only solution to the housing crisis is massive Council/Housing Association build, protected against resale otherwise there is no point, funded by guaranteed bonds against the properties. However, the politicians are terrified of theis option, since an end to housing scarcity would drive down house proced, perhaps by as much as 25%.

No real surprise when Chancellor pip Squeak talked the British economy down for the first year of office so he could push his ideological agenda of spending cuts for the poor and tax cuts for the rich.

Cutting spending during the worst global downturn since the 1930s was always madness but when you are a puppet of the 1% you have to do their dirty work for them.

Osborne doesn’t care about the wider economy. He only cares about keeping the rich sweet. Shame the cretins in the lie dems can’t see the reality.

M4E: “Nothing wrong with pre-fabricated construction techniques as a solution…”

Actually there is – not because there’s anything wrong with prefab techniques (used all over the world) but because it’s not a solution to the main problem – the dysfunctional market for building land.

The problem is that landowners, by and large, continue to be able to make healthy profits by speculating on land – something they can only do if they leave it empty. This is partly because land values are inflated by people using it as an abstract financial investment, pushing its value out of reach of the bulk of house buyers, and partly because the incentives created by government policy are all wrong.

As Private Eye readers will know, many housebuilders have been very profitable this year, even while their output decreased. That’s because the government slashed regulations and social housing requirements on their land bank, therefore increasing its value – and incentivising housebuilders and investors to hang onto that undeveloped land in case (as is likely) the government decides to take further similar measures.

What we need is some sort of government intervention, I’m afraid, of the market in building land, just as we do on rents. Bubbles need to be out of the market, to bring the value of housing back in line with the incomes of those who actually want to live in it. I’m under no illusion that this would be easy, or that there would be no losers, but I see no other way out of it. I admit the libertarian prescription of abolishing all planning controls would do something similar – but at an unacceptably high price.

The other problem is that all this is very caught up in political baggage. Direct funding of social housing and intervention of any sort in the housing market (other than green belts and so on, which are OK because most Tories like them) are both things Labour ‘modernisers’ undoubtedly categorise as forbidden “Michael Foot” type activities.