Progress | Centre-left Labour politics

Freeing the power to build

The scale of the housing crisis is put into sharp focus this week as the London assembly’s housing and regeneration committee – which I’ll be giving evidence to – continues to hold Boris Johnson to account on his pledge to deliver new affordable homes. The news follows last week’s reports suggesting house prices in the capital have rocketed eight times faster than wages, according to research by LSL Property Services.

London alone requires an additional 249,000 homes over and above those expected to be built by 2020 just to meet historic and rising demand. At the same time, the government is failing to get a grip on the construction of new homes, with only 9,200 affordable homes started in the capital last year – down half on the previous year. This affects not just the very poorest, but low and middle income families and aspiring young homeowners, too.

The government’s focus on housing as an atomised asset for individuals to buy and sell, rather than as a key component of the UK’s infrastructure, seriously risks undermining the UK’s growth.

Businesses are increasingly worried about the talent they need to succeed being deterred by the expense of housing: the CBI has been calling on the government to do more to create growth and provide the affordable housing its members’ employees need. This isn’t just the same old suspects – businesses are now warning the government its housing policy is deterring skilled workers from moving to London and holding back the creation of new jobs in construction.

In a letter to the Financial Times last month, London Councils led a coalition including the British Property Federation, business group London First, the Chartered Institute of Housing and Shelter, calling on the government to lift the housing revenue account cap, which is unfairly blocking councils undertaking sensible borrowing against their housing assets to reinvest in new homes.

Research shows that a simple change in legislation could enable councils to build 60,000 new homes and create 19,200 jobs, adding 0.6 per cent to GDP – at a stroke of the chancellor’s pen.

The government has been quick to dismiss the plans as councils wanting to borrow more. But this ignores the fact that the calls come from across the political spectrum, as well as from businesses. Removing the cap has been given the thumbs-up by Capital Economics, whose research confirms councils would be able to pay the money back with little risk. Council borrowing is already restricted through prudential borrowing limits, set by HM Treasury.

In my own borough of Lewisham, we have worked closely with our housing partners to build the homes we desperately need. Last year, Lewisham had the second highest level of affordable housing completions in London. We have a programme to build new council homes over the next five years, but we could produce three times that number if the cap was lifted.

We know that investing in housing isn’t just good for the housing market – it’s also good for the wider economy and kickstarts local growth. Construction is one of the most efficient ways of guiding public investment: for every pound the state spends, 56p returns to the exchequer. Jobs in construction can be easily linked by councils to local schemes tackling worklessness and can create apprenticeships for young people.

Local authorities want to invest in housing to address local shortages and create employment. Later this month, London Councils, which represents London boroughs of all political hues, will publish a report looking at the different investment options for meeting the acute and rising need for housing in the capital. The government should take the report’s findings seriously and act on our recommendations to boost the supply of desperately needed new housing.

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Steve Bullock is the directly elected mayor of Lewisham and London Councils’ executive member for housing

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Photo: Jan Gosman

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Steve Bullock

is mayor of Lewisham

2 comments

  • stop immigration and housing demands will fall. councils should borrow less not more–the taxpayer is responsible for any shortfalls

  • Some serious questions it would be good to hear answers to:

    1. Where exactly is the evidence for this demand for almost 15,000 homes per year (up to 2020) for London alone – based on historic and rising demand? Providing evidence is not fashionable for the coalition, but they say there is still a ‘fag paper’ between them and New Labour – so where is the evidence? We really want to know.

    2. Why is it “additional homes” means new buildings? Additional homes should include getting back into use the large number of empty homes, many of which are in private hands. It should not be the norm that anything older than 1980 that needs money spent on it is automatically felt to be fit only for demolition, rather than improvement. You should be calling for reduced taxes on renovations and encouragement for people to take on and improve empty homes – as has happened in Liverpool. You should be empowering people, especially the skilled unemployed.

    3. Why should a high density borough like Lewisham be building at around the fastest rate in London? And it is amongst the very poorest Boroughs.

    4. Why is every effort being made to turn Lewisham into Croydon i.e. large numbers of ugly great towers springing up in the poorest areas? Mayor Bullock must take responsibility for this uglifying of our Borough.

    5. Why are you asking the government to lift the housing revenue account cap? Benefits are being cut at a faster rate than any increase in rents can bear, and interest on loan charges are going up faster than any saving rates. The poor are being hit from every direction and the government caps that need lifting are those on council’s benefits spending, to at least make good a small percentage of the worst effects. Councils will be evicting tenants at a huge rate of knots soon with welfare cuts and bedroom taxes.

    6. Why are Labour Councils failing us in London and across the country? Councils say they are committed, and indeed are required, to build homes people want to iive in. The rich might want to live in high rise blocks, but those who will increasingly be even more impoverished by this government, do not. We need easy access to the outside with our children and the elderly, to walk in safety and pleasant environments, free from big chain ‘outlets’, money-milking parlours which exhort us to spend money we haven’t got. We don’t need to be worrying about whether or not the lift will be working when we get back to our 5 or 6 or 8, or 14, or 20 storey tower blocks, nor worrying about our teenage children who, by these structures, become locked in to post code wars. High rise blocks are fine in small numbers, but they are sprouting like cancers over our city. They are crushing historical areas and their treasures (Evelyn ward proposals in Lewisham), crushing our ability to build stable communities, making it more similar to US cities which look superficially glamorous, while poverty has a stranglehold on people who just want to have a decent life.

    Councils in the poorest areas of London and elsewhere are no more delivering on their responsibilities than is this treacherous millionaire and banker-friendly Government. We are being sold down the river again by our politicians.

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