Budget Response

Today the chancellor has announced that £44bn will be used to build 300,000 new homes every year by the mid-2020s. As someone who has worked in the field of housing and homelessness for twenty-five years I welcome this commitment. There is no doubt that the government’s own figures show that homelessness and rough sleeping have increased year-on-year since 2010 having decreased year-on-year for the seven years prior to that. Something clearly had to be done and the government has now committed to ensuring that it is.

But it is important to realise that building 300,000 new homes every year will not, of itself, solve the housing crisis.

The first point to make is that we are already creating 200,000 new homes each year, which is a substantial amount. The problem is that they are often not the right kind of homes, and they are also not always in the right places. The government needs to make sure that the additional new homes that are to be created in future address these issues.

Fundamentally, the problem is that there is not a sufficient supply of secure rented homes that are affordable for people on average or below-average incomes. Last year’s Redfern Review on the housing crisis came to the surprising conclusion that building more homes will have little impact on the owner occupied sector in most areas of the country. The real shortage of supply is in affordable homes for rent. The well-publicised problems in the private rented sector (PRS) are only occurring because people who should really be in social housing are being forced to try and access the PRS because of the lack of social housing. The number of people in social housing as a proportion of the population has halved over recent decades, not because people don’t want or need it, but because it has been sold off so they can’t access it. So the additional new homes that are to be built need to built and let by housing associations and local councils.

But the second point to be made is that the housing crisis is not a uniform national phenomenon. In places such as Liverpool and Stoke on Trent councils are selling off homes for as little as £1 in an attempt to re-fill whole streets and neighbourhoods that have been emptied. Why? Because the population is slowly being concentrated inside the M25 ring. In the last two decades the number of jobs in London has increased by a whopping 40%. Unfortunately the number of homes in London has increased by only15%. One of the reasons for this is because a shortage of space – economically viable development land is at a premium. Despite this, the number of people living in London has increased by 25%. Whilst some of those people are coming from abroad, many are coming from the UK regions in pursuit of the best job and career opportunities. The provinces meanwhile are gradually being emptied. The population of Liverpool nearly halved between 1914 and 2014 – and there were dramatic declines in other regional cities such as Glasgow too.

The point here is that land inside the M25 is a finite resource. There is a lot more of it available in other parts of the country – parts where they are desperate to welcome new people and reverse decades of population flight. But you cannot build homes there if there are no jobs there. So allied to the Chancellor’s housebuilding drive, we also need to see a real and meaningful commitment to regionalisation. We need to see the government actively encourage investment in and job transference to the regions. There is land available for development and people who would want to live there if they knew that good jobs would be available there – as they used to be.

Simply building more homes will not solve the housing crisis if they are all built in and around London. That will simply exacerbate the long-term problem and lead to further overheating of the London housing market.

The Chancellor’s announcement therefore, is a good start, but it needs to be backed up by strategies that disperse, rather than concentrate, housing demand.

Alan Fraser
is chief executive of YMCA Birmingham.

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