Housebuilding targets: Britain becomes a NIMBYocracy
This represents the final victory of NIMBYism in Britain. Thus far, housebuilding targets have been one of the very few tools to hold the worst excesses of NIMBYism in check. Their abolition marks the passage from a de facto NIMBYocracy to an official NIMBYocracy. Thus far, governments have felt obliged to at least pretend to care about Britain’s housing crisis. With this latest measure, the last vestiges of that pretence are gone.
How did we get here?
The problems of the British housing market have been known for quite some time. Already in 1988, when housing was still a relatively low-profile issue, the Institute of Economic Affairs published the book No Room! No Room! The Costs of the British Town and Country Planning System by Prof Alan Evans, who argued:
“[T]here are […] significant economic costs associated with the planning system. It has significantly increased land and housing prices […] and distorted the economic structure, all of which have led to the British standard of living being lower than it otherwise would be. […]
The aggregate reduction is […] probably of the order of 10 per cent or more of national income” (p. 50).
Fourteen years later, when the house price explosion was in full swing, the IEA published another book on the subject, Liberating the Land by Prof Mark Pennington. He argued:
“[T]he local amenity lobby […] are keen to prevent any development from taking place ‘in their backyard’ and have been particularly successful in stopping new housing developments in high demand areas such as South-East England. Evidence from the local planning process suggests that over 60 per cent of the changes brought about by the process of public participation result in a reduction in the amount of development proposed […]
The principal effect of such restrictions has been the inexorable rise in the price of housing land and hence house prices brought about by the increased scarcity of supply. While there is continuing academic debate as to the precise magnitude of the price rises that may be attributed to such nimbyist action, that prices have risen as a consequence is in little doubt” (pp. 62-63).
These were think tank publications, which most policymakers and opinion formers would not have been aware of. However, in 2003, the Blair government commissioned a landmark study into the British housing market, led by Bank of England economist Kate Barker.
The Barker Review opened with the following observation:
“The UK housing market is unusual, in that over the past 30 years there has been a long-term upward trend in real house prices of around 2½ per cent per annum […] By contrast, […] the increases in many other European countries, such as France and Germany, have been much lower” (pp. 16-17).
She found that housing supply in the UK had become completely unresponsive to price signals, and that if the UK wanted to limit future house price growth to the European average, annual housebuilding numbers would have to almost double (pp.: 58-60).
Barker warned that “in the absence of structural changes […], national home ownership rates will reach only 71.7 per cent by 2016. Unless there is a structural change in supply, most higher demand will be squeezed out by higher house prices” (pp: 23-24).
The actual home ownership rate in 2016 was 62%, so if anything, the Barker Review was too cautious in its warnings, and too temperate in its choice of words.
On the causes of the housing shortage, Barker said:
“The relationship between supply and affordability is not always recognised in debate: the lack of market affordable housing is bemoaned, while, at the same time, new housing developments are fiercely opposed. […] [T]his issue has the characteristics of an insider-outsider problem, where those inside the housing market have more power over any decisions than those outside and their decisions naturally reflect their own interests rather than those of the wider community” (pp: 14-15).
“[L]and supply is the key constraint to increasing housing supply […]
In some areas not enough land is allocated for development and/or the rate of land release is not responsive to market conditions and rising house prices. Housebuilding is often politically contentious and […] the incentives facing decision makers do not reflect those costs and benefits. Local costs of development can be high and those already housed have a much stronger voice than those in need of housing” (p. 25).
The Barker Review marked the end of any plausible deniability. It took away ignorance as an excuse. Since its publication, it is entirely fair to say that any policymaker or opinion former who wants to know the basic facts about Britain’s housing crisis and its causes does know.
The political reception of the Barker Review set an unfortunate precedent, in that it was widely praised, but then not followed up on with any meaningful political action.
Since then, this has become a bit of a political tradition in Britain, observed by Labour governments, Tory governments and coalition governments alike.
Nick Boles, the Minister for Housing and Planning from 2012 to 2014, started with the correct diagnosis of the problem, and the right ambitions to solve it:
“[I]n Germany real house prices have remained constant since 2000. And in the Netherlands, […] real house prices rose by a little bit more than a fifth in the same decade.
So why did they nearly double in the UK? The answer is simple. We’ve built too few houses […]
We have to accept that we are going to have to build on previously undeveloped land. […]
[S]ome [councils] are dragging their feet. And a few are looking for ways to evade their responsibilities”.
This was a very clear-sighted analysis, which explicitly addressed, and rebutted, the usual excuses from the anti-development lobby: imaginary empty homes, imaginary brownfield sites, the myth of “landbanking”, the idea that it is all just due to immigration, and so on.
But then nothing happened.
Similarly, Sajid Javid, Housing Secretary 2016-2018, also started with the correct diagnosis and the right intentions:
“The housing market in this country is broken, and the cause is very simple: for too long, we haven’t built enough homes. […] This isn’t because there’s no space, or because the country is “full”. Only around 11 per cent of land in England has been built on. The problem is […] not enough local authorities planning for the homes they need”.
But then nothing happened.
Robert Jenrick, Housing Secretary from 2019 to 2021, was another reformer who started with the right diagnosis and the right intentions:
“[The planning system] simply does not lead to enough homes being built, especially in those places where the need for new homes is the highest. […] The result of long-term and persisting undersupply is that housing is becoming increasingly expensive […]
In Italy, Germany and the Netherlands, you can get twice as much housing space for your money compared to the UK”.
But again – nothing happened.
I suppose the good news is that this cycle of grand ambitions, followed by capitulation to NIMBY interests and disappointment, has finally been broken.
The bad news is that it has ended, because the government decided that they can no longer be bothered to even try.