Boris Johnson’s Queen’s speech was largely empty of substance. So thank goodness for the housing and planning secretary, Michael Gove. In his contribution he never spoke truer words, at least if anyone understood them. He has dismissed housing targets as “Procrustean … arbitrary … perfect arithmetic”.
In plain terms, what Gove meant was that Johnson’s mantra of “build, build, build” (a parroting of his chief party donors, the construction lobby) was senseless. The build-or-be-damned policies of David Cameron and George Osborne had funnelled jobs, people and money into the south-east of England, spawning characterless housing estates from Hampshire to East Anglia. This had enraged Tory voters in villages and small towns, because it sucked the life out of existing communities, crushing high streets and closing local pubs. The response at last week’s local elections was clear: stop the policy.
The British housing sector is not “in crisis”. Sectors such as social housing are in trouble and need far more help. But property prices have been rising fast, up 11% from last year. They have risen in all rich countries, driven largely by decades of low interest rates.
Gove is right to protest at the fatuous government statistic that Britain “needs” 300,000 houses a year, broken down to individual counties and cities. There is no Leninist requirement of a roof, bedroom and sitting room for each Briton, allocated by the state from birth to death. Whitehall’s centralism can be plain barmy. A housing market responds to changing patterns of migration and demand. Most people would like a different, preferably a better, house. Whether they can realise that preference depends on myriad factors, chiefly price.
British housing – overwhelmingly in houses rather than the European preference for flats – is desperately inefficient. As the geographer Danny Dorling has noted, a third of British bedrooms are empty on any given night and even London has a bedroom surplus. Britons have 2.5 rooms each. As for new building, it has virtually no impact on price, since some 90% of house sales are of existing properties. Countries that build extravagantly, such as the US and Australia, have house prices soaring faster than Britain.
As Dorling has pointed out, social and demographic differences hold the key to housing supply. The gap between London and the rest of the United Kingdom yawns wider than anywhere in Europe. First-time buyers in Westminster pay an average of £906,000 for a property, while in North Ayrshire they pay £102,000. Yet it is London not Scotland that holds a magnetic hold on young people. Despite the high prices, it still has the youngest population – its median age, of 35, is six years younger than Scotland – and the youngest workforce in Britain. A London street or tube concourse teems with youthful faces. Their living conditions may be cramped, but the Dick Whittington effect is as strong as ever.
If Gove really wants to bring down house prices, he should increase market flexibility. The most absurd tax in Britain is stamp duty, a tax on house transfer. Sales soared when the duty was suspended early in the pandemic, and have now slumped. Britons are reckless users of property. Stamp duty penalises downsizing and rewards housing waste. It is mad. The abolition of the tax would free up existing property, allowing retired people to swap places with young families. Higher council tax or a mansion tax would make more sense.
The biggest challenge for Gove is the other half of his brief. It lies in what he sees as the true nature of “levelling up”. Every prime minister since Margaret Thatcher has wanted to bless the north – or its voters – rather as the Victorians wanted to help the poor. Yet they all pumped infrastructure and housing subsidy into London, ever widening the gulf. Johnson often says levelling up does not mean “levelling down”. But he continues to tip vanity public spending into London, its railways, airports, bridges, sewers and even, it seems, the buildings of parliament. The reality is that if the north really is to be more attractive as a place to live and work than the south-east, then the south-east must be made less so.
This means putting a stop to first-time house-buyer subsidies for Londoners, which anyway just increase prices. For those on lower incomes, house prices would drop over time. It means, as previously mentioned, giving rich councils powers to set higher council tax bands to sting their wealthier residents, motivating them to downsize. It means making London less attractive to foreign property ownership and enforcing the subletting of vacant properties. The stark residential emptiness of the West End is so brazen it must explain the Tories’ loss of Westminster council this month.
Levelling up should mean not building over ever wider expanses of the south-east’s countryside to welcome northern migrants. It should mean increasing – and publicising – the competing attractions of the north’s countryside. What has appealed to London’s creativity has been the vitality of its Victorian market hubs and restored commercial architecture. The north has these in plenty and should exploit them. It should fight to keep its young skills, perhaps waiving student debts if graduates stay working five years in the north.
House prices are not a random variable. They reflect where people prefer to live. Britain’s poorer regions need policies to help them retain their talent, creativity and prosperity. This will be hard, but success will come when their house prices too can be “in crisis”.
Simon Jenkins is a Guardian columnist
