Initial reflections on the Prime Minister’s speech on house building for the future

One of the hallmarks of Theresa May’s tenure as Prime Minister has been her emphasis on social mobility and what she calls the ‘British dream’. Today, she has attempted to temporarily shift the focus of public policy away from Brexit towards the most significant infrastructure pressure facing the United Kingdom, namely the burgeoning housing crisis.

Affordable housing and inequality

In her speech this morning to the National Planning Conference, Mrs May has announced the Ministry of Housing, Communities and Local Government’s consultation on the National Planning Policy Framework. Her aim is to shake up planning law in local government. And the mood music to this could not be clearer: the PM has described it as her “personal mission” to tackle the shortage of homes which she believes embeds structural inequality.

Is it perhaps more than just coincidence that this runs alongside the Resolution Foundation Chair Lord (David) Willetts giving his speech on wealth inequality this morning? Once again, Willetts has drawn attention to the differences in opportunity for today’s younger people, contrasted heavily with the baby boomer generation. One of the core disparities is home ownership and the relative prosperity attached to it.

A more muscular approach

Because the government Theresa May leads intends to be much more muscular on house building to match need for the future, the days of the ‘NIMBY’ local council are looking numbered. The Housing Secretary, Sajid Javid, has wasted no time in telling The Sunday Times that NIMBY councils will face a crackdown when they – as he puts it – “fudge the numbers” on housing targets. Crucially, he has said housing targets will be taken in account with average house prices.

The market will no longer be left to regulate itself and the Housing Ministry will intervene to the extent that planning powers may be removed from underperforming councils and given to independent inspectors. Such a flexing of muscles marks an interesting shift in policy from the predominant ‘localism’ underpinning local government policy for over a decade.

Likewise, developers who ‘landbank’ will find the Government’s tolerance to be minimal. And if Sir Oliver Letwin’s review into the disparity in planning permission granted in certain areas can identify ‘unjustifiable’ delays in build out rates, no cards are off the table in intervening.

Build more, build better

Taken as an example, Greater London is often cited as at the sharp end of the housing crisis. Our recent Nudge Knowledge Report shows that the proportion of all planning applications approved stands at average of 79%, across the capital, with 86% of major applications being granted. But there is a large variation between boroughs. The Government will no doubt want these approval figures to increase.

However, the Chair of the Local Government Association, Lord Porter of Spalding, is keen to highlight that councils are currently approving nine in 10 applications and that “the planning system is working well and is not a barrier to building”. Porter has expanded on his response by urging the Government to lift what he sees as harsh restrictions on local authorities’ ability to borrow money to pick up the mantle of building homes themselves. That would be a big step for a Conservative administration, although it is worth noting that Lord Porter is himself a leader of a Conservative council and that the idea is starting to gain traction with some backbench MPs.

Despite May and Javid welcoming a broader increase in approved planning permissions, they also want to see new homes built quicker and on a larger scale. It can be assumed the Government generally welcomes high rates of planning approval, but it will no doubt want to see more homes built, more often.

And that means more of a focus on developers actually delivering the finished product. As such, a large portion of the PM’s speech today was devoted to laying down the law to housebuilders, warning them that they need to build sites out more quickly, ensure a suitable amount of housing is affordable, tightening up viability assessments.

Quality as well as Quantity

That being said, today’s speech emphasises quality as well as quantity in planning. The sacred cow that is the green belt will receive strong protections. “The answer to our housing crisis does not lie in tearing up the Green Belt”, May said in her speech. “Barely 13% of this country is covered by such a designation. But it serves a valuable and very specific purpose.” Naturally, this went hand-in-hand with the predictable reference to using brown field sites better – an obvious fop to rural Conservative heartlands. Whether that green line in the sand can be held forever, though, will remain to be seen.

The message

What is evident from today’s speech is that the PM is keen to speak directly to aspirational younger people, for whom owning their own home is a remote prospect. As she told the conference this morning: “The British dream is about each generation being better off than the last, but todays’ young people are forced to spend three times more of their income on housing than was the case for their grandparents.” This chimes with Lord Willetts’ dire appraisal on social mobility and opportunity between generations.

Developers and local councils should be aware that the PM has made planning a personal issue as well as a political one. And in the midst of an ever-changing political landscape, not least a Government without a Commons majority in the context of leaving the EU, she may be in a hurry to leave planning reform as a non-Brexit, domestic legacy.

If you are interested in more information about our Public Affairs practice, please contact David Park (Partner) at david@nudgefactory.co.uk