Some of observations on the housing aspects of the main parties’ manifestos as we head into the final week:
- Tories and Liberals see housing as a numbers game
Both the Tories and the Liberal Democrats are pledging to get new build housing to 300,000 a year. Such a pledge is a little tired. The 300,000 figure has been around for sometime and no one has got near it to date.
Last year, output was 222,190 new homes. A meaningful proportion of this came from permitted development, something Labour opposes. There is evidence that 2019 could see another 10% jump on this output but figures are yet to be confirmed. Moreover, there is also evidence that housing starts are now declining due to the prevailing economic climate. Therefore, 2019 could be the high watermark.
At current rates of growth, I estimate it could take another 20 years for the industry to exceed 300,000 homes without some radical changes to land use policies.
- Labour is focusing on tenure
Labour is concentrating on the housing they want to see delivered with an offer of 100,000 new social rent homes. This has the obvious attraction of not committing the party to a macro target which is arguably not achievable. Moreover, it underlines a recognition that housing isn’t simply a numbers game and that new build alone will not make housing more affordable for the general population.
To deliver, Labour is pledging £75 bn. My view is that it’s unlikely they will be able to get such a programme up and running and getting results until the very end of the next parliament. It can take 4/5 years to deliver any site from cradle to grave.
Labour seems to be assuming that each new social rented unit will attract a grant rate of £100k. This is reasonable as a blended rate nationally. Of course, in London and other more expensive cities where arguably the affordable housing is most needed, a higher rate will be required to make a tangible impact – perhaps double? Based on my rough sums, the programme will cost about £15bn a year to run, a huge price tag and unlikely to be really motoring until year 4 of a Jeremy Corbyn led Government.
- All headline policies will require a big uplift in construction workers
There seems little or no thought on who is going to build these new homes. Acadis produced a very interesting study several years ago where they broke down the manpower required to deliver a new home. Their assessment is that every new home requires 1.5 new workers over and above the existing labour supply. So, based on an uplift of 77,810 new homes above 2018 output, the Tories and the Liberals will need to find a way of attracting an additional 116,715 construction workers into the industry. This is going to be difficult to do given the near full employment of the UK economy and potentially more constraints on migration in the years ahead. Once again, another strong endorsement for the nascent modular sector in the residential sector.
Conclusion
All three main parties appear to be throwing money and targets at a system which has limited capacity to deliver. It’s like running a high voltage through a circuit board of limited capacity. There are some nods in the Conservative manifesto to planning reform and likewise some nods in the Labour manifesto towards land tax and land release. Both are needed in my view. I’ll write a further piece once the results are in on Thursday.
