1. Government
February 9, 2017

If Westminster wants to solve the housing crisis, it needs to give cities more powers

By Ben Rogers

Housing is the major driver of inequality in the UK, and a major drag on UK’s economic success. Across the country, rising housing costs are eating away at people’s income and undermining their living standards. Theresa May has committed her government to creating a “society that works for everyone” – but this vision will never be achieved until we see a step change in the supply of new homes.

Disappointingly, this white paper does not represent the new departure that we need.  Government is still looking to developers to lead on house building.  But while they have a vital role to play, they don’t have resources, or for that matter, the incentives to build at the level and rate we need.  

Developers shouldn’t – and can’t – go it alone. We need to fundamentally change housing policy so that regional and local government can lead on housing delivery and development more generally.

Government will say that it does not have funds. I’m not expecting it to write a big cheque, but it should reform tax and borrowing regimes to give local authorities the power to spend some of the tax that they raise.

Research by Centre for London has shown that the total net expenditure on planning and development by London boroughs was reduced by nearly 60 per cent between 2010-11 and 2015-16.  And this austerity is making it increasingly difficult for authorities to meet their targets. London needs a minimum of 50,000 homes to be build every year just to meet demand, and we need to ensure quality of place too. But how can we expect authorities to draw up comprehensive masterplans, secure investment partners and win the local public over to new developments without the resources they need?

We also need the right housing in the right place. That is why infrastructure matters too. The capital needs to be able to commit to a long term infrastructure and regeneration plans, improving existing rail services, above all in South London, and investing in new lines that will unlock development.  Our research showed that upgrading the rail network to Overground could support the development of 16,000 new homes in south central London alone.

As the report of the London Finance Commission argued, government should continue to promote devolution and give English cities and regions powers to design their own pro-growth tax regimes and borrow against them. Like other global cities, London’s property market faces challenges like under occupation and property speculation. Devolving powers to London would allow the city to design a tax system that tackled these challenges and, most importantly, unlocked capital investment in infrastructure and development.  

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Giving away more power over tax and housing would also allow central government to get on with the daunting challenge of making a success of Brexit. 

Ben Rogers is the director of the Centre for London.

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