Bob Kerslake knows a thing or two about housing. As the first chief executive of the Homes and Communities Agency, and then permanent secretary at the Department of Communities and Local Government, he has been at the heart of the housing debate for the past decade.
Now, as chair of the London Housing Commission, Lord Kerslake is perfectly placed to identify missteps in policy and potential solutions to the UK’s very real housing crisis, which, unresolved, threatens to cripple the national economy. It was on this subject that he delivered the second Estates Gazette/Peter Wilson Lecture on 25 February, at Fitzwilliam College, Cambridge.
A 200-strong congregation of housing specialists listened intently as Kerslake set out the crisis like a murder mystery, putting himself in the detective’s role as he detailed the prime suspects responsible.
But with a problem so complex, a “Professor Plum in the drawing room with the lead pipe” conclusion was never going to be on the cards.
“Mea culpa”, Kerslake began, as it became clear no one would escape blame.
Analysts say it will take 250,000 new homes each year to address the supply shortage, yet in the 2014/15 period, there were just 157,000 new-build completions.
Planners and the planning system, housebuilders, landowners, the public at large, and the government – “the real villain” – were all in the frame.
And while alluding to the “radical and challenging proposals” in his report for the London Housing Commission, which is being released on 7 March, Kerslake outlined how each “suspect” would need to become part of the solution.
He called for an end to the “clobbering” of local authorities and the planning system. Only when they receive adequate investment in their capacity and capability can they be properly held to account for what is often described as slow and inconsistent performance, he said.
“Every developer I have ever spoken to says they would trade a properly resourced, effective planning department for higher fees.”
The suggestion prompted strong reaction from the crowd. Tim Holmes, founder of Endurance Estates, applauded Kerslake’s desire for stronger local leadership but asked what could be done to achieve it, citing a tendency for rural planning committees to rely too heavily on large sites to deliver housing numbers.
“The reality is that villages and smaller sites can be very useful deliverers of immediate, sustainable schemes with infrastructure and communities,” said Holmes. “What can we do to strengthen the quality of the planning commission that ultimately makes the decision on the millions of pounds we invest in the planning process?”
Ben Temple of Temple Field Property suggested that an extension to the existing use of permitted development rights would help, but Kerslake expressed mixed views on the efficacy of this idea.
He said: “They can speed up the process, particularly on sites that go from office to residential use, but this can also have unintended consequences. In some parts of London you’re losing genuinely useful employment sites, usually to luxury flats. You have to be careful what you wish for.”
Kerslake went on to outline the crippling decline of small and medium-sized housebuilders. Registered SMEs plummeted from 12,000 in 1990 to just 3,000 in 2015.
“One of the reasons SMEs struggle so much is they have difficulty accessing capital. They find it hard to go through the uncertain timescales of the planning process, yet they are important for creating a dynamic market.”
Eric Sorensen, director of Central London Forward and the man previously in charge of the Thames Gateway London Partnership, agreed.
“A lot of planning permission in London is locked up in very large sites controlled by relatively few developers. But the output on very large sites does not rise commensurately with the output on very small sites because of concerns about local absorption rates,” he said.
“This suggests, as Bob mentioned, that the loss of the SME builder is a serious issue. If we don’t get a more diverse supply in terms of the scale of building – and often it’s very easy to get small sites under way – we’ll never get to the level of output that we want.”
Kerslake acknowledged the efforts of successive governments to introduce initiatives to increase supply. However, he was quick to point out that cumulatively, they did not stand up to the challenge.
“I’ve lost count of the people, usually from number 10, who came to me with ‘solutions’ to the housing crisis. They were not all bad ideas, but it was piecemeal and short term in its approach.
“The issue is of such scale now that it requires long-term, strategic thinking.”
Kerslake said that the prime responsibility for setting out this long-term strategy belonged to central government but called for local leadership to take the initiative in its delivery.
In the case of London he mooted the idea of a new housing devolution deal that would call for a commitment to a dramatic increase in supply.
Lord Kerslake’s lecture
Britain’s Great Housing Failure: whose fault is it anyway and what can we do about it?
We can say without much fear of contradiction that in London and large parts of the country we have a major housing supply failure.
The cumulative effect of the many positive initiatives taken by various governments to boost supply, such as the Kickstart initiative, Help to Buy and the National Planning Policy Framework, have not matched up to the challenge.
Building houses is not intrinsically difficult. From the early 1950s until quite late into the 1970s, supply consistently topped 300,000.
Private-sector delivery was strong and there was growth in public-funded and commissioned housing.
During the interwar years, planning controls were much more relaxed and the private sector dominated.
In the past we did manage a level of new supply, but that now seems to defeat us.
Why is this and who is responsible?
Here are my suspects:
The planners and the planning system. Instead of clobbering local authorities and the planning system, we need to invest in growing their capacity and capability and then properly hold them to account for performance.
The housebuilders. The sector has become too concentrated on a small number of large housebuilders sitting on land and controlling the rate of supply to maintain high prices.
While large housebuilders will increase supply, an over-reliance on build-for-sale and the pressure on private housebuilders to deliver the necessary growth in supply is a mistake.
The Landowners. To speed up development I would strongly support the government’s plans to simplify CPO powers.
I would also reduce uncertainty around Section 106 agreements and the community infrastructure levy to reach agreement on land values and enable development.
Finally, local authorities should have the powers to charge tax on permissioned sites where development has not taken place after a reasonable period.
The public at large. It used to be that local residents or “nimbys” were often the last to know what developments were being proposed, and housebuilders were naïve to this. It was also impossible for developers to get planning decisions just before an election.
These issues are changing. The NPPF and Local Plans mean there is a much greater onus on planning committees to give approval; housebuilders and developers have got better at understanding good placemaking and engaging local communities; and neighbourhood planning has allowed local communities to work through the issues of new supply for themselves.
Most importantly, the shortage of housing has gone beyond a big set of numbers to affect real people’s lives.
The government. More like the real villains, governments have collectively failed to take a long-term strategic approach that treats housing as a vital part of our national infrastructure, and that straddles the election cycle.
The Housing and Planning Bill, in committee stage in the House of Lords, is a textbook example of what concerns me about government housing policy.
Its central purpose is not to increase supply, but to advance one form of tenure at the expense of social rented housing. This gives the secretary of state extensive centralising powers that contradict the government’s professed localist approach.
When the financial crisis hit in 2007, private house building fell off a cliff, and the only housing getting built at that time was social housing.
Putting all our eggs in one basket will leave us more vulnerable to a downturn.
It is possible to meet this country’s housing needs. But we need to build more housing of all types and tenures.
And we need every part of the housing sector, including local authorities, housebuilders, developers and housing associations to step up and play their part.
We especially need to invest in a major new programme of public housebuilding alongside substantial growth of the institutional private rented sector.
We should also invest in our planning departments, giving them the flexibility to charge economic rates for their services in return for better performance.
There is plenty of scope for more development. But we need to take a more robust approach to the release of public land and the density of development.
Nowhere is this more relevant than in our capital city.
Read a transcript of Lord Kerslake’s lecture here
Lord Kerslake gave the Estates Gazette Peter Wilson Lecture, which is supported by Savills and Barr Ellison Solicitors, and hosted by Fitzwilliam College, University of Cambridge
• To send feedback, e-mail Janie.Stamford@estatesgazette.com or tweet @JanieStamford or @estatesgazette
