The housing supply debate

One of the most interesting current debates on housing is one that to many commentators had long been settled – whether we actually need to build more homes to solve the housing crisis. Only today, Jonathan Eley had a long read piece in the FT that is well worth reading.

Last year’s Redfern Review, commissioned by Labour, came up with a conclusion that surprised many – building more homes would do little to improve housing affordability or boost home ownership. This has provoked a debate between Ian Mulheirn of Oxford Economics, whose analysis underpins the Redfern Review, and, it seems, almost everyone else (see the critical comments in that Guardian piece from both Shelter and Aldermore). This is an important debate because it forces everyone to consider what the problem really is, and to recognise the non-housing factors that have contributed to the crisis.

The basis of his argument is outlined in this post on Ian’s blog in which he responds to criticism from John Kay. In short, the housing problem is one of distribution not supply. Housebuilding is keeping up with demand, which we know this from looking at the rate of housing completions vs household formation (166,000 vs 199,000 since 1996). Data on rents reveals that they have remained stable, indicating there is no unmet demand (or at least not at a level that should concern policy-makers). There have been a number of responses on the dependency of household formation rates on housing affordability, which I won’t repeat here. Sam Bowman’s blog explains the case.

A couple of points have been overlooked. First, rents are limited by incomes because housing is the major household expense for private renters. We may have a severe housing crisis but it won’t perfectly translate into rent increases because there is a limit to what people can afford (to take this to one extreme, average rents could not reach 101% of average incomes because people simply could not pay). This may explain the shrinking size of rented homes – it’s the only way landlords can generate higher returns. And unlike house prices, you can’t speculate on rents or accumulate capital by signing a tenancy agreement.

Second, rents may have increased at a much faster rate than the data shows. Rents are the first indicator of unmet demand as people unable to buy are forced to (continue to) rent. If rents have stayed broadly stable or, as he argues, they have fallen in relation to incomes, there can be no unmet demand. But he also admits that the size of rental properties has fallen. As we still don’t build homes for market rent at any great scale, the vast majority of new tenancies are taken up in existing rather than new homes. If rented homes are shrinking in size, perhaps it’s because landlords are converting and dividing existing homes into ever smaller units (circa 40,000 of the 217,000 new homes added last year were from conversions). If the average 2 bed flat has not become more expensive to rent but has shrunk in size by 20%, rents would have increased.

But what if for the sake of argument we accept that we are building the right number of homes?

In this case, building more of the same will not solve the problem, because those currently priced out due to non-housing factors will continue to be priced out. However, even in this case I believe that we do need to build more.

We need to build the right types of home in the right places, but we tend to get a debate focused on a) overall numbers (hence a constant focus on national targets) and b) location (partly this is because of the vociferous backers of planning reform and, in particular, relaxation of green belt restrictions).

Numbers and location are vital, of course, but so too is housing tenure (which is Ian’s point). Talk of building up to 300,000 homes a year only makes sense if the gap between homes built now – 187,000 last year – and that target is filled with what is currently not being built at scale. That is, affordable homes for rent. Building tens of thousands more homes for sale would only help those in or close to being in a position to buy.

Even if rents in the private sector are static or falling slightly, the proportion of 25-34 year olds renting privately has nearly doubled in the last decade. For those people, and older generations who have been unable to buy, we should be concerned that 28% of private rented homes fail to meet the Decent Homes standard (1), the rising churn in the sector which brings with it increased instability and the high costs of moving, and those shrinking sizes. And if we want to support home ownership, we should want to increase the supply of rented housing that is affordable enough to allow tenants to save to buy.

So even if we accept that there is not a shortage of housing numbers, there is a shortage of affordable rented homes, and we still need to do something about that.

It’s hard to change the distribution of housing if you are trying to shift from market to sub-market housing (primarily because it requires a lot of government funding). The first option would be to take action to convert existing homes into social housing or impose much heavier regulation on private landlords. This could mean councils buying up private stock and renting them out as social homes. It’s hard to see how this is a deliverable or affordable solution. I don’t want to get into the debate on rent caps and PRS regulation but there are legitimate concerns that landlords would exit the market and the supply of rented homes would fall. Again, it’s not obviously a solution to the problem.

The second option would be to build more affordable rented homes, in much the same way that homes were built in the postwar period. Private sector development would likely continue as it did then – demand for homes for sale would not be affected, and indeed may increase as more people can gradually save to buy – and so the overall rate of housebuilding would increase. In my view, therefore, moving past the ‘housing supply’ question to think about the distributional problem of housing still leads you back to a need to build more homes.

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(1) Although this proportion has fallen from 47% in 2006.

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Thoughts about The Myth of Meritocracy by James Bloodworth

I read James Bloodworth’s The Myth of Meritocracy (which I highly recommend) and had some thoughts:

  1. A liberal order needs social mobility. Firms need access to the best workers. And support for a market economy relies on the faith of people in their ability to better themselves.
  2. Success depends on a mix of social circumstance (e.g. privilege), talent (i.e. merit), and luck (let’s include risk taking in this).
  3. Bloodworth argues that social mobility has fallen in the last few decades, and that people are increasingly aware of it. Lots of people have cited it as an important cause of the Brexit vote.
  4. But he also argues that policies to boost social mobility by establishing a meritocracy (policies largely focused on education) have failed to do so and have in fact cemented class divisions. More people go to university, but poor people are still locked out of the best universities. Etc.
  5. We can’t do much about luck.
  6. That leaves social circumstance. Well, we could have more affirmative action based on social class rather than just ethnicity, gender or sexuality. The problem with that is that we would see more social mobility – downwards, as middle class people lose out to working class counterparts. That’s one reason why Bloodworth argues we shouldn’t pursue social mobility as an overriding aim of policy – it should be a positive side effect.
  7. So that means improving the socioeconomic lot of the working class. But that has sort of happened – income inequality as measured by the Gini coefficient has fallen to its lowest level for 25 years, driven largely by wealth redistribution through the welfare system. If wealth redistribution isn’t the answer, what is?
  8. I think this gets to the big gap we are facing in social policy. It probably means looking harder at things like employee ownership, new routes into home ownership, properly incentivising entrepreneurship and business creation, and looking at ways to harness the value of big data for everyone, not just business. We have to look at things beyond wealth transfers (which will become increasingly difficult anyway with years of fiscal constraint ahead) to readjust the balance between privilege, merit and luck.

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When League One was everything

When Neil Gregory scored against Doncaster in a chaotic game at Belle Vue to send us to the play-offs. When his brother David scored a lucky penalty at Wembley to put us into Division Two for the first time in 17 years. When our biggest hope was to stay at that level and we were all happy as long as that happened.

When Lomana Tresor Lua Lua scored on his debut at Chesterfield and we’d never seen anyone like him before. When no-one had heard of Phil Parkinson but he led us to the Championship and we all got to feel like Leicester fans do this season.

When we inevitably came down again but finally moved to a stadium we’d waited our entire history for.When we beat Norwich 7-1 away. When Adam Barrett scuffed the ball into his own net to complete a double over Southend and help relegate them. When we beat Norwich 7-1 away. When Tom Eastman scored in Carlisle on the last day of the season to keep us up. When Preston expected to seal promotion on the last day of the season and George Moncur scored to keep us up again and it felt like the spirit of Layer Road was back.

When we were relegated yesterday to League Two, for the first time in 18 years, and a generation of U’s fans realised that League One is our league.

 

When I stole an idea for a blog.

 

 

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It’s ok to like Fantasy Football

Screen Shot 2015-07-22 at 21.23.29Someone on Twitter was moaning earlier about people who are happy when a player scores – even against the team they support – because they have them in their Fantasy Football team. I can’t find it now but this, from a Spurs fan, isn’t far off:

For those who enjoy moaning (and it’s obvious they do when it’s the summer and no-one in their right mind is thinking about Fantasy Football), it’s the latest symptom of the ills of modern football. It’s too easy to watch football, grounds are a bit too nice, fans don’t stab each other as much anymore. And people find consolation in Sergio Aguero scoring against them because they captained him this week. Football, it’s gone to the dogs.

Except it hasn’t. Because it’s meant to be a bit of fun, you can’t pick a Fantasy team consisting entirely of your own team’s players. That means you care a little more than you would about how other teams are doing. No big deal.

Besides, sometimes you can be pleased if a player scores, for other reasons – you had two quid on Berahino first goalscorer; you’re playing United and the thought of Robin van Persie scoring fills you with mortal fear, so much so that Rooney scoring is almost a relief.

You’re not happy, but it’s a sweetener. And so it is with Fantasy Football. Four points here, three points there, it all adds up. No need to get worked up.

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“The Farm is alright”: Exploring a UK panel block estate

I wrote something about Tottenham’s Broadwater Farm estate for Retrograd, an online project exploring the legacy and transformation of socialism in post-Soviet countries and the West. Link.

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Economic migrants aren’t refugees

Blogger Left Outside has published an interesting piece arguing against drawing a distinction between refugees and economic migrants:

Every refugee finds themselves thinking “how do I improve my situation?” and the answer usually concerns safety, but often also concern economics.

It’s right to point out the multitude of complex reasons behind migration. As far as they choose the country in which they seek sanctuary, refugees often base their decision on things like language, family ties and economics, and I agree that there’s nothing wrong with this.

Similarly, refugees aren’t uniformly destitute or likely to put their lives in the hands of people traffickers. Many of the Syrians who have claimed asylum in the UK have been able to do so because they could afford to fly here; and many others were able to flee to neighbouring countries where they owned properties.

But it is wrong to suggest that, because economic migrants and refugees share some motivations, they are the same. After all, the primary reason a refugee leaves a country is due to war or persecution – the same cannot be said for any other type of migration. We don’t need a UN agency to identify tailors in Senegal and help them resettle in Italy. Economic migrants aren’t refugees and our approach to them should be different.

In a world without open borders, the refugee-economic migrant distinction is needed: the notion of refugeehood is not (just) an ideal, as Left Outside states, but a legal classification that gives those fleeing persecution some protection from the whims of European immigration policy.

What blurs the distinction is that we see both refugees and economic migrants on the boats sinking in the Med – so we need to be more tolerant and have a more open approach to both. For one thing, that means allowing safe and legal ways for people – regardless of their reason for migrating – to get to Europe.

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What do the manifestos say about immigration detention?

Last month, the report of the parliamentary inquiry into immigration detention was published. After an eight month inquiry the panel, made up of MPs and peers of all parties, recommended that there should be a 28 day time limit on the length of time anyone can be held in immigration detention. They also called for a presumption in favour of community-based alternatives to detention. The full report is available here.

This week has seen the publication of all the major parties’ manifestos, so it’s a good opportunity to see what each party would do about indefinite detention:

Conservatives

There is no mention of detention in the Conservatives’ manifesto.

Theresa May did announce a review, led by Stephen Shaw, of detainees’ welfare and conditions in detention in February. She has also asked Shaw to consider the inquiry’s recommendations. Conservative panel member David Burrowes also wrote this piece for ConservativeHome.

Greens

The Greens say they would:

Ensure that no prospective immigrant is held in detention. As a matter of urgency, the administrative detention of children and pregnant women should end immediately.

This appears to suggest they would not use detention at all. It’s not clear if failed asylum seekers or foreign national offenders are covered by the term “prospective immigrant”.

Labour

Labour have pledged to end indefinite detention. Their manifesto states:

We will end the indefinite detention of people in the asylum and immigration system, ending detention for pregnant women and those who have been the victims of sexual abuse or trafficking.

This was announced by Yvette Cooper last month. The Guardian at the time reported that the time limit would not apply to “those who have committed criminal offences and were being deported because of their criminal behaviour, or those who posed a threat to UK national security or public safety.”

Liberal Democrats

The Liberal Democrats say in their manifesto that they would ‘end unnecessary detention’:

Liberal Democrats would end indefinite detention for immigration purposes, and use community-based alternatives instead.

It’s right to deport people who don’t have the right to be in the UK, and sometimes that requires holding them temporarily in a detention centre first. But locking people up has gone too far. Routinely detaining immigrants and asylum seekers indefinitely is a waste of time, resources and taxpayers’ money, and has a terrible effect on the physical and mental health of those detained.

Plaid Cymru

Nothing in their manifesto. In February, the BBC reported that Plaid Cymru would “lobby the Westminster government to ensure that they shut ‘detention’ centres.”

Scottish National Party

The SNP manifesto has not yet been published.

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