Contribution
My Lords, it is common ground that we need more homes, but this Government are going entirely the wrong way about it. We are on track to complete fewer new homes in this Parliament than in the last—a period that was disrupted by Covid and the strategic supply shocks unleashed by a European war. It is not hard to understand why we are failing, but to mask the failure to grow in our cities, impossible unachievable new targets have been set in the countryside, and have undermined the equity and collateral in the largest sites with the greatest entry costs. Any old orchard for a handful of homes has economic preference over the strategic allocations, which are being left to moulder. Yes, the five-year land supply is part of the problem, not the solution. New levies, fees and charges amount to between £30,000 and £40,000 for a new dwelling house, and I now learn that regulatory costs for high-rise flats amount to about £70,000—a real fiscal disincentive, borne disproportionately by the young and the first-time buyer making a start.
There are three elements to sustainability, but Natural England has been granted a veto on the creation of new homes in the largest parts of the country with the greatest housing potential—as if not building new homes is going to clean up our rivers. All those ecological and archaeological reports, which can only be done at certain times of the year, add delay, cost and increased risk. Failure to dot an “i” or cross a “t” means growth is postponed for a year by quangos acting as judge and jury in their own court, using the consent process as a make-work scheme for university chums and colleagues, while bricklayers, tilers, roofers and ground workers are put out of work. The Labour Party, which was established to represent the journeyman, has nothing to say to these people.
Only last week, the Home Builders Federation told me about the case of a small piece of ground suitable for nine homes that cost about £40,000, but was burdened with proposed biodiversity charges of over £200,000. That was before the madness of the nutrient neutrality levies. No wonder the developer walked away—no homes built there. Now there will be more mayoral taxes, and building safety levies in London—£90 a square metre in Fulham—are chilling our capital’s housing growth. The fiscal incontinence of this Government, unable to get spending under control, has led to the highest interest rates for two decades, which have killed off nearly all the small builders. Even the largest operators, public companies, are now struggling with the number of active sites, which is down 20% in London since this Government started.
Only this morning, the Times reports that worse is to come: 140 of the 166 developers operating in London are working on projects due to complete in 2027. Without a pipeline of work from 2028 onwards, the Times says they will “effectively exit London”. Of course, the Government try to blame councils for this sorry situation, but to find the culprits they just need to look in the mirror. This is their calamity.
Looking at the situation for families who have aspired to, and own, a stake in their own home, we have a Prime Minister who tells them that their land and property is not taxed enough; the politics of envy, and a mansion tax that falls on the old widow eking out a pension while living in a home bought generations ago; second home surcharges that are crashing the tourist economy of coastal communities; a resistance to addressing the injustice in the balance of power, and sharp practice, between shared-ownership owners and the RSLs, where the residents cop all the costs and the landlord gets off scot-free; and crazy stamp duty rates that damage labour market liquidity, trap people in their homes and discourage inward investment in our economy.
The Government are trying, of course, but their medicine is making the patient worse. Vibes alone will not build these homes. The new town programme is dead on arrival, not even going so far as to long list schemes with fast rail connections, grade-separated junctions and all the land assembled in the adopted plan, with the unanimous support of the local planning authority. It is just incompetent.
The emergency relaxations on high-rises in London will expire before they can do any good, so that is another three years wasted. On 1 January, the Government plan to implement even more taxes—on steel and cement. How many more burdens can the construction industry take? We have to call time on these delusions, because build costs have leapt while house prices have fallen. Can they not see the jeopardy here? Why would anybody want to catch a falling knife like this?
The property market is being taxed to death. Whether you are building, buying, selling, owning, renting or being a landlord, this Government are crushing aspiration while missing their own numeric manifesto target by miles. This matters because workers cannot move about, growing families cannot get on, the old cannot downsize and the young cannot upsize. Worst of all, the journeymen are being put out of work.
The economist Arthur Laffer, with whom I had dinner last night, says that you cannot tax yourself to success. But Britain is taxing itself to death, no more so than in building, construction and housebuilding, with a dogmatic whole-economy experiment on housing that is killing home ownership and aspiration. It is just not working.