Homes for the people, by the people

After work, housing is the second question Labour needs to address if it forms a government next week, and the second area where we need a different approach to power.

In this series of pre-election posts I’ve argued so far that a Labour government needs to have a practical idea of freedom at its heart. Our story should be about supporting people make their way in life. Labour’s idea of liberty starts with the fact we have free will but are always also dependent on others. It understands that government can’t and shouldn’t ‘delivery’ very much on its own. But politicians can help build institutions where people provide each other support.

Over the last twenty years, politicians have abdicated responsibility for the housing market. We’ve left the nation’s accommodation to be shaped by a set of random deals made between property developers and council planning committees, with developers have the upper hand. The result is chaos: no home-building where it is most needed, dilapidated accommodation where its not, insane house price inflation in the south, making it impossible for young people from the south to buy a place where they grew up. The inequalities are eye-watering: the value of property in Westminster, one London borough, is £128 billion.

This abdication is the result of big business lobbying and the weakening leadership skills of our political class. There’s nothing anti-capitalist about offering leadership to the housing market. We need a radically different approach.

The Conservative strategy offers interventionism without leadership, the worst of both worlds. They want people to have more debt, then let people negotiate with developers on their own. The effect, as we’ve said many times, doesn’t lead to more building but just higher prices. House-building is an erratic industry. As the Housing Federation economist Joe Sarling argues, each time bust turns into boom house-building never recovers to the level of the previous crash. It isn’t property developers fault; the problem is no single market player has a big and long enough perspective.

The result is chronic under-supply. It’s a situation where people who own a house feel theoretically wealthy, but everyone else is just isolated and abandoned in the face of a housing market that is out of control. The lack of power people under 40 feel about where they live is one big reason for the big gap in Labour and Tory support.

Labour’s approach is outlined in the brilliantly researched and detailed Lyons Review, a report which offers convincing case for political leadership in housing, but give no clear overall approach.

In government, we need to sharpen up. The priority is simple: build a lot more houses for people starting out in life, but do so in a way that doesn’t abandon people to an irrational market. The answer isn’t only more social housing. It needs to be easier for councils to build more. But more importantly, we need collective planning so we have houses where we need them, and new institutions where people buy in common.

In our current, chaotic system houses aren’t built where they’re needed. We need national coordination, and a programme of new towns and garden cities not just the steady creep of existing big cities outwards. Decisions can’t just be made by a minister locked away in Whitehall. Labour needs to create a national housing commission or council, which brings all the different interests together to work out a plan.

That plan will only work if we do something about our erratic, escalated land values. The problem isn’t with developers, but the system they are part of. There are different ways to change it. One is a land tax – but there’s nothing to guarantee that developers don’t just pass it on to buyers. More practical is to create forms of ownership that take land values out of the equation, and ensure the community – not just a few speculators – benefit from increases in asset values.

Community land trusts do that. They capture the value of land in perpetuity for the benefit of the local community, then let people buy just the bricks and mortar. In the model worked out by East London Community Land Trust, homes cost a lot less, and can only sell or rate at a rate linked to local incomes. East London CLT, in Mile End, proves its possible to build affordable homes to buy in areas with high existing house prices.

Land trusts and cooperative housing options are starting to proliferate, with 170 in the UK now – but to grow, they need government backing. The current madness is that it’s far easier for a council to offload land onto private developers who sell houses to investors who’ll never come to the UK, than it is to transfer properly to community organisations. The law needs to change to give community trusts first refusal on public land. We need a community right to buy under-used land, and a new land bank to lend community housing institutions capital to grow.

The first step in all this is simple: get the right people together. There are exciting set of ideas bubbling away in organisations interested in housing – the Housing Federation, the Town and Country Planning Association, Citizens UK, Shelter, as well as some of the smart property developers. A new minister’s first step should be to ask them to get together and come up with a quick plan to build a million low cost homes to buy in five years, without inflating the housing market.

Underpinning that plan needs to be the idea that things can be very different. What blocks change in British housing is a kind of weary complacency – everyone knows the system is broken, but no one imagines it can be different. It can. For residents of most other countries, it is our system with its inflated values which is mad.

The media politics around house building construction has ended up as a silly numbers game with little idea about how we’ll actually get things done. Parties throw numbers about as if David Cameron and Ed Miliband will get their trowels and spirit levels out themselves. The Tories solution is to abandon people to a market that doesn’t work. Labour has the right ambition, but we need serious thought about new institutions to put it into practice. It won’t government, but local councils and community-based land trusts which will build our badly needed new houses.