Labour's housing plans are sensible, but the nimby lobby looms large

http://www.theguardian.com/commentisfree/2014/jun/09/labour-housing-plans-nimby-lobby-housebuilding

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Sir Michael Lyons' housing policy proposals for the Labour party represent a solid response to the widely debated "crisis" in housing. There is much disagreement about the causes of the shortage of housebuilding, which in turn fuels high house prices. It is also the case that the problem is most severe in London where there is substantial international demand affecting the property market.

The 1997-2010 Labour government commissioned economist Kate Barker to review the supply of housing. She concluded in 2004 that a number of steps needed to be taken, including: more land being made available for housing; planning procedures being speeded up; councils being incentivised to grant planning permission; greater certainty in seeking "planning gain" contributions; and more competition in the construction industry.

A decade on and there is still a gap between growth in the number of households and housing completions. The UK's population has been rising relatively sharply and the need to accommodate between 400,000 and 500,000 additional people each year has generated further pressure on Britain's already under-supplied housing market.

London's population is rising at a rate of 100,000 a year, with the rest of the "greater south-east" (south-east plus east) increasing by a similar amount. Housebuilding in these areas and across the country as a whole is lagging the growth in population-driven household demand. As a result of a period in which the increase in households has outstripped the creation of additional housing there is a backlog of demand. The shortage of housing has also, inevitably, fed into rising house prices – particularly in London and the greater south-east.

Pent-up demand and (a related issue) affordability mean that, particularly in the south, prices are increasing, while those who currently own homes are in an advantageous position in relation to buying new housing. Even if there were a modest rise in housebuilding there is little chance that many middle-income households could compete with, for example, buy-to-rent purchasers.

Lyons has been working against this backdrop. He will report that there should be "urban extensions", and that while communities should have a say in planning they should not be able to veto development. This policy of incremental growth around the edges of existing cities, possibly facilitated by new development corporations, would be accompanied by a removal of limits on the housing revenue account (HRA).

HRA limits were put in place following a reform originally designed to liberate councils to develop more housing by giving them control of £300bn of rental income and surplus rental streams which would be available to support significant levels of building. However, the government's overriding need to cut its budget deficit led it to put a limit on the new borrowing freedoms, which had been the original purpose of the HRA reform.

Lyons is not alone in suggesting the HRA borrowing, and the proposal is prudential at a local level. But if enacted there would be an increase in "total managed expenditure" and, thus, UK government indebtedness. While it is possible that lenders and ratings agencies would recognise the difference between additional borrowing to build homes (ie infrastructure) and borrowing for, say, higher spending on welfare, there is no doubt the chancellor would either have to accept slightly higher spending and borrowing or make cuts to other programmes.

Other proposals are likely to include additional shared ownership schemes and a transparent land registry to reveal the extent to which forms of land ownership were driving up land prices. Lyons also wants housing associations to be liberated from their balance sheets and to work with the construction industry to build additional housing.

Underlying the evolving report are two highly controversial ideas. First, Lyons suggests there will have to be more top-down powers to use currently protected green land on the edges of cities. Second, the same kind of authority will have to be used to override local opposition to new housing. As ministers have discovered, there will be aggressive opposition both nationally and locally to such proposals, especially in London's green belt.

No government has proved capable of defeating this powerful coalition which exists to protect England's green and pleasant land. Would Labour really want to take on such a massive lobby?