Who demolished the housing industry?

At the end of last week, Britain’s largest housebuilders, Barratt, announced 1,200 sackings. The Barratt announcement follows similarly gloomy news from Redrow, Persimmon and Bovis, with a total of 5,000 job cuts – nearly 40 per cent of all workers in the industry.

The lay-offs are remarkable when you think that the UK’s housing stock was valued in January 2008 at four trillion pounds. Then, housing was seen as the booming sector of the economy, accounting for around forty per cent of UK growth.

What happened? The sad truth is that the growth in the UK housing sector was not growth at all. In fact, the output of new construction fell off at the end of the Nineties and into the Noughties, lower than it had been since the end of the war. More people in work, with cheaper credit on hand, had no positive effect on housebuilding. What people bought were not new houses, but second-hand ones, so that all the increased demand just chased prices upwards.

What happened to the laws of supply and demand, you might ask. When prices go up, they are supposed to tempt more people into the business, to make more. But the housing market did not follow the usual pattern. Housebuilding slumped just as more people were spending more money on houses.

It was politics that stopped the new homes being built – green politics. For the last fifteen years, the anti-housing lobby has been overwhelmingly successful in sabotaging the industry. There has been a conservative lobby against new building since the Campaign to Protect Rural England was founded in 1926 – along with the National Trust and the list of historic buildings, the conservative anti-housing lobby has been a formidable representative of nimby-ism (Not In My Back Yard) in the Tory shires.

What changed in 1997, though, was that the former radicals joined in the anti-growth chorus. Lord Rogers’ Urban Task Force took on board the new environmentalist agenda, arguing that growth should be restricted to the cities. Rogers’ ‘build up, not out’ mantra was adopted by a whole generation of town planners and local authority officers. Former London mayor Ken Livingstone rallied urban leaders to the new policy with the backing of commentators like architecture writer Deyan Sudjic and historian Tristram Hunt, while the conservative Daily Mail rallied the Tory shires. Opposition to new building had reached critical mass.

The anti-growth lobby turned the planning laws that have limited development on ‘green belts’ around cities since 1955 into a point of honour: This far and no further. Local authorities found it more popular to bend to the vocal lobby of nimbies than to think of the future.

Complicit in the new conservatism, the current Labour administration faced a huge problem. Looking at the numbers for the country as a whole, they knew they were sitting on a timebomb. Population projections predict a marked growth in households – much greater than the 200,000 houses being built each year could accommodate (200,000 is not even enough to replace the dilapidated housing stock).

However, the Labour administration was in no position to argue with the environmental sentiments behind the anti-building lobby – they shared them. Instead they tried to square the circle with a succession of special projects: the Thames Gateway development was one; the subsidies for key workers scheme was another. Then there was the idea that government land (Ministry of Defence sites and railway sidings) could be released to create new growth; and most recently the planned ‘eco-towns’ were supposed to meet housing demand and protect the environment.

But the special project approach could not stop the anti-growth lobby. On the contrary, each new announcement by government that there would be more homes in the Thames Gateway or that there would be new eco-towns only provoked further opposition. Local authorities prided themselves on the barriers that they put in the way of new houses, slapping special taxes on them (‘section 106’ funding) to make the developers pay for local amenities. They were killing off a goose that had not even laid its golden egg.

It was a fantasy world where the government would announce the building of new homes that never were, and the anti-growth lobby organised protests against developments that never came. Historian Tristram Hunt railed against the ‘Tsunami of Concrete’ that the government had unleashed – what Tsunami of Concrete? Housebuilding was at its lowest rate ever – and that was before the collapse in house prices.

The housing developers could have organised some opposition to the anti-growth lobby. If the commentators were to be believed, the housebuilders were the devil incarnate, with Machiavellian powers to force government to sacrifice the countryside to them. The truth was the opposite. The big housebuilders were strangely happy with the arrangement that kept their business small.

Getting planning permission for new homes through local government was so complicated that only big housebuilders could absorb the costs. The rules limiting development had the effect of raising the bar of entry to the business, so that they had few competitors. They did not need to make many homes (however much people needed them) because they could make money selling few homes at inflated prices.

In the end, the housebuilders, the government, the green lobbies and the Tory campaigners were all complicit in strangling the construction industry. The political outlook that favoured limits on growth reached the tipping point. It would be some satisfaction to list the idiots who wrecked the housing industry, from Ken Livingstone to the Daily Mail, but the list would just be too long.

The housebuilders’ demands for government help in the past few days are a bit rich, considering the way that they squandered all the opportunities that the house price boom brought. But government should help – not with money, but by taking the limits off housebuilding. We can all help by putting the blame for the problem where it lies, on the anti-growth lobby, so that they are shamed into silence.

James Heartfield is a director of Audacity.org. His new book Green Capitalism: Manufacturing Scarcity in an Age of Abundance is available to buy directly from his website at www.heartfield.org.