Spare a thought for poor Mr Pennycook, Labour’s new housing minister. Before we do that, however, we should congratulate him on being the longest serving housing minister in the last 14 years. Well, if you count his period in opposition, that is. Let us all hope that this continuity will enable him to actually make some progress on what is clearly a major manifesto promise from the incoming government.
Sadly however, it looks to me that he is in a big bind before he’s even got his feet under the desk. The much proclaimed 1.5 million homes over the next five years, looks a stretch to most commentators and nigh on impossible to this one. Has he been set up to fail from the outset?
It’s not just that the major house builders are engaged in a series of Pac-Man activities, (Barratt with Redrow, Bellway with Crest Nicholson, and Carla… we await to hear…) or that the SME housebuilders are now rather few and far between, or that the much needed labour market has gone home, or even that supply chains are creaking; it’s not just all this that has me worried for him.
In a world of higher interest rates than everyone would like and have become accustomed to in recent times, efficiency rather than numbers of homes built is now the name of the game, and house builders are going to have to be persuaded that they can make the margins they seek on new developments.
In recent times there has been something of a stand-off between landowner and house builder, which partly explains the dearth of new homes—landowners have never been keen on seeing housebuilders eating their land value.
You might think that this could unlock a little now with the manifesto commitments. The house builders though still have to be persuaded to do their thing, which is to build houses. They are not going to do that unless, or until, they believe that they can sell them at a healthy profit. It’s helpful that the Bank of England has started cutting interest rates, but even that doesn’t deal with the underpinnings of the system.
I was speaking with a Chief Executive the other day. He pointed out that the Labour/Liberal Democrat Council “partnerships” that sought to block their local Conservative rivals on planning permissions for new homes no longer have an enemy so to speak.
The consequences are that they will actually have to agree on housing provision locally and one wonders if this will be as easy as said. May elections already loom large and the local populace is always prepared to move on swiftly having achieved its main ambition.
It is the Local Authorities who typically negotiate planning consents, specifically the Section 106 agreements, on behalf of County Council’s where the receipts typically reside. The big-ticket items for the Councils are usually education and transport.
I hear that in one particular area, earmarked for significant housing growth, the Council education department wants a new school to come with a particular planning consent, whilst the Council’s transport department wants a new road. The scheme in question might support just half of one of those. Unsurprisingly there is little progress there, and it is unlikely there will be until heads are knocked together. But by whom I wonder?
Councils with eyes rather larger than their tummies have always been a challenge for hopeful landowners and house builders, but internal Council stand-offs bring an additional hurdle. Now if this happens to occur in a Labour-run Council, there is a chance that it might just get sorted. If it is a Council in “no overall control”, of which there are now an awful lot, then stand well back and watch the local politics fly. None of that is going to help poor Mr Pennycook.
It is easy to criticise the planners for a broken planning system, and pretty much everyone has an awful story to share on planners. But it is also true that if housebuilders believed that they could sell the houses they build at a profit, there would be a lot more to choose from.
The uncomfortable truth for the incoming government is that they don’t. The dearth of new developments that Labour is so keen to repair needs to come with financial viability, which brings us back to Education and Transport. A Council hand overplayed will merely perpetuate the problems.
These examples really go to say that the problem is rather more complicated than many understand, and I for one don’t see Downing Street’s wishes prevailing quickly, despite the laudable aims.
Of course, in the unholy game of politics, it might not just be Mr Pennycook who will be in a bind if/when the much-publicised targets become unachievable. Conspiracy theorists tell me that this might have been the aim all along. Responsibility for failure would more likely fall to Mr Pennycook’s boss.
Whether you believe this or not is up to you, but it reminds me of a certain President giving a tough hand to his deputy to keep her occupied with something properly difficult lest she rather fancied the top job herself. What an irony that has turned out to be.
Back on these shores, serious politics are needed before we see the houses delivered that our children need. My bet is that it might take rather longer than the new government hopes to resolve things on the ground and success or failure here will have political consequences at the highest as well as the lowest levels. I await with interest to see how this one plays out.
