Emma Reynolds MP, Shadow Housing Minister, addressed the National House Building Council on November 20 2014

“I would like to thank Isabel and NHBC for inviting me to speak to your prestigious annual lunch, now in its 78th year. It’s also a pleasure to follow Brandon.“I’m not entirely sure which the tougher gig is – Brandon keeping you from your lunch or me keeping you from Rory Bremner. I have to admit Rory, that when I was elected in 2010, I never imagined that I would be your warm up act.” I was here last year for my first NHBC housing lunch and I am well aware that this event holds an important place in the housing calendar – which is testament to the respect and support for your work across the industry.

The NHBC has been an enduring force in house building over the years because of its mission to ensure quality and high standards. And today’s meeting is very timely given that there are only 167 days before the next General Election.

In fact you could say that this is our first housing hustings!

Like NHBC, I believe that housing is not just about bricks and mortar – as important as bricks are to the industry! – I am passionate about the quality of homes and the places where people want to live.

Building homes is only the first step to building new communities.

Which is why housing is also central to achieving our other ambitions in health, education, and social care. But we’re not even building half the homes we need to keep up with demand.

That means, by 2020, there could be a shortfall of 2 million homes. We’re facing the biggest housing crisis in a generation. And the acute shortage of homes is driving the dream of home ownership out of reach for more and more people.

A record one in four young people are living at home with their parents into their thirties. That’s a shocking 3.3 million young people. I have lost count of the number of parents who tell me that they are craving an empty nest! And there are 1.7 million families in the queue for a social home.

As a result, more and more people are renting from a private landlord which many find insecure, expensive and all too often of a poor standard. This shortage of decent homes has much wider social and economic costs. It means our businesses find it harder and harder to recruit and retain staff. And it affects the overall state of our economy.

The Governor of the Bank of England, Mark Carney, recently warned that the housing market is the single biggest threat to economic recovery.

 

Government record

And I can’t stand here today and tell you that our problems in the housing market started in May 2010. Although it is the case that this government has presided over the lowest level of house building since the 1920s.

And the government, in my view, doesn’t really appreciate the scale of the challenge that we face. But it is also the true that for decades the supply of new homes has failed to meet demand under successive governments. And the problems in the housing market are therefore long-standing, deep and structural.

That’s why it is not enough to sit back and let the market recover. There is also an acute shortage of the number of council and social homes – what’s known as affordable homes.

 

Housing is a Labour priority

So my key message to you today is we understand the scale of the challenge. We are determined to meet this challenge.

And doing so will be a day one priority for the next Labour government. That’s why Ed Miliband promoted the position of shadow housing minister to the Shadow Cabinet. And why housing has been central to his party conference speeches.

Last year he made a commitment to increasing house building to at least 200,000 homes a year by 2020. This year, housing was one of his six long-term goals for a future Labour Government. Ed pledged that by 2025, we will meet housing need for the first time in 50 years and double the number of first time buyers each year. And standing here this time last year at this annual lunch, the Shadow Chancellor, Ed Balls, made clear that housing must be at the centre of Britain’s economic policy.

Which is why we’ve said housing will be a top priority for capital investment for the next Labour Government. But to meet our commitments in government we also need a plan. And that’s exactly what the Lyons Report sets out. It is the first time an opposition party has produced such a comprehensive plan for tackling the housing crisis.

I would like to take this opportunity to thank all of you in this room who contributed to the Review. I am particularly grateful to Sir Michael, his team and the panel of experts drawn from across the industry for all the work they did.

We were overwhelmed by the response and the interest that the industry showed both in the consultation period and the warm welcome that Sir Michael has received for his report.

NHBC said that they welcomed “the comprehensive nature of the Lyons Review and the commitment by Labour to put housing at the top of the policy agenda.

The Chartered Institute of Housing described the review as the most comprehensive approach for a decade.

The Federation of Master Builders welcomed it as a blueprint to boost SME House Building.

And the British Property Federation said it “provides a clear vision for housing and planning policy” and called on other political parties to carry out such a review.

 

Lyons

The report identifies two major causes of the housing crisis. First, there is not enough land being brought forward for new homes.

This artificial scarcity of land for housing has created distortion in the land market – incentivising the acquisition and trading of land.

Second, the nation’s capacity to build homes has shrunk drastically. Fifty years ago, the public and private sectors between them built over 300,000 homes a year. But after successive recessions, house building has failed to recover to pre-recession levels.

Today, we rely on just a small number of volume house builders. Their contribution is hugely important but even they would recognise that we need more players in the market. These are significant challenges. They will take time to overcome.

The Lyons Report sets out the way forward. It begins with setting the priority in Government.

So as the Report recommends, we will ensure there is a national focus on delivery. The next Labour Government will establish a cross-government taskforce to tackle the housing crisis. With every major Whitehall Department represented to drive a coordinated approach to housing supply.

 

Responsibility

But to be successful we need leadership from both central and local government. We have committed to keeping the National Planning Policy Framework. We understand that the industry needs certainty and the ability to plan ahead.

But we want to see local communities and local authorities taking responsibility for their own future, and making sure that there are enough homes for the next generation in their areas. Most local authorities have now drawn up local plans, but a minority have not. I think it’s absolutely essential that every local authority draws up a local plan which sets out how it intends to meet housing need in its area. They’ll have until December 2016 to do so.

There is no good reason for councils not to have a local plan. After all, where they do, local communities have much more of a say over where new homes will go.

 

New powers for local government

But with that responsibility will come much greater powers for local authorities to deliver the homes their communities need.

As the Lyons Report recommends, we will give local councils the ability to designate land as “Housing Growth Areas” and form partnerships with builders to get homes built where local people want them.

Councils will have the power to reserve a proportion of the homes built in these areas for first-time buyers. We will give councils – who work together – the power to set up New Homes Corporations to deliver significant development on designated land.

This new model was inspired by the success of the Olympics delivery agency which delivered on time and on budget. These bodies will be set up by local authorities, normally at devolved city and county region level. They would be accountable to their communities.

And crucially they would work closely with private sector partners commissioning a wider range of developers, including SMEs, to build out sites at pace and at scale. And we will bring an end to the situation where land is allocated in a plan or planning permission is granted and the homes are not built and the land sits idle.

Local authorities will be able to apply a charge on these sites or in the most serious cases apply a ‘use it or lose it’ power, with a streamlined CPO process, so the site can be bought and sold on to someone who will build. So the deal is everyone should live up to their responsibilities but we’ll also distribute more power so that they can fulfil them.

 

Competition in the housing market

We must also reverse the decline of our builders in both the public and private sector. The last time we built 200,000 homes a year was during the 1980s. Back then SME builders built two thirds of new homes. Now they are building less than a third.

If we’re serious about building more homes, there simply must be more builders to deliver them. Small builders have told us that the key barriers are – the costs and risks of the planning process, and access to land and finance. We’ll introduce fast-track planning rules for small sites of fewer than ten homes through red-line applications. And we’ll introduce a new Help to Build scheme using Treasury guarantees to boost access to bank finance for small builders.

But there are other areas where we remain far behind our European neighbours. So we will seek to expand custom and self-build.

We will attract greater institutional investment for build-to-rent schemes, so that we can start to have a more professional private rented sector. And we will encourage new fast off-site construction. Boosting competition and the number of homes built will bring a lot of new opportunities in terms of jobs and apprenticeships. But we must make sure we have the skilled workforce in place to take advantage.

 

More affordable homes

The public sector must also do more. As the Lyons Report puts it, we want to see councils returning to their historic role of building homes. And Housing Associations must continue to play a major role. And as somebody who grew up for the early part of my childhood in a Council flat, this is not just an abstract notion, but something I am passionate about.

We’ve made clear housing will be a top priority for capital expenditure in for the next Labour government. But in tough times we must make better use of existing resources. We’ll move to single-pot funding for housing and we’ll refocus public expenditure from benefits to house building over time.

It simply doesn’t make economic sense to spend only 5 pence in every pound on building homes and the rest on benefits. We will extend existing Government guarantees for Housing Associations. Innovative use of public land, including investing it as equity rather than selling it off to the highest bidder, will help us deliver more affordable homes.

And where councils present a strong business case and investment plan to the Treasury, they will have greater flexibility through the Housing Revenue Account to build more council homes.

 

New Settlements             

Finally, we will support a programme of Garden Cities and new extensions to existing settlements. This will be supported by New Home Corporations and new financial incentives including financial guarantees and the retention of business rates.

 

Conclusion

I know only too well that politicians often seduced by the notion that there is a silver bullet. But we know that there is no single policy which will solve this housing crisis. There are diverse challenges across the country – there is a huge contrast between the market here in London and in my own constituency in Wolverhampton.

This means we need different answers in different places. We recognise this and the next Labour government will prioritise housing and implement our long term, comprehensive plan – you could call it a “real long term plan” – to boost house building. I believe that it is not beyond us to deliver enough homes to meet demand.

It will take time, determination and leadership. But we’ll need everyone in this room to make it happen.

ENDS:

November 2014