The election of the Labour government has been accompanied by a renewed appetite to deal with England’s housing crisis. Among the first of its policy initiatives, announced by deputy prime minister Angela Rayner, is the reintroduction of a national housing target – 1.5 million new homes over the period of the five-year parliament.
This target is only for England – the other UK nations have devolved powers over their housing totals – and includes privately-built housing as well as “affordable homes”.
While the government’s desire to confront this major housing challenge is laudable, achieving its ambitious target requires two major challenges to be overcome: first, identifying the type of new homes that are needed and who will build them; and second, working out where they should be built.
Overseeing five consecutive years in which 300,000+ dwellings per annum (dpa) are completed would be without modern precedent. The last time 300,000 new dpa was achieved was 1969-70 under Labour’s Harold Wilson (see graph).
In 1978-79, the last full year before Margaret Thatcher’s Conservative government came to power, local authorities across England built 93,300 new homes. By 1996-97, the last year of that period of Conservative government, the figure had fallen to 450.
Over the same period, the number of new homes delivered by the private sector remained largely static, ranging from 127,490 in 1978-79 to 121,170 in 1996-97. At no point in the intervening years did the scale of private development replace the loss of council housebuilding. Instead, around 1.3 million council homes were sold over this period through the “right to buy” initiative – effectively transferring public housing stock to private homeowners.
And post-1997, every successive government has failed to oversee the delivery of anything close to the average of 300,000 new homes per annum that the new government has identified is required.
New homes built in England each year since 1969
Ministry of Housing, Communities and Local Government, 2024
What kind of homes should be built?
Part of the challenge is defining what types of home the government is aiming to deliver. The scale of housing need in England is defined by a government-devised formula, the “standard method” for the calculation of housing need. Since its introduction in 2018, this formula has used a blend of population projections and an affordability ratio to determine the number of new dwellings required in every English local authority.
But the standard method does not distinguish between housing of different types: one-bedroom apartments for social rent, detached executive homes for sale to owner-occupiers and everything in between are all counted as “dwellings”.
Policy in such an important area should be driven by greater insights into the type and tenure of the new homes we need, particularly given the changing domestic requirements of our ageing population.
The largest category of new-build homes that we have lost is council housing – affordable housing to rent. But if this government is to provide an average of 300,000 dpa, it will require incentives for the private development industry, housing associations and local authorities to all deliver a significant programme of housebuilding, comprising a blend of private and affordable new homes of varying types.
No previous government in recent times has been able to achieve this goal – in part because they have found the related issue of where new housing should be located even more difficult to overcome.
Where should the new homes go?
To understand the geographical distribution of new homes required, we have to return to the standard method.
The government’s proposal – note that it remains a proposal out for consultation – makes some important adjustments to this formula. In addition to greater weight being placed on affordability, the most significant change is a new baseline number of dwellings calculated as a proportion of the existing housing stock in each local authority (replacing the population-based approach). The outcome is a national target of 371,000 dpa.
Under this proposed new method, Manchester – one of the UK’s most successful cities in terms of its decades-long urban renewal – actually sees its new calculated housing need fall by 25% (from 3,579 to 2,686 dpa). Greater London also sees its overall need for new dwellings fall, from just under 100,000 dpa under the old standard method to around 80,000 dpa.
By contrast, around 90% of English local authorities see increases under the proposed new method, with some of these increases being very large. For example, while Cheshire West and Chester previously had a housing need of just 532 dpa, under the proposed new method this increases to 2,017 dpa.
If this seems strange, the explanation is the decision to make existing housing stock the most significant determinant of future need. Whilst this might sound simple, its logic is sketchy to say the least.
There is also a political dimension to the change in the proposed standard method. Labour’s election victory means that it has MPs in historically “blue wall” Conservative seats such as Aylesbury, Buckingham and Bletchley, Milton Keynes, Basingstoke and North East Herts – places where the contentious issue of accommodating elevated scales of new housing may pit constituency and local interests against party and national priorities in a previously untested way.
Real opportunities
Despite these challenges, it is still hugely encouraging to see the government begin its programme with a focus on housing – and important to note this presents real opportunities to achieve progress on housing in England.
The creation of a New Towns Taskforce is a response fitting in scale and ambition to the nature of the housing crisis. However, by their nature, new towns are large-scale developments where there is no existing community – the polar opposite of the core principle of the new standard method.
There is also clear potential in revitalising England’s declining retail centres, which are well served by transport links, but have suffered as consumers are increasingly shopping online.
Investing in new towns and retail centres are potentially great opportunities for the renewal of urban areas. However, identifying the particular type and tenure of new homes that should be prioritised in towns (both old and new) requires a more rigorous approach to the calculation of housing need.
