Rowan Moore: Housing is now higher up the British political agenda than it has been for a very long time. The government believes that an awful lot of houses have to be built very quickly, and the question this raises is: does this mean we will go back to the instruments that were used in the past, such as new towns, planning from the centre, major public investment in creating settlements at a large scale? Are we going back to the 1950s and 1960s?
Yvette Cooper: We need a very significant increase in housebuilding. Over the last 30 years of the 20th century, we saw a 30 per cent increase in the number of households and yet a 50 per cent drop in the level of housebuilding, and that’s clearly unsustainable. We are building more new homes than at any time since 1990—last year 185,000 were added to existing stock—but it is clearly not enough to keep up with rising demand, which is why we have set a target of 240,000 new homes a year by 2016, or 3m additional homes by 2020. But we need to make sure that we build those homes in a sustainable way, not just in terms of carbon emissions but also in terms of local communities. Part of that is recognising that every community has to build more homes, right across the country, and it should be for local councils and communities to decide where these homes should go within their area.
RM: So without exception all communities everywhere have to build more homes?
YC: One of the things that has changed compared to even five or six years ago is the fact that we are seeing serious pressures on affordability, as well as household growth, in the north as well as the south. As recently as the end of the 1990s, a lot of the northern regions and cities were experiencing population decline.
RM: So does that mean demolition of housing stock in the north is not going to happen?
YC: Some areas still suffer from low demand, like Hull and east Lancashire, but other areas have seen the problem change. Look at the Yorkshire region as a whole—the gap between the number of new households and the level of new housebuilding is bigger than it is in the southeast. Little wonder you have rising pressure on house prices.
The new planning rules that came in last April allow every community to plan for more housing according to local needs —what kinds of homes and where they should go. For example, the brownfield site target will be very different in different areas. So we’re giving councils more flexibility about how to build while recognising that everyone has to take responsibility about the fact that we do need more.
RM: So this is about changing planning policy, and effectively applying more pressure from the centre, albeit in a friendly way?
YC: Well, it’s saying that every area has to take responsibility. This is not something the government can do; it has to be done by partnerships between local councils, the private sector and housing associations. Government has to provide the framework and support, but we can’t take individual decisions for councils.
RM: But councils will say: we need roads, we need schools, we need infrastructure—where’s the funding coming from for that?
YC: There is £1.7bn of infrastructure funding for the next three years coming simply from my department alone. In addition, there’s major transport infrastructure investment—things like Crossrail—and also investment in schools, healthcare facilities and so on. But we also want councils to be able to raise revenue themselves from developers and from their “planning gain”—the increase in the value of land where planning permission is granted, particularly greenfield land. And we will be introducing a new local infrastructure levy as part of the planning charge—allowing councils to raise more revenue to support infrastructure. Finally, where we have new developments like eco-towns, we will contribute additional investment as well.
RM: The private sector tends to say that if you ask them for too much, they will not build. If the whole purpose of this policy is to increase supply so that prices fall over a period of time, aren’t you asking turkeys to vote for Christmas? Builders don’t have a great interest in increasing supply to the point at which the value of their product declines. How do you get around that?
YC: I think there is clear evidence that many private developers will respond strongly to short-term market pressures rather than the longer term rise in demand, but we’re waiting for John Callcutt’s report on housebuilding delivery in late November before coming to final conclusions. Let me mention one other area. At the moment, if a local authority owns a plot of land it thinks is appropriate for housing development, it will often sell it off to a developer and then try to influence through the planning system things like what the level of affordable housing should be. That, however, makes it very difficult for the council to influence the build-out rate—whereas if the council put the land instead into a local housing company and specified as part of the contract what the build-out rate should be, it would have more say over the pace of development. Government has to push harder, but can’t do it all.
RM: Historically, the decline in housebuilding over the last 30-40 years is almost entirely due to the decline in council housebuilding.
YC: That’s partly because demand has changed—most people want to be homeowners now. What is significant is not what has happened in the public sector, but what has failed to happen in the private sector. The private sector has not responded to rising demand for private housing—we effectively have a market failure. Part of that failure is the result of the planning system, and part of it is due to the short-term cyclical response of the housebuilding industry. The argument made by Kate Barker in her review of housing supply was that that can become self-perpetuating, because constraining supply over a long period of time can make the housing market more volatile.
RM: So your solutions are to free up the supply through planning process and, where the public sector has a role to play, to push harder. Is there anything else?
YC: I think you need more land coming through the planning system, and councils can do more here. And you need more active public sector engagement—whether through local housing companies or using public sector land, like old MoD sites. The other thing we’re doing is creating more incentives for local authorities and communities who are doing their bit—so as well as infrastructure support, we are providing revenue support for those areas through the housing planning delivery grant.
RM: In general, you’re taking about 3m houses by 2020, a colossal number. This implies a level of positive planning we haven’t seen for a long time, as most recent activity has been market-led within the constraints of an essentially negative planning system. So are we going to see some kind of more positive idea coming from the public sector about how to make communities and towns?
YC: We are talking about more positive planning, but that sort of place-shaping role is for local councils, not central government. It is central government’s role to look at overall national housing need, but also to make sure the system doesn’t encourage councils to free-ride on each other—to say: we’re not building more houses because they should go somewhere else. So yes, that does mean more positive planning than many councils have done in the past, but it needs to be planning in a way that involves local communities. Rather than a planner’s vision it needs to be the local community’s vision.
Take eco-towns; the first time for 40 years that government will be supporting new towns. We’ve had 50 expressions of interest. Some of those will not be runners, but it demonstrates a strong interest. We have said new towns are justifiable only if they can be done at much higher environmental standards than in the past. So the zero-carbon vision applies not just to the housing but the shops, the offices, the pubs and clubs, the schools.
We are aiming for a two-phase design competition for the eco-towns. The first phase is the ideas stage, and the second will be for individual towns. We’re running the competition with the Prince’s Foundation, Riba and Cabe, but we also want to involve citizens’ juries in the first stage, so you get people involved who are not in design or architecture or urban planning, but who are simply thinking: is this a place I would want to live in? The bids are now in, and we would expect to say more about the locations in the new year.
Matthew Lockwood: You’re planning to build 3m houses by 2020, and eco-towns will provide less than 10 per cent of these. So how do you see the relationship between zero-carbon homes and the mass of houses out there, especially when some housebuilders see eco-towns as niche and too expensive for the mass market? What can be done to link the ambitions of eco-towns to wider housing policy?
YC: We’ve set a timetable for all new housing to be zero carbon by 2016, and that will be underpinned in building regulations. It’s a more ambitious goal than any other country has aimed for. By 2010, all homes will need to meet level 3, by 2013 code level 4 and by 2016 code level 6, which is zero carbon: this means no net carbon emissions over the course of a year—you might draw down from the grid one month, but then you’d need to contribute back into the grid another month. We have worked on this with the Local Government Association, the World Wildlife Fund and the Housebuilders’ Federation. About 170 organisations have now signed up to our code for sustainable homes, ranging from major housebuilders as well as the HBF to environmental organisations, local councils, the LGA, employers and unions. It’s about trying to build a big consensus behind the proposition that we have to both deliver more housing but cut emissions from housing too. The ten-year timetable gives the market an incentive to invest and to plan now. People need to plan for a complete revolution in the way they design and build homes.
ML: What’s happening on enforcement and inspectors?
YC: There was a problem with the enforcement of, I think, the 2002 building regulations. When the 2006 regulations were introduced, a lot of time and investment was put into enforcement, but we still need to go further. The department is undertaking a review of enforcement, and Ian Wright has been looking at a wider review of building regulations and overall enforcement.
ML: What’s going on with the Merton rule [the London borough of Merton introduced a rule in 2004 requiring 10 per cent of energy use in new developments to come from renewables]?
YC: Councils should be able to set out policies on renewables, but it should be part of an overall plan and tested through the planning process, as with Merton. Some councils have added such policies later as part of supplementary guidance, but we think it needs to be part of the overall development framework.
ML: So you’re setting out rules for the application of the Merton framework.
YC: Yes, that’s why we are setting out a whole planning policy statement on climate change. People should see prevention of carbon emissions not as an add-on but as a fundamental part of the planning process. The Merton rule may be the right approach in terms of getting a base position, but in particular sites councils should go further. An example is the Barking development where they’re using a combined heat and power (CHP) plant station with a power station. So you make sure your policy is compatible with building more homes, then you make sure you are not simply looking across the board but looking at individual site opportunities; and third you should start to be flexible around on and off-site development. If you’ve got a particular development of, say, 50 houses that you could connect up to some renewable energy or a local CHP plant 100 yards down the road, you should be able to do that sort of thing because it might give you a lower carbon opportunity than saying simply it’s all got to be on that particular site. You should have the flexibility to be able to look at different kinds of technologies.
RM: You’re asking for a lot of quality and a lot of quantity at the same time. What do you do if the private sector doesn’t deliver in the way you hope?
YC: One thing is to recognise that we need to do more with public sector assets. We are aiming to use these assets strategically, when we can, to support additional development. Second, as I said, we will look at the John Callcutt review and the structure of the private market. If there is a market failure here, if the private sector is not responding properly to rising demand, what does that tell us about the industry and planning sector?
RM: This has been government policy for quite some time now, under John Prescott and others—what are the models for the future from the activity that has already happened?
YC: One important thing has been the redevelopment of town centres; we’ve seen a big increase in the use of brownfield land. Attitudes are changing among local councils, which we can see through the number of councils that have come forward to be growth areas in the past few months. There were the original 2003 growth areas—the Thames gateway, Milton Keynes, Ashford and the M11 corridor—then there was the first wave of smaller growth areas. Now we’ve announced that 78 local authorities have come forward as part of a second phase of growth points; in total that means that more than half of all local authorities have come forward to work with us on sustaining significantly higher levels of housing growth. That’s a big change from two years ago.
RM: And has that happened because of the government’s initiatives?
YC: I think it’s partly the growing recognition of the problems of affordability—throughout the country we’ve got people on council waiting lists, we’ve got first-time buyers who can’t get on the ladder, we’ve got people’s sons and daughters who can’t afford a home in the place they grew up. Alongside this, the work on cutting carbon emissions has been important; it has changed attitudes about the sustainability of development. It’s the prospect of being able to do new development which cuts carbon emissions and potentially develops new technologies that you can then use to retrofit existing areas—which is the real prize on the environmental side. The new homes we build will end up being about a third of the stock by 2050, so it’s significant, but the big area that we need to do more with is existing stock.
ML: The hope will be that prices of on-site renewables and renewable electricity will come down, but reducing emissions from heating and retrofitting old stock is a different kind of problem. If you’re building a new house you can insulate it to very high standards, but if you’ve got a Victorian dwelling, you can’t put in cavity wall insulation. Maybe renewable heat technologies can help, but I would press you on where the gains are going to be.
YC: We need to develop radical environmental technologies that solve problems like that. The way I describe it is that you need “magic wallpaper.” The officials think I’m stupid when I say that, but it is what you need—well-insulating, inexpensive stuff that you can put on to solid walls easily and that doesn’t add an extra couple of inches to the walls. This is the kind of technology that you need. On one of our visits to Sweden, we met Scansca, who are looking at ways to use their technology to retrofit, and they were far further ahead than a lot of our housebuilders in terms of energy efficiency. You can set an incentive framework for new housing that you hope will give the economies of scale that will then drive the technological spinoffs, and you then need to look at different mechanisms to apply these to existing homes.
RM: There’s huge inflation in construction prices at the moment; the industry is already stretched building existing homes. How will it have the capacity to build the extra 3m homes on top of the things they’re already building?
YC: One finding of John Callcutt’s preliminary assessment was that the industry does have the capacity to expand substantially and could support a big increase in housebuilding, but obviously that’s something we need to monitor carefully. One way of improving competition in the market is to have companies come in from other countries; having housing associations do more is another. We have also been working with John Denham’s department of skills on expanding construction apprenticeships and the skills base for longer-term expansion.
RM: If the property market cools down, as it seems to be doing, does that reverse the urgency of what you’re doing?
YC: Well given how long it takes to build homes and to get from deciding on a site to actual construction, I think the long-term demand is clearly growing. There’s a lot of pent-up demand—a lot of first-time buyers who would like to get on to the property ladder. The national housing and planning advice unit’s assessment was that the long-term factors in the market will remain very strong regardless of what happens over the next 12 months, so I think the need for building more homes for future generations is extremely clear.
RM: As well as housebuilders, the other people you’ve got to get to perform are local authorities. It’s clear that a lot of this new development is going to have to be on greenfield and green belt sites as well as on brownfield—something that can be unpopular with local authorities.
YC: The proportion of new homes being built on brownfield land is 74 per cent, up from 56 per cent in 1997. At the same time we have seen an increase in housebuilding.
RM: But even at that figure it means that 750,000 of the 3m houses are going to be built on greenfield.
YC: What it means is that we’ve had a reduction in the proportion of homes being built on greenfield land. And bear in mind the distinction between greenfield and green belt: we’ve said that the green belt policy—which prevents urban sprawl—needs to continue. In the end, however, it has to be for local councils to decide what’s right in their area. Remember, too, that more brownfield land comes on stream all the time because land use changes. In my constituency we have a major programme for new housing and jobs on a pit site that only closed about four years ago. We’ve also got two proposals for development on two former chemical factory sites that only closed in the last two or three years. In the public sector, you’ve got disused British railway board land—often in sustainable locations because it is close to stations and good to build on—that has just been sitting there. But you also have to bear in mind that councils decide both where homes need to be located but also what kind of homes they need. Family homes with gardens will have different kinds of land and locational requirements to city-centre flats.
RM: What happens if a local authority decides what is really needed is another 30 eight-bedroom executive homes with triple garages?
YC: Well, they’re going to have to deliver mixed communities.
RM: But what if they don’t want to play ball? There will be local authorities who say we don’t want this, and we can guess what kind of local authorities they will be.
YC: There are very substantial differences between the political parties on this. The greatest opposition has come from Conservative-controlled authorities—the Conservative-controlled southeast regional assembly has argued for cuts in the level of housebuilding, not even lower increases, which I think is completely bonkers given the level of demand. Some of this comes down to the need to make the political argument in every community across the country that if councils just back small amounts of executive housing, that is deeply unjust, and lets down local first-time buyers and council tenants. It is in the council’s interest, though, to work with the planning framework, because otherwise they can end up losing out on additional investment in terms of the housing planning delivery grant, and having proposals they turn down overturned on appeal. That is not a sensible way to build communities. Also, if the plan they set out does not meet local needs, they won’t be able to get it adopted in the first place if it doesn’t get through the independent assessment, and that can cause them all kinds of problems in their ability to get proper sustainable growth and jobs in their area.
ML: When you say things like local authorities shouldn’t use the Merton rule to prevent housebuilding, I suppose the fear is that in the rush to meet the housebuilding targets, environmental goals will be watered down.
YC: Well, be clear, we’ve set the 2016 timetable that all homes have got to be zero carbon—a really ambitious national framework—and we will not reach that unless we get a substantial increase in renewables, and that means local renewables—we’re not talking about offsetting with a wind turbine in Cornwall. We’re talking about the policies that local councils adopt, so it’s ultimately for them to decide, but our approach is that there should be sufficient flexibility to be able, for example, to connect to a local CHP, if you’ve got one in the area, rather than ending up effectively choosing technologies because they have to be on rather than off site. This is about innovation at the local level, on the way in which you deliver local renewables that will have the biggest impact on cutting carbon emissions but also deliver affordability. The local issue is about innovation and flexibility, while the wider question about overall government credibility in backing renewables is demonstrated by the 2016 commitment—we just won’t get there unless we get a very substantial increase in renewables.
ML: This raises questions about the fact that power like CHP tends to be demand-led rather than just lying around unexploited.
YC: Our approach as central government should not be to pick technologies—the frameworks ought to encourage the cutting of carbon emissions and the use of renewable energy as a way to cut emissions, but councils must make sure that they have sufficient flexibility on technology. You need to be technology-neutral on both the renewable side and the energy-efficiency side if you’re going to get sufficient innovation to get the cost reductions in the delivery.
RM: Is the ultimate aim of this to bring house prices down?
YC: The problem we’ve got is that house prices have gone up significantly faster than earnings, not that house prices have gone up. What we’re trying to do effectively is prevent that huge gap between price increases and earnings increases. What we’re not trying to do is to have a long-term project that’s about making house prices go down.