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Last Updated: Thursday, 27 September 2007, 05:11 GMT 06:11 UK
The government's big push on housing
By Julian Bailey
Business reporter, BBC News

The government has placed house building at the top of the political agenda.

House under construction
The government wants 240,000 homes-a-year to be built by 2016

The Housing Minister Yvette Cooper is expected to give more details of how it will achieve its ambitious targets when she addresses the Labour Party Conference on Thursday.

Earlier in the week, Gordon Brown repeated the bold aspiration that by the next decade 240,000 homes per year will be built in the UK.

Driven by a shortage of new-builds and a massive increase in demand, house prices have risen steadily for the last decade.

This increase in house prices should have encouraged more house building but the graph below shows just how much construction has fallen since the 1960s.

It depends upon the government's will to make the system work because it has not historically been so easy to deliver at a local level. The government needs to sort the problems out.
John Slaughter, director of external affairs at the Home Builders Federation

The main reason for the reduction is that council house-building has collapsed since its 1960s heyday.

However, the house price boom of the last decade has also not encouraged more developments by commercial homebuilders.

The Office for National Statistics predicts that 233,000 new households per year will be created by 2016.

Yet house building is currently running at about 165,000 homes per year.

"If we don't meet the needs of our local communities we will have overcrowding and a failure to help people meet their aspirations," said Kevin Williamson, chief executive of the National Housing and Planning Advice Unit, which was set up last year to advise the government on the level of house building.

Carrots and sticks

The government's diagnosis is that councils are not working hard enough to find land for developers.

This year's Housing Green Paper sets out a range of carrots and sticks for councils, which include:

  • A new housing grant to reward councils that identify land for development
  • A threat to overturn local authorities' planning decisions
  • Using more public sector land for development

"The combination of these measures ought to be effective," said John Slaughter, head of external affairs at the Home Builders Federation.

"It depends upon the government's will to make the system work because it has not historically been so easy to deliver at a local level. The government needs to sort the problems out," he added.

The second target of the government's reforms is house builders who sit on land and do not build on it.

Developers will be required to commence building or risk losing planning permission.

But builders reject the accusation that they are sitting on land.

"Ninety seven percent of these sites were under construction within three months of receiving planning permission. We don't see the need for this policy," said Mr Slaughter.

Affordable housing

The final plank of the government's housing strategy is to provide more affordable housing.

The Green Paper set a target of 25,000 "shared ownership" homes to be built every year, backed by money from the government's Housing Corporation.

Under the schemes, tenants buy part of a property and a housing association, lender, or the government owns the rest.

The House of Commons Public Accounts Committee earlier this year said these schemes cost 500m a year and were wasting money.

Yvette Cooper
Housing minister Yvette Cooper wants more home building

There is a promise of 8bn from the government to pay housing associations to build 180,000 "affordable" homes.

The other half of the money needed will come from housing associations' own resources.

"The government has set a target and the crucial thing is that the investment is there to back it up," a National Housing Federation spokesman said.

The housing associations have questioned whether 8bn will be enough to build these homes.

The message from experts is that the governments measures have a chance of working, but do not expect big changes in the short-term.

"Current regional plans considerably undershoot the level of demand that we are forecasting," Mr Williamson said.

The fact that we are becoming more prosperous means that we are demanding new homes, or even second homes," he added.

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