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10 for 10: The Social Housing Bill

It is deeply wrong that parliament is on holiday for 10 weeks at a time of national crisis and peril, as I argue here. So what should the government be bringing to parliament instead of a 10-week holiday? I will be publishing detailed proposals for 10 pieces of legislation that would answer the needs of the millions who are left out and left behind in today’s Britain. Number six in this series is a bill to build the social housing we desperately need.

This first appeared as an article in Inside Housing, which you can read here.

The large-scale construction of new social housing by local councils is vital to addressing England’s housing crisis

Unfortunately councils are completely under-resourced and hamstrung by inadequate powers.

A major problem is compulsory purchase powers. Britain has enough land to vastly increase the number of affordable homes being built, but it is largely sitting idle while developers wait for the value of their plots to rise so that they can sell them on for huge profits.

Landowners know that developers can fiddle their figures to dodge affordable housing obligations so they squeeze every penny out of deliberately inflated land values.

After changing hands between “developers who do not build” enough times, land is so expensive that only luxury housing will be built.

Councils are almost powerless to stop this national disgrace.

If a local authority forcibly buys unused land from one of these unscrupulous landowners it must pay them not just the current value of the land and an additional compulsory purchase order compensation charge, but also the extra value created by re-designation of land for residential development and infrastructure development.

Practically, councils must cough up hundreds of times the current value of deliberately unused land to build social housing on it.

They clearly cannot afford to do so after being financially crippled by years of Conservative ‘austerity’ cuts to local council funding. The result is hundreds of thousands of unbuilt affordable homes.

This is utterly wrong. I have had a great deal of experience of compulsory purchase orders as a former transport minister and on the board of HS2.

It is vital that they are fair, and balance the national interest with the rights of individuals. It is clearly unfair that local councils cannot meet the urgent social housing needs of their communities because they are unable to take on developers sitting on unused land.

Development gains should not be pocketed by ‘developers’ unwilling to build decent homes in the first place.

Clement Attlee understood this. His post-war government passed the Town and Country Planning Act 1947 which radically expanded compulsory purchase powers and nationalised development gains from major land transactions.

If landowners or developers were unwilling to build affordable homes or sell their land at a reasonable price, local authorities could compulsorily buy the land off them at its undeveloped value and build the houses themselves. This policy helped build over a million new homes, 75% of which were council houses.

Unfortunately, despite initially following Mr Attlee’s approach of harnessing local councils to famously reach 300,000 homes built a year, his successors dismantled compulsory purchase powers with the Town and Country Planning Act 1959 and Land Compensation Act 1961.

This must urgently be reversed. There is no longer a strong housing safety net as Margaret Thatcher’s decimation of social housing stock with the Right to Buy has never been reversed. At a time of severe affordable housing shortages this has left the most vulnerable in desperate situations.

Local councils must once again be given the power to compulsorily buy land at existing use value and build social housing on it. This would short-circuit the cycle of land hoarding and luxury housebuilding and ensure that affordable housing is built by private or public means.

Removing onerous compulsory purchase conditions would free up resources, but councils need more to replicate the scale of post-war social housebuilding.

A land value tax on the market value of land as it rises would enact Mr Attlee’s principle that unearned windfalls should go to the community, and give local councils the tax base they need for large-scale housebuilding.

It can no longer be tolerated that wealthy landowners exacerbate and profit from a housing shortage with near impunity. We should follow Mr Attlee’s lead and give local councils fair compulsory purchase powers to address this scandal.

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