November 2023: Meeting summary

Journalist, author and broadcaster, Mr Liam Halligan, currently Economics & Business Editor at GB News, delivered a talk on the UK’s chronic housing shortage at the second ordinary meeting of the 191st session of the Manchester Statistical Society.

Mr Halligan set the context for his talk by mentioning the need for building more houses. He spoke about the Barker Report of 2004, which set an annual target of 250,000 housing completions. Although the number of new houses completed increased in 2006 and 2007, housebuilding declined sharply during the 2008/09 recession and has not recovered to pre-recession levels. Subsequent governments have emphasised the need to build more houses to meet demand and address soaring house prices.

Analysing the causes for the low rates of house building in the UK, Mr Halligan was forthright that the barrier was neither the lack of land availability nor significant delays in planning permission. In Mr Halligan’s view, the main cause is that developers are not building fast enough even when after they obtain planning permission. He pointed out that a small number of very large developers dominated the market. In his view, the absence of SME builders and the lack of genuine competition were the main barriers. SME builders with limited cashflow could often not afford ‘land banking’ and tend to build much faster. The larger developers could engage in price speculation, which tends to drive up land prices and in turn profits. In analysis done for his book, “Home Truths”, Mr Halligan reported that only 48% of permissions awarded were being built.

The talk ended with Mr Halligan proposing some solutions, which included a requirement for developers to pay council tax on planning permissions awarded should they not convert permissions awarded into actual completions, changes to the Land Compensation Act 1961 to give local authorities a better financial reward for granting housebuilding permissions, building more on some parts of the green belt and planning reform.

Overall, the talk was an informative elucidation of the supply side causes for the housebuilding crisis, which showed that stimulating further demand – as previous governments have done with schemes such as Help to Buy – will only increase house prices and worsen the problem. Significantly boosting housebuilding is the only viable solution.