Hey small spender, spend a little on London?

Last week, the LCA team attended London Real Estate Forum (LREF), as we do every year. While last year's event was characterised by impatience for a Labour Government, strikingly so for a sector not known for its left-wing politics, this year was more muted in tone.

The industry is certainly happy to see an era of expected political stability ushered in after the last few years of Tory mayhem. There was a sense that simply having a Housing Secretary - and indeed a Prime Minister - who might stay in post longer than the lifespan of your average lettuce would be a marked improvement for a sector crying out for investment, support, and, most of all, clarity. 

That said, I sensed some disquiet at the inauspicious start for Starmer's government and frustration with the number of perceived own goals (perhaps witnessed from a corporate box) in the last few weeks. There was also outright scepticism that the housebuilding targets were even half-way achievable with almost no hands in the air for 'yes' when the audience was asked if they thought the target could be reached.

Most worrying of all was the widespread concern about the lack of investment into infrastructure being announced - whether housing, transport, energy, or other. The sector is waiting with baited breath for the Chancellor to pull some rabbits out the hat on 30 October but there are growing worries that perhaps she won't do so, instead focusing on more 'tough choices' to further squeeze the middle class.

Without infrastructure investment, it is hard to see how housing can be delivered en masse - something we discussed at length at the 'Back the Bakerloo' panel chaired by yours truly. The long-mooted Bakerloo Line extension down to Lewisham (and eventually as far as Hayes) could unlock up to 107,000 new homes - and yet confirmation on funding is no nearer than it was under the Tory government. While money for London seems to be less of a curse-word for this government, it is still unclear if Reeves has any intention of chucking in a few pennies for this crucial project.

This is exactly the kind of 'spend money to make money' investment that British business wants to see but are increasingly worried won't be announced come Budget time. Time will tell, of course, but a mega-majority isn't meaningful if you don't intend to do anything with it. Let's hope caution doesn't become the enemy of progress under this new (but not 'New') Labour government.

Harriet Shone

LCA Director

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The honeymoon period is over and the squabbles have begun - by Peter Lord

I will be honest: if you had told me on 4th July that by the end of September Keir Starmer would be struggling to keep his party on message, and that Angela Rayner's much-lauded planning policy would be depressingly achievable, I would have been sceptical. 

At last week's Labour Party Conference, its first in Government for fourteen years, one might have expected New Labour-style ambition and optimism from a party that had just won a stonking 157-seat majority. Instead, Keir Starmer delivered a balanced, but uninspiring conference speech, which will likely be remembered more for an apparent reference to sausages than anything he actually said. Announcements of new planning passports and a consultation on the implementation of the Decent Homes Standard are hardly the kind of ambitions that we might expect following such an unassailable success in the polls. Angela Rayner herself, self-styled socialist with an undeniable ambition to drive real change in Britain's housing policy, spent the build-up to Conference tinkering with the Thatcher-era Right-to-Buy scheme. Is this what any of us were expecting following the General Election?

Rayner 'marginalised'?

The word on the grapevine is that Rayner is rattled by a string of 'negative' media stories that present her being marginalised, with key policy areas she previously championed being taken up by other Cabinet members. It also appears clear that her own ambition is being restrained, as we argued last week. Is this just the realities of power hitting home to a party familiar with opposition, or is there a deeper problem here with ambitious ministers like Rayner passionate about what they want to do, but unclear about how to achieve it? 

And what of the alternative? Well, two days into their own Party Conference, the Tories are engaged in a staged internecine battle, interesting outside of the room only for the occasional bizarre, headline-grabbing soundbite from the Shadow Housing Secretary; someone apparently more interested in starting a fight in an empty room than proposing an alternative vision for housing policy.

If it has taken three months for the wheels to fall off Labour's united front, there is little hope of the Tories getting their own house sufficiently in order to sell their own housing vision ahead of the next election...

Housing in the headlines

Planning approvals down as Government faces an uphill battle to meet its own housing target

The number of homes granted planning permission in England has fallen to the lowest level for 11 years. In the year to June 2024, only 231,000 homes were granted planning permission, down 15% from the 270,000 approved in the year to June 2023. This is the third year in a row that planning application approvals have declined. This statistic appears even more disappointing when set against Labour's own housing target. The Housing Forum has projected that the new Government will need to increase house building to 450,000 homes a year by 2029 to meet its target of delivering 1.5 million homes over this Parliament. Recent Government data shows that only 160,000 homes are expected to be built this year.

Rural areas to bear the brunt of increased housebuilding

According to analysis by the County Councils Network, the Government’s proposed planning reforms would require a 56% annual increase in housing outside metropolitan areas. This could put pressure on rural areas by overwhelming local roads, schools and infrastructure. While most councils support the idea of nationally set housing targets, 90% believe the current targets are excessive.

Brown or grey? Which belt offers the best location for new homes?

If housebuilding targets continue to cause tension, developers and local authorities face the perennial question of where new homes should be built. Research by three UK developers has found that nearly 80% of urban communities back brownfield development and believe that brownfield regeneration would positively impact their local areas. In addition, 75% of respondents wanted brownfield regeneration prioritised over other types of development. The developers are calling on the government to prioritise brownfield development and to promote the delivery of affordable housing. Meanwhile, The Telegraph reports that analysis by LandTech shows as many as 4m homes could be built on the green belt under the Government’s plans to release ‘grey belt’ land for development.

Affordable Homes Programme set to be delayed until after Spending Review

The Government’s next five-year Affordable Homes Programme is not expected to be announced until Spring 2025. This is because it is unlikely to be announced before the Government’s Spring Spending Review, which sets the limits of department spending for the next three years. Housing sector bodies are calling for a cash injection to tide over the current Affordable Homes Programme ahead of the review next year.

Pennycook calls for diversity as large housebuilders continue to dominate market

Minister for Housing, Matthew Pennycook, has told a fringe event at Labour Conference that housebuilding in the UK relies too much on a small number of housebuilders and that the industry needs to diversify. According to the Competition and Markets Authority, the largest 11 housebuilders provided around 40% of homes in the UK in 2021-22.

Let's get political

Reeves looks to change borrowing rules as public spending set to grow

The Chancellor has promised that public spending will grow in real terms, almost certainly funded via a range of tax rises and some additional borrowing at the budget next month. The Times looks at some of the Chancellor’s options which include increasing capital gains tax and changes to inheritance tax. Meanwhile, Reeves is said to have asked the Treasury to look at changing the government’s current borrowing rules that would give her as much as £50bn to spend on roads, housing, energy and other large scale projects.

Meanwhile, The OECD has called on Labour to focus on addressing years of under-investment rather than following on its fiscal rules. The Government is set to increase capital spending at next month’s Budget, after the OECD backed reforms to boost growth-enhancing public investment.

When is a conference not a conference?

This week's Conservative Party Conference has been described as being

‘Like celebrity reality TV where you don’t recognise the celebrities’ as the ongoing leadership contest continues to dominate the agenda. So far, the most attention has gone to Shadow Housing Secretary Kemi Badenoch's controversial comments about culture, maternity pay, and immigration.

Meanwhile, Conservatives Together, run by former defence secretary Grant Shapps, has advised that the Conservatives should emulate the ‘Gail’s strategy’ used by the Liberal Democrats during the general election to target middle-class voters. The strategy targeted constituencies with a branch of Gail’s bakery.