Housing

The problem of affordable housing has been highlighted by the Journal recently. In Bath and North East Somerset the average house price is £238,498. This is about ten times average earnings for the area. The Nationwide provides a history of house prices to average incomes and between 1950 and 2000 it varied between 3 and 4 times. That means that the current average price is approaching three times the historic level. It raises the whole question of what is meant by affordable housing when people need to earn £60,000 a year to buy the average house on a normal multiple of salary.

Homeowners have in recent years seen all the costs of home ownership rise. Stamp duty has hit people hard. Anyone buying the average house today is paying nearly £1500 extra in stamp duty alone against 1997. Also the council tax has risen, as a greater burden has been put on local tax payers rather than coming from central government grants. In 1996/7 the council tax paid for 32% of BANES expenditure, that has risen to 37%. This means 46% of the increase in spending has come from home owners. There has been a transfer of taxation from the south and west to the north and from local government to central government. It has been particularly acute as the government has imposed additional service requirements on councils without providing the funding. This means that the cost of buying and owning a property has substantially increased since 1997.

It affects everybody. Young buyers have been almost priced out of the market unless they receive some parental support. The list at the council for social housing expands by 1200 households per year on top of 6000 who are already waiting while only half that number is even targeted by the council to be provided. It is a serious problem.

It is, however, easier to outline the problem than to provide popular solutions. Many schemes will need to be incremental and will not transform the situation in one go. There are ideas, such as those put forward by the Conservative Party, to remove stamp duty for first time buyers. This would be an important saving of £2,500 on a property of £250,000 but it is only a beginning.

The obvious solution requires more house building. Unfortunately, this is usually unpopular in the areas where the houses are going to be built. That is not always the case. When I went to the discussion at the Victoria Hall in Radstock on the NRR/Belway development it was interesting to listen to people’s views on housing development. A number of the people that I spoke to said that they did not object to new housing per se, what they disliked was development that was out of keeping with the town and was in unsuitable materials or an inappropriate design. It seems to be widely recognised that there is a need for more houses not only for first time buyers but people on other rungs of the housing ladder. Unfortunately the Government has tended to direct councils towards large schemes that change the character of an area. The village of Whitchurch, which is on the edge of the constituency neighbouring Bristol, is threatened with 6000 houses in a village that currently has fewer than 500. This would turn Whitchurch from being a rural community into a suburb of Bristol. Naturally it is being vigorously opposed. Within NE Somerset there are 125 square miles of space which is 80,000 acres.  That means that there is the opportunity for incremental development at suitable densities to provide a modest number of new houses. Some of this will need to be on green field sites. Trying to build only on brown field sites leads to perverse incentives. It gives a huge profit to companies who close factories and cut jobs (as potentially for Cadbury’s in Keynsham). Building in gardens, by increasing density, changes the character of an area to make it more urban and provides accommodation that people do not always want. Many, especially families, want a garden. Brown field sites ought to be seen as a selective part of the solution but profitable facilities and gardens so not need to be turned into housing development.

However, green field does not mean greenbelt. No one is NE Somerset wants to see our area become part of Bristol’s urban sprawl and each town or village needs to keep its distinct nature. Midsomer Norton and Radstock do not want to merge nor does Paulton.

Basic economics explain that if supply is constrained and demand is high prices will rise. In terms of housing supply is constrained by a rigid planning system that encourages development at very high densities. Demand on the other hand is growing rapidly as lifestyles change and immigration flows into the country. More single person households and the influx of people from both the European Union and other countries will lead to continued demand for housing for the foreseeable future. If this continues without any suitable and sensitive house building than affordability will be limited to the extremely well off.

Since state industries were privatised in the 1980s and 90s it has been widely accepted that central planning does not work. The man in Whitehall really does not know best. It is only on planning that rigid state determination remains. It has failed and a new system is needed.

Jacob