The Daily Telegraph - Saturday, 22 February 2003 - Property

The South-East has to find space for 200,000 new homes

John Prescott has finally decided where but who will tell us how? More homes - and more misery.
Report by Ross Clark

What exactly did Mr Prescott announce?

John Prescott: he has set a target for 200,000 new homes.

The Office of the Deputy Prime Minister sets targets for the number of homes it wants to see built in each region of the country by a specific date. Under a guidance note he issued two years ago, local authorities in London and the South-East are already committed to allow the building of 62,000 new homes a year for the next 20 years. This target has now been increased by a further 10,000 new homes a year. The implication is that instead of having to absorb 1.24 million houses over the next 20 years, the South-East will have to absorb 1.44 million. That is the equivalent of about 30 Oxfords or 20 Brightons.

Will it stop there?

No. Besides demanding an extra 200,000 homes within the next 20 years, Mr Prescott made some vaguer, but even more dramatic, projections up until 2031.

Between now and then, he says, Milton Keynes and the south Midlands could absorb a total of 370,000 new homes. Ashford could have 31,000 new homes and the London-Stansted-Cambridge corridor could have between 250,000 and 500,000. No corresponding figure was given for the Thames Estuary, but that is supposed to be the biggest expansion zone of all.

Why so many houses?

For a start, there will be more of us in 20 years. Common wisdom holds that the population of the UK has settled down from the explosion seen during the 19th and early 20th centuries and is now barely growing. This isn't quite true. Although the current rate of increase - 0.3 per cent a year - sounds paltry, over 20 years this works out as an extra four million people. It may even be more if the rate of increase in immigration is allowed to continue. Ten years ago, more people left the UK than moved here. Now, there is substantial net immigration, not just because of the rise in asylum applications but because of foreign workers moving to Britain to take up jobs.

Even without population growth, the demand for new homes is set to rise substantially. The fragmentation of the family and the greater aspirations of the young mean more and more of us are living alone. The demand for second homes, too, contributes to the need for new housing.

To add to this, there is a strong inward migration from the North to the South-East - between 1991 and 2000, the population of the South-East grew by 5.7 per cent, compared with 3.7 per cent for the UK as a whole. By contrast, the population of the North-East is contracting. There was a time when the Government tried to reverse the flow by handing out cash to firms prepared to relocate to the regions. In announcing the extra homes, Mr Prescott seems to have admitted defeat and accepted he cannot order where people and businesses should locate.

Will the extra homes actually materialise?

Certainly not, at current rates of housebuilding. At present, developers are only managing to build 82 per cent of the new homes in the South-East decreed by central government. Developers are not known for voluntarily holding back their JCBs, especially not in the midst of a property boom, but there are good reasons why housebuilders are not reaching their targets. Planning restrictions have never been tighter and there are considerable delays in obtaining planning permission, even for large developers armed with lobbyists and lawyers. In particular, development has been slowed by Mr Prescott's own demand that 60 per cent of new homes be built on brownfield land. Many brownfield sites are badly contaminated and it takes time and money to clean them up.

Why concentrate development in four growth areas?

By designating four big growth areas, Mr Prescott is hoping to speed up the building of new homes. It means fewer public inquiries and fewer constituencies affected. What Mr Prescott is proposing is a return to the big-planning thinking of the post-war era, when house-building was concentrated in new towns. What Mr Prescott hasn't yet said, but may well secretly be planning, is to reintroduce the practice of creating new towns through compulsory-purchase. When the new towns were built between the 1940s and 1970s, the required tracts of land were bought by the Government at agricultural value: in other words, landowners did not receive a windfall as they do in most cases when their land receives planning permission. During the Thatcher years, compulsory-purchase powers were rarely used for house-building and, as a result, development was diffused on to smaller sites.

Ominously for landowners hoping to make a mint from the house-building bonanza, Mr Prescott is also pushing through Parliament a bill to make compulsory purchase easier and he has allotted 600 million towards "site assembly in growth areas".

Why these growth areas in particular?

The Thames estuary is an obvious choice. There is an ongoing supply of brownfield land along both the Essex and Kent flanks of the Thames as the heavy industries which used to line the river contract. The zone of expansion now known as Thames Gateway was, in fact, first proposed by Michael Heseltine in his second spell as environment secretary in the early 1990s. Ashford, too, was earmarked for large-scale expansion more than a decade ago, thanks to its strategic location on the Channel Tunnel Rail link.

Milton Keynes has not quite yet reached the target of 250,000 inhabitants set when the one-time village was designated a new town in 1972. The expansion will not be limited to Milton Keynes, however: Mr Prescott spoke of a "South Midlands" growth area which would encompass Luton, Dunstable, Bedford, Northampton, Wellingborough, Kettering and Corby. The latter in particular has a large number of brownfield sites following the decline of the steel industry. All bar Northampton and Milton Keynes lie on the relatively under-used Midland mainline railway. The countryside around the towns is not the best and expansion here is relatively uncontroversial.

The only growth zone which is new to the planners' map is the "London-Stansted-Cambridge" corridor. Part of this zone lies within the green belt and much of it is largely unspoilt Essex countryside. With its booming technological industries, Cambridge is in dire need of more housing, but it is one of the few cities outside London to have its own green belt. Mr Prescott can expect considerable opposition.

What are these growth areas going to be like?

Unless there is a dramatic shift in transport policy, they are going to have a very under-developed transport system. There are plans for vast airport expansion at Stansted and/or at Cliffe in the Thames Estuary, but there aren't many people who go to work by plane. Network Rail and the Strategic Rail Authority have retracted plans for more rail capacity, and the Government is very reluctant to build roads - in the South-East, at least. Expect an extra lane on the M11, a bit more dual carriageway along the A414 and A120 to become a makeshift outer M25. Otherwise it is likely to mean a lot more congestion.

Life is likely to be a bit congested inside the new homes, too. Mr Prescott has ruled that houses must be built to much greater densities - at least 20 to the acre. This means fewer three- and four-bedroom homes and many more one- and two-bedroom flats. Unfortunately, the tastes of the home-buying public are moving in exactly the opposite direction: most want a detached house or bungalow with a good garden. To judge by previous experience, childless couples on dual incomes will outbid young families for the few four-bedroom houses.

On the bright side, if young couples can't afford the space to breed, it might cut the birth rate and reduce the need for even more houses.

What will it mean for house prices?

If the drift from North-East to South-East continues, there is little danger that the supply of housing will increase at such a rate as to cause the puffed-up property market to collapse. That is not to say that the speculative bubble in property witnessed over the past few years will not collapse of its own accord, however. A slump in the property market could slow housebuilding, already at its lowest since 1924, even further, scuppering Mr Prescott's plans.

Who is going to live in these new houses?

"I want to make it absolutely clear that this is not homes everywhere and anywhere," said Mr Prescott. "This is homes and sustainable communities. Not suburban sprawl. Not soulless estates. Not dormitory towns."

New houses: building further away from the city

He'll be lucky. The post-war new towns were conceived in much the same way: they were supposed to operate as self-contained communities, unlike the commuter-land ribbon developments which had occurred along the arterial roads during the 1920s and 1930s. However, over time, the new towns have themselves become absorbed into commuterland. A quarter of the workforce in Hertfordshire and south Essex commutes to London. The only difference between life in post-war new town and life in a 1930s London suburb is that, thanks to the 10 to 15 mile-wide green belt, commuters have to travel considerably further to work.

Is there anywhere else Mr Prescott could build?

All the proposed growth zones lie to the north, east and south-east of London. No expansion has been suggested to the west and south of London, in Surrey, Berkshire, Hampshire or Sussex. Yet it is in these areas, to judge by property prices, that housing is in greatest shortage. To the south-west of London average house prices are currently more than seven times local salaries. In the south Midlands and the Thames estuary, prices are more in the order of four times earnings. Mr Prescott wants to put his new houses, in other words, in the places people seem least keen to live. But there is a good reason for this. There are more environmentally sensitive areas and areas of outstanding natural beauty to the south of London.

Besides, nimbyism is strongest in Surrey.

Has Mr Prescott thought his plans through?

He has already run into trouble with the Environment Agency, which says his plans for the Thames Estuary will require 4 billion in new flood defence work. The deputy Prime Minister does not appear to have budgeted for this and the housebuilders say they won't be paying the bill.

More homes - and more misery

More homes could mean more business for Bruce Munro, who lives in Thaxted and runs an estate agency there and in Saffron Walden. But that doesn't mean he is happy about Mr Prescott's plans.
"This is the last unspoilt place in a thoroughly ravaged county," he says. "They are already building thousands of new homes in Takely, which is merging with Great Dunmow. But it seems to be completely unplanned development. They keep building more and more houses on the periphery of towns without any proper infrastructure. I can't see there is demand for many more houses in this area."
He does concede, however, that property prices do point to something of a shortage. In the 1950s, a semi-detached house in Thaxted cost about 800. Now, it costs 250,000.

5 February 2003 [News]: Scepticism over Prescott's plan for an extra 200,000 homes

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