Anthony Hilton: State must step in to avoid social catastrophe of housing shortage

You have to go back to the 1920s to find a time when we built fewer houses

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The Independent Online

I thought I had slipped into a parallel universe on Friday when I heard that surveyors and estate agents were urging the Bank of England to slow down the rise in house prices. But it also put in mind a conversation with a fund manager on Tuesday. We spoke of how excited he was to invest in housebuilders because the industry had become “much more shareholder friendly”. What he meant was that the people who run building companies these days are far more interested in paying high dividends to shareholders than in ploughing profits back to expand output. And as long as supply lags so far behind demand, prices will rise.

According to the fund manager, up until a decade ago all manner of small builders used to rush out to buy land and start building when they saw signs of life in the market and housing supply would increase rapidly. But the handful of large firms which now dominate the industry take a different view. Pleasing shareholders, and securing their own bonuses, makes them much more interested in keeping the volume of new homes low to get as much as possible for those they do build. That is one reason why you have to go back to the 1920s to find a time when we built fewer houses.

This is potentially a huge problem. Using data from the 2011 census the Cambridge Centre for Housing and Planning Research forecast this week that the number of households in England and Wales will rise by a fifth to 27 million in the next 20 years. They say that housing this expansion will require the building of between 240,000 and 245,000 homes a year, which is well over double the present level.

Even in the biggest boom of modern times we struggled to build 200,000 homes, so the private sector alone is not going to meet demand. Even if it could, a significant proportion of these households could not afford to buy at their prices. History tells us we have only ever achieved high volumes of housebuilding when a significant number of homes have been built by public bodies, usually the local authorities.

Good housing creates healthy communities and reduces social problems. Inadequate housing does the opposite. The numbers suggest that the only way to avoid a looming social catastrophe is for the state to step in, either directly or by giving significantly more financial help to housing associations. But given that ministers look the other way when interest rates are rock bottom, it is hard to see them rushing to help when rates are higher and it will cost them so much more.

Big guns aren’t fleet enough to start tweeting

Rather bravely, the Centre for the Study of Financial Innovation ran a Thursday lunchtime seminar to explore how the financial services industry could and should engage with and use social media.

We are told Twitter, Facebook and the rest have revolutionised communication because of their speed and their reach. Whereas 20 years ago a disgruntled customer could voice his gripe to 20 people in a pub, chief executives never heard the gripe – unless their taxi driver happened to have been there having a drink – so it never went any further. Today that unhappy customer can sound off to millions via Twitter and Facebook and someone in the organisation is bound to hear about it. But the question is what should they do then?

For a small firm it is relatively easy – the chief executive can respond, because he or she has the authority and the knowledge to do so. Or they can decide to ignore it. For a large organisation it is massively more difficult. No one person has the knowledge to be able to answer everything, nor even to know whether it merits an answer. What is said in reply can have legal repercussions outside and put noses out of joint inside. The entire system of command and control in a large company militates against the quick, casual and often inconsequential nature of online conversations.

Companies have devised ways to work round this with conventional media. If, for example, the Sunday press has adopted a hostile tone during a bid battle, the chief executive and the public relations team will agree in the early morning what the response should be. This is then fed out by phone on an off-the-record basis – so no fingerprints, no accountability – to the next day’s journalists in an effort to defuse the criticism. Only in late evening will there be an official announcement. Even then it will probably not say much. But that’s the point – you can say things privately which you can’t put in the public domain.

Perhaps in time companies will be more relaxed about 10 million people reading some rude tweet when they understand that 9,999,999 of them will have forgotten about it half an hour later. But we are not there yet. A whole industry is growing up telling companies they must engage. But for the most part they fail to appreciate that fast, open response is pretty well impossible for companies which live in a regulatory straitjacket. And they seem entirely reactive, telling  firms how to respond to customers, when what would really make a difference is an explanation of how firms can use social media to  reach new customers in a way which makes life better for both.