Why are we building so few new houses?

It seems OK to build factories, shops and offices on greenfield sites, but not new homes
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Suddenly social housing, and the urgency with which it is needed, is back at the forefront of the political agenda. Which can only mean that all the good intentions three years ago, when it was last at the forefront of the agenda, have come to naught.

Suddenly social housing, and the urgency with which it is needed, is back at the forefront of the political agenda. Which can only mean that all the good intentions three years ago, when it was last at the forefront of the agenda, have come to naught.

Last time around the Urban Task Force, headed by Lord Rogers of Riverside, set impressive targets for social housing around the south-east, largely to be created on brownfield sites. It was suggested at the time that these targets were unattainable, since local councils had the power to veto the targets that were foisted upon them. This they have done in droves. And while the Government does have the power to override local refusals, the political price of all those local battles proved too high to pay.

This time, similar targets are being promised. The only difference is that in the time since Excellence In Cities was published matters have deteriorated, and it is likely that there will be reform to centralise the planning process, currently slanted towards a "not in my backyard" approach.

Three years ago the problems of the affluent south were already clearly recognised. In the towns, key workers were being shut out from the ranks of the property-owning democrats. In the country, property owners were buying weekend retreats, pushing out the rural young.

Since then, as we are endlessly told, property prices have rocketed, amid some astonishment that people can keep on finding the money, and the will, further to fuel the boom. Now the astonishment is growing into sheer disbelief. Few experts are predicting a crash of the type experienced in the late Eighties. But at last there is a realisation that the inflation of house prices cannot continue indefinitely.

The huge change that has occurred in the last three years is that the property-owning democrats are now very vulnerable, too. With household debt at an all-time high, everyone understands that a significant hike in interest rates would be disastrous for many of those firmly ensconced on the property ladder. Those who find it impossible have been left (with some exceptions among public-sector workers earning enough to qualify for shared ownership schemes) to stew in their own juices. But the possibility of everyone beginning to stew a little is concentrating minds wonderfully.

So other ways of cooling the housing market are being looked at, in an attempt to avoid the pain that more expensive debt would cause. The rules on council tax relief on second homes have been tightened up – one indication of how much the Government is troubled by the housing situation.

Three years ago the Government blanched at clobbering second home owners with the tax burden of even a few hundred pounds a year. Now rural homelessness is escalating, while the proportion of new homes being built is vastly inadequate to deal with the problem.

So the freeing of local councils to raise full council tax on weekend residents is at least an indication that the better off are being expected in some small way to compensate the communities they are helping to displace.

But adjustments like this are signifiers, not solutions. The only real way forward – surprise, surprise – is to address the scarcity of affordable homes directly, an option that has been on the theoretical agenda for years, but barely on the practical agenda at all. Such affordable homes being built are, on the whole, better quality than ever. Developers are compelled to build a proportion of affordable homes in any housing development, and a positive trend has been towards "pepper-potting", whereby affordable homes are constructed side-by-side with private ones to similar specifications, instead of being built to a lesser standard in the least desirable corners of developments.

This, though, is an attractive vignette in a desolate landscape. It is estimated that 4 million new homes must be built in the next two decades. But the ghastly fact is that in the years of the Labour Government, which is undoubtedly committed to new housing as a concept, house building has been dwindling to the point where, last year, fewer new homes were constructed than in any peace-time year since 1924. Meanwhile, the right to buy ensures that affordable homes are passing into private hands faster than they are being built.

It's hard to fathom exactly why this failure to build is happening on such a scale, unless you sign up to the idea that developers are deliberately holding back on production in order to force up property prices, while the land they are sitting on also appreciates in value, thus doing wonders for their share prices with no investment needed at all.

Some experts insist that this is exactly what is going on, although the developers deny that, insisting that, instead, they are hamstrung by planning restrictions, the increasing time it takes for planning permission to come through, and an unavailability of suitable land for homes people want to buy (great big ones in the country, presumably, with a couple of acres round them sold at massive profit).

The shortage of land was the prompt which last month emboldened the Royal Town Planning Association to suggest that it was time for Britain's sacrosanct green belt to be trimmed a little, in order to address the affordable homes crisis. This idea floated around for a matter of seconds before it was vetoed by the then housing minister, Lord Falconer of Thoroton.

And no wonder. As Britain neglects the countryside and its people in its eagerness to become a leading post-industrial global player, it also gets more sentimental about it. So as the green belt more and more becomes something to spend weekends in, or look at while driving from city to city, and less and less something it is possible to live a life in, Britons defend the empty landscape ever more ferociously.

Meanwhile, it is OK to build factories, shops and offices on greenfield sites, but not homes. Which seems to me to be the opposite of what people want. Why live on brownfield and work on greenfield? Shouldn't it be the other way round?

The Council for the Protection of Rural England certainly thinks so. It has suggested to the Government that 85 per cent of commercial development should be on brownfield land. In truth, though, the Government has sanctioned 140 incursions into the green belt during this time, when so very few homes have been built. Which brings us back once again to the disquieting priorities of developers.

All in all, it rather looks as though the market, left to its own devices, has not quite managed to deliver what is needed to the property-owning democracy, let alone those left putting their names onto council housing lists that in some parts of the country promise accommodation within 70 years.

So all we can do now is await Gordon Brown's next comprehensive spending review, which we're assured will finally kickstart the creation of realistic numbers of affordable homes. The Government's social housing budget has already had massive increases and stands at £1.2bn for 2003-04.

If this sounds generous, it's good to remember that the Government has made many billions in stamp duty from all those property sales over the last few years. There could surely be no better way of spending it than on the social housing provision needed to make sure those very mortgage deals don't turn to rubble and ashes.

Essentially, centralised state control and government investment is the only thing that can save the members of Mrs Thatcher's property-owning democracy from torture at the hands of interest rates. Best to wait and see if it works, though, before hazarding an ironic smirk.