Building 18 Birminghams

Supplying more demand, demanding more supply.

I think it’s important to contend with failures. A while back I wrote a three-part series on the failings of austerity, for instance, because I think conservatives need to reckon with the mistakes of Conservative governments in order to learn from them. Particularly important, in that case, was the need to balance to literally everything else against the interests of your current electorate.

But it’s a lot easier to contend with the mistakes of politicians who first came into power when you were 17 than to contend with your own. And that’s what this post is about.

I’ve written about NIMBYism and housebuilding A LOT recently, which has been driven by three things. Firstly is that, since I’ve become a councillor I’ve sat on both the local and strategic planning committees; I’ve seen the planning system up close, and I’ve grown increasingly secure in my conviction (backed by evidence) that it is completely incapable of delivering houses at scale. And enacting the planning reform we need without winning the political argument against Nimbyism first is going to be impossible.

But more importantly it’s because I think it’s morally wrong, as well as economically harmful, for us to create a helot class by holding up an entire generation on the road to home ownership.

That fuels the third and final reason, which is that those that sow the wind shall reap the whirlwind. There is little evidence that those on the losing side of the housing crisis are moving right-wing as they age - and who can blame them? The old adage ‘if you’re not socialist at 20 you’ve got no heart, and if you’re not conservative at 40 you’ve got no head’ is not true because you suddenly get into your 30s and start reading Roger Scruton. It is true because as you age, you build a life that gives you a stake in society you want to preserve. Simply put, conservatives are created when people have something worth conserving.

But Andrew Orlowski pointed out a failure in my most recent article. He took issues with my comment that ‘increasing supply is the only thing to do’ by pointing out that ‘Voters want to see demand addressed before talking about supply. That seems reasonable: Brexit and "take back control" never really happened.’ He also linked to a Telegraph headline that read; ‘Eighteen Birmingham-sized cities needed for housing ‘if record net migration lasted 25 years.’ Although that should read another 25 years.

I do talk about reducing demand in that article - including through reducing immigration, which I include here:

We need to allay some of the reasonable concerns that communities raise about new housing.

First amongst them is making sure that houses become homes. Second home ownership is incredibly unpopular, as is foreign ownership in London, which has a heavy distortion effect on the rest of the market. Measures to tackle under-occupancy are low-hanging fruit, too. Why would you be in favour of a new development and the resulting disruption when every time you go for a walk through your village or town, you’re walking past empty homes? Meanwhile, ensuring planning reform is a means to prevent landbanking and end the monopoly of large housebuilders. Giving the communities the safety and security of appropriate development is as essential as finding a way to increase the resulting investment in infrastructure and public services. Reducing immigration, meanwhile, would also reduce demand.

Reading that back, frankly, I think Andrew’s comment is a fair cop. I do mention the need to reduce immigration, but I’ve clearly put nowhere near enough emphasis on it. And, having reread some of my previous housing articles, I think repeating the classic YIMBY mistake of only ever talking about supply-side issues is a recurring failure of mine; if I do mention immigration it is off-hand, and no more than a line or two.

This is a trade-off that’s likely to become a more salient problem if (when?) Labour take power at the next election. As Karl Williams has pointed out, ‘Labour’s plan for stopping the small boats can be summed up in one word: surrender. Surrender on principles, and surrender in practice.’

I asked Karl if there were any estimates for how much migration might rise under Labour, but there aren’t yet. It’d be safe to assume that migration carries on at around 2022 levels of underlying net migration (i.e. excluding Ukraine and Hong Kong), so somewhere just short of half a million. That is ignoring the general upward trend, of course, and the fact that the last time a Labour government followed a Conservative one immigration doubled.¹

The think tank he works for, the CPS, reports that 600,000 homes a year must be built to cope with immigration. That’s at current levels. It’s also twice the government’s - and Labour’s - target. Which no government has met since the late 70s.

Now there is a YIMBY argument that cutting immigration is likely to make things worse, because immigrants bring new skills and can plug gaps in the construction industry. This is something William Atkinson calls the ASI tendency: ‘the belief that open borders are necessary for a free market in labour.’ Which is a fine argument, if you ignore the fact that after a quarter-century of mass immigration the skills shortage in the construction industry has reached ‘alarming proportions’, and will see labour costs rise by 8.3% this year. Plans to retrofit 19m houses with better insulation were cancelled on account of the fact the entire retrofit sector had just 55% of the capacity needed.²

The argument that we need mass immigration to build houses ignores the fact that mass immigration has been unable to meet the demand it has already generated. Besides that, it’s clear the demand for further immigration will increase, both because of the increased labour demands of expanding house building to meet demand, and the coming generational shift in the industry;

The UK construction workforce is an aging one, with over 20% of our tradespeople being over fifty and 15% being in their sixties. The trouble is, as these plasterers, painters and plumbers retire, the same percentage of young people are not entering these professions.

This is reflective of a wider economic problem; the lowest cost and lowest friction policy decision is to draft in new workers from abroad. Easy access to lower-wage economies meant that, rather than investing in training up new workers, businesses have found it easier to source workers from abroad. This is not to blame businesses solely; as a society we have placed too much emphasis on what David Goodhart calls ‘head’ work, prioritising it over the ‘heart’ and ‘hands’. We have told a generation that anything other than laptop work is demeaning and should be beneath them, and that manual and care work should be outsourced completely. University acceptances increased by 50% in the last two decades, and as a result the next generation is going to be incapable of building its’ own homes.

The realty of that economic model is why Andrew is so right to point out the fallacy (my fallacy) of trying to address the housing crisis solely through a supply-side lense. Because, as I’ve written before;

A continued high level of immigration will perpetuate an economic structure that relies on cheap labour rather than capital or human investment, acting as a break on productivity and on wage growth — particularly for the poorest — whilst further driving housing demand. Thus the whirligig of time brings in his revenges.

When we are already missing over 4 million homes, when demand continues to outstrip supply by hundreds of thousands of homes a year and when immigration causes the number of homes needed to double (with particular demand in London and the South East, where the housing crisis is most acute), how much longer can we ignore the very real benefits reducing immigration would have on easing the housing crisis?

Whether we reduce immigration or not there will still be a housing crisis. But Andrew is right, and I was wrong; ending the housing crisis does not mean that increasing supply ‘is the right - the only- thing to do.’ Demand must be reduced, not just through reducing immigration but by tackling foreign and second home ownership too. As William Atkinson pointed out, YIMBYs don’t talk about immigration. But if an increase in housebuilding under Labour is offset by an increase in immigration, they are going to have very little choice.

1. For the record I don’t expect that to happen.

2. This probably says as much about government management of Net Zero as anything else.