The government doesn't build houses itself, it just provides the market conditions for private developers to build more houses themselves. Their justification is that the housing market is 'broken', and requires government interference to become healthy again. In 2017, Sajid Javid, then Secretary of State for Communities and Local Government, presented a report detailing this argument, as well as setting out the steps that would be taken by government to 'fix' this market.
The key arguments presented in the report are
- Not enough local authorities planning for home building in their area,
- The pace of development being too slow,
- The structure of the housing market, being made up of a 'handful of very big companies', presents a large barrier to entry for smaller developers & new companies.
In order to fix this, the report proposes that the government creates a new standard methodology for local authority home building planning, reduce red tape in the planning system to increase the pace of development, and diversify the housing market by supporting housing associations and smaller developers.
More recently, in the Homes England strategic plan for 2018-23, this is presented in more detail. In particular, the introduction by the Chief Executive explicitly states:
We will use our land, money, powers and influence to increase the
pace, scale and quality of delivery. This will accelerate the delivery
of new homes in areas of greatest demand and help to create great
places.
That doesn’t mean we will build the homes ourselves. It means
we will intervene in the right places at the right time to change the
market, by working with ambitious partners and being more
intelligence-led in our decision-making.
Meanwhile, the Chairman makes it clear that in order to achieve the Government's target of 300,000 new homes, the housing market needs to be 'disrupted'.
Conservative MPs also seem to argue that the housing market is not a free market in the first place, and a balance needs to be sought between Government intervention and the market - Nick Boles, then a Conservative MP, presented this argument in 2018:
The roots of this problem lie in a fundamental misunderstanding of the
nature of our housing market and house building industry. We talk of
them as if it were a free market and all the problems that emanate
from it are a result of free market operation, but that is not the
case. This is a market in which the Government have made the most
extraordinary intervention. Back in the 1930s, the house building
market used to generate, in a country with a much smaller population,
well over 300,000 homes every year. That was a free market, but the
problem was that it led to unstoppable urban sprawl, as cities reached
out into the countryside in a never-ending way.
As a result, as a Parliament and as a people we decided to introduce
the Town and Country Planning Act 1932 to constrain that sprawl and
introduce some order into the development process. That was an
extraordinary intervention. We went from a situation in which someone
could buy a plot of land, put up a few homes and sell them, to a
situation in which the right to develop land was nationalised. The
landowner has no innate right to build anything on their land. They
have to apply to the Government for permission. That is an
intervention that I support. I believe that the British people were
entirely within their rights—as my hon. Friend the Member for
Tewkesbury (Mr Robertson) is entirely within his rights—to want to
defend the precious English countryside, but we need to acknowledge
the effect of that intervention and be willing to embrace the measures
to ensure that we nevertheless build enough homes for our people.
In France, they have a planning system, yet every single year they
build 300,000 or 400,000 homes and they have very much less in the way
of house-price inflation than we do. In Germany, they have a planning
system, and every single year, routinely, they build 300,000 or
400,000 units, and they too have managed to avoid the UK’s curse:
house-price inflation.
So to conclude, the Conservative party justifies intervention in the housing market by acknowledging that the market is 'broken', perhaps due to intervention by previous governments. They do not propose to actually build the houses themselves, although they may use this rhetoric, but instead support intervening in the market to reduce red tape in the planning system, as well as supporting smaller businesses through investment and ensuring local authorities continue to plan for the home building they require.
