Housing: An alternative history – Part 2

Kristian Niemietz

August 22, 2023

…continued from Part 1 

The more Cameron thinks about it, the more it makes sense. Housing and planning are not just another policy area among many; they are the bottleneck of the British economy. 

Housing costs obviously have a huge, direct effect on people’s living standards, because it is the single biggest item of expenditure in most people’s household budget. But this direct effect is only the tip of the iceberg.

If you inflate the cost of property, you actually inflate the cost of everything. Every supermarket, every shop, every pub, every restaurant, every takeaway – everyone has to pay those inflated prices – especially customers.

High housing costs make it harder for people to move from low-productivity to high-productivity areas. This is because it is not a symmetric problem – it does not affect all parts of the country in equal measure. Rather, it is a problem which is worst in the most prosperous parts of the country which are the parts that we need to expand if we want the country as a whole to become more prosperous.

High housing costs erode work incentives because once people receive Housing Benefit, there is not much point in increasing one’s earnings. What you gain in additional wages, you lose in Housing Benefit. 

High housing costs also inflate public spending. Britain spends much more on Housing Benefit than comparable countries spend on comparable programmes, simply because the underlying cost of housing is more expensive, so more people need financial support. 

And this is just the residential sector. The same forces which block the construction of residential housing also block the development of offices, retail outlets, hotels, factories, science labs, infrastructure, energy generation – everything.

NIMBYism isn’t a problem that affects one or two sectors of the British economy. It is the ultimate millstone around the British economy’s neck. It has to be taken on in the way Thatcher took on the National Union of Mineworkers, and that confrontation must not end in any kind of compromise. It must end in the total defeat of NIMBYism as a political force. 

Why did this not occur to us last time? Cameron wonders.

And then he remembers that this is not, strictly speaking, true. There has been no shortage of ambitious reformers in this area. Under his own watch, there was Nick Boles, during his two years as Housing and Planning Minister. Under Theresa May’s watch, there was Sajid Javid, in his role as Housing Secretary, and under Boris Johnson, there was Robert Jenrick, in the same role.

The problem was that all of them came under attack from the NIMBY lobby, and when that happened, none of them could count on the support of their own party, or, for that matter, from their respective Prime Ministers. The party tolerated those reformers for a while, but they were never prepared to invest any political capital in them.

The next day, Cameron convenes his full cabinet, and gives an impassioned speech, making the case for a radical shift in housing and planning policy. He describes two possible futures, one bleak and depressing, one bright and uplifting. The first one describes a NIMBY-run Britain which fails to tackle the housing issue. In that future, the economy stagnates, housing costs continue to explode, and millions of disillusioned young and middle-aged people give up on capitalism. The second one describes Britain declaring an all-out war on the NIMBYs, tackling the issue once and for all. In that future, Britain becomes a much more prosperous, dynamic and productive country, in which well-housed, economically optimistic Millennials make their peace with capitalism.

Describing the first future is easy enough: it is simply a slightly embellished version of the timeline Cameron has already lived through once. The second future is more speculative, and he cannot yet provide much detail. But at least, the tone is now set.

Cameron decides to give the Ministry for Housing, Communities and Local Government (the future Department for Levelling Up, Housing and Communities) a good reshuffle, making sure that all the important positions are occupied by people who he knows to be – or to soon become – solid “YIMBYs”. 

Cameron also decides to assemble a special government commission on the housing crisis, consisting of housing and planning experts from academia, the think tank sector, planning departments, campaign groups and industry associations. Politically, the Housing Commission is quite balanced: Cameron makes sure to track down as many left-leaning housing and planning nerds as he can. The Commission does, however, have a strong bias towards YIMBYism and supply-side-led solutions.

In the Spring of 2012, the Housing Commission, headed by Prof Paul Cheshire from the LSE, is launched with great fanfare. It has no decision-making powers of its own, but it does enjoy a high degree of professional authority, and an extremely high media profile because it is – correctly – perceived to have the Prime Minister’s ear. While there have not yet been any specific policy announcements, the media senses – again, correctly – that something big is about to happen, which gives the topic and Commission greater media prominence. Their initial proposals – build on the greenbelt, close down avenues for objections, increase mandatory housing targets, and financial penalties for NIMBY councils – are enough to stoke the rage of NIMBY campaigners. Media clashes between representatives of the Housing Commission, and representatives of NIMBY campaign groups, become a regular occurrence. In these debates, the former usually wins hands-down: for them, it is like shooting fish in a barrel. They know their subject matter inside out, whereas the NIMBYs have little to offer except cheap sentimentalism and weak excuses for what is really nothing more than a knee-jerk dislike of the sight of houses.

The Commission does not have a high degree of message discipline, and could not have: they are not a political party or campaign group, but a collection of independent experts, who sometimes disagree with each other, and who are free to speak their minds. Nonetheless, and more by accident than by design, the Commission’s media representatives converge on three common talking points, which they keep repeating over and over and over and over again:

  1. Britain is an international outlier when it comes to housing costs. Very few comparable countries have experienced a housing cost explosion of this magnitude.
  2. Britain has lower levels of housing supply than most comparable countries. 
  3. Britain is not, by any stretch of the imagination, “overdeveloped”, and never will be. Even in the most densely populated regions of the country, most of the land is low-grade farmland.

In itself, bombarding people with these facts does little to shift public opinion: an instinctive, knee-jerk NIMBYism remains the country’s default setting. What it does, however, is shift the social reputations associated with NIMBY and YIMBY positions. With lots of smart YIMBYs on TV and radio all the time, YIMBYism acquires a reputation for being a “smart person’s opinion”. Thus, some people start to adopt YIMBY positions simply to appear smart. James O’Brien starts using his LBC Radio show to argue with NIMBY callers: armed with facts and figures from the Housing Commission, he soon makes it his trademark to humiliate inarticulate NIMBYs in front of live audiences. 

This has an especially strong effect on Cameron’s coalition partner, the Liberal Democrats, who respond by positioning themselves on the pro-YIMBY side in a particularly aggressive way. Cameron finds this highly amusing because he remembers all too well how the LibDems used to be the über-NIMBYs in his timeline. But he won’t complain. Their repositioning, however shallow, works in his favour.

As the end of 2012 approaches, Cameron finally feels like the ground has been sufficiently prepared. It is time to spring into action.

Continue to Part 3…


Written by Kristian Niemietz

Kristian Niemietz is Head of Political Economy at the Institute of Economic Affairs.

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