Our Chief Executive, Jasmine Whitbread's speech at Building London
29 January 2019
Good morning and welcome.
Let me begin by putting your minds at rest.
There are two things I won’t mention today.
The first is ‘no silver bullets’.
The second is ‘avocado on toast’.
That’s the good news. However, there are two things I definitely will mention.
There’s Brexit…coming up in about seven minutes’ time, if you want to excuse yourselves.
And then there’s the housing crisis.
I know that housing is only one part of today’s discussion. But given that we have the rare treat of having the Housing Secretary right here, I do want to start off with that.
We already know that London is one of the most desirable places in the world to live. But what’s the point if people want to live here, but can’t?
A new poll by London First and Grosvenor shows that 75% of people think there’s a housing shortage in London. Two thirds think that the government isn’t spending enough time sorting it out – neck-and-neck with crime. And perhaps most shocking of all, 4 in 10 have considered leaving London – with a quarter of those saying they want to go in the next year.
This is a real problem.
And its roots go deep.
Successive governments, left and right, have built too few homes, sold too many council house, and failed to replace them. Uncertainty caused by Brexit means building will probably get more expensive. And for over a decade, rent has shot ahead of inflation.
But this isn’t an economics problem. It’s a people problem.
Young people – and increasingly middle-aged and older people too – are tearing their hair out over the cost of housing.
I remember when I joined London First two years ago.
Back then, when the cost of housing was only just becoming a boardroom issue, the people who were concerned were supermarkets … coffee chains.
Not anymore. It’s banks. It’s law firms. It’s professional services.
PwC said recently that fewer of their young applicants want to work in London than ever before. It was close to 100% five years ago. And as a result, PwC is selling space it owns and vacating space it rents.
If this ‘London flight’ continues, it will endanger the one thing that above all else makes this city the world’s capital – its mix of people.
The more housing becomes out of reach for certain parts of society – whether that’s public sector workers, cleaners, administrators, students, graduates, families or whoever – the less vital London becomes… and the less successful we’ll be.
So. The big question. What’s to be done?
Well let’s start with a bit of myth-busting.
Myth one: land-banking.
Developers do not hoard land. Study after study has shown this. They make money by selling houses, not by sitting on them.
Myth two: government doesn’t care about housebuilding to take the hard choices that will actually make a difference. Also not true.
Following lobbying from councils, London First and others, the Prime Minister scrapped the cap on the amount local authorities can borrow to build.
The government didn’t have to do this, and it’s an important step.
And myth three. A particularly pernicious one: it’s all overseas investors, buying houses and leaving them empty.
Funny how that assertion is always backed up by anecdotal evidence rather than hard facts.
That’s because the facts are these: almost no new housing units bought by overseas buyers are left vacant. In fact, London has the highest occupancy rates of any UK region.
The truth is that there’s no one baddie here.
The only way – the only way – we’re going to solve London’s housing crisis is if everyone takes their slice of the responsibility … and contributes their share of the solution. Government, Mayor, boroughs and industry.
Let’s be blunt: we need cash.
Less than two years ago, the Chancellor said England needs 300,000 new homes every year.
The bill for that works out at an extra £20 billion, according to research we commissioned from Volterra. 40% above current spending.
The government’s capital expenditure on housing has gone up 20% in the last year, which is great. But we still need more money, for more homes, to get anywhere near those targets.
Particularly in London. The Mayor’s London Plan states that the capital needs to build 65,000 new homes per year – more than double what’s being delivered. For that to happen, funding needs to rise by 65%, or about £9 billion.
The private sector will do its bit.
But we still need more direct capital investment … greater investment in infrastructure to unlock development … and fewer borrowing restrictions.
So that’s government. Next: the Mayor.
Mr Khan has done a good job in securing a record amount of affordable housing grant for London, but the scale of the housing challenge we face is so great that he must use the full weight of his powers and influence to bring more land forward for development. Both public and private.
And there needs to be more flexibility with the Green Belt. It kills me that brownfield sites, next to tube stations, with zero environmental or civic value, stand empty. It’s plum land.
The Mayor’s New London Plan says that we need “a fundamental transformation in how new homes are delivered.”
Quite right. So let’s lift those restrictions.
Next, the boroughs.
To deliver the scale of housing we need, we must use the land we have much more intensively. That means: replacing disused garages with homes … delivering housing across London’s existing rooftops … and yes, being adventurous in the suburbs.
Remember: high density needn’t equal skyscrapers. Think of Edwardian mansion blocks and Victorian terraces … Parisian apartment blocks and Madrid’s storeys of wrought-iron balconies. That is good, high density housing and there’s no reason why boroughs can’t facilitate more of it.
Finally, the industry. Developers and builders need to up their game too.
Firstly, they need to work with each other and across the supply chain to improve skills provision – which is vital to the future of all types of construction.
The Mayor gets it. What he’s doing with his Construction Academy is fantastic. The industry should follow his lead.
And secondly, businesses need to push more modern practises, like off-site construction.
And there we are. Money from government, ambition from the Mayor, flexibility from the boroughs and innovation from the industry. The four pieces of the jigsaw. All equally vital.
That, ladies and gentlemen, was where I was going to leave it.
But then I thought ‘what’s a London First conference without a reference to everybody’s favourite topic?’
Brexit is an albatross round the neck of builders and developers.
I can be very clear about this. For this sector, Brexit has zero upside. Zero.
It hasn’t even happened yet, and it’s already made it far harder and more expensive to attract the best people, whether bricklayers, architects or anyone else. And it’s increasingly clear that the same can be said for the country as a whole.
That’s why, alongside housing, London First is campaigning for an overhaul of our immigration system to ensure every sector can thrive post-Brexit.
But even that’s only part of the picture.
For coming up to four years, Brexit has sucked the blood out of successive governments’ legislative agendas and money out of this nation’s wallet.
It’s time to stop the clock, revoke Article 50, and give government time to come up with a workable plan that can command Parliamentary support.
And if one can’t be found, they need to be grown up enough to admit defeat – and hand the decision back to the people.
So that’s where London First stands, both on Brexit and on the construction sector more generally.
But today isn’t all about us. I know we’re all looking forward to hearing the fantastic line up of speakers and contributors.
And I’d like to thank our partners and sponsors that have made this summit possible.
Our Headline Partner: Grosvenor Britain & Ireland – we’ll hear from their Chief Executive, Craig McWilliam, in just a few minutes.
Our conference partners: Arcadis and Terence O’Rourke.