UK housing shortage is costing consumers £4bn each year - CBI report
Business manifesto calls on parties to deliver prosperity for all in next Parliament and beyond
Ahead of the party conference season, the CBI is setting out the choices political parties must make to ensure the benefits of growth are felt by all people during the next parliament and beyond, including a major push to get Britain building.
The CBI’s manifesto includes proposals from Housing Britain – building new homes for growth which examines the current state of the housing market and the urgent need to ramp up supply across the country. The report finds that shortages have created above-inflation house price rises, which is taking a £4 billion bite out of consumers’ pockets every year (£3.2 billion in housing-related costs, and £770 million in transport-related costs), money they could otherwise save or spend in the wider economy. The situation is also holding back many young people from getting onto the property ladder or renting a good home.
The report is part of the CBI’s manifesto outlining the business vision for a better Britain and the measures needed to help unleash the potential in the private-sector to drive economic growth, keep the UK on the centre stage of global affairs, and ensure growth can benefit everyone. Among other measures the CBI is calling for is a roadmap for increasing capital spending – once the deficit is eliminated – as a percentage of UK GDP in the next parliament and beyond, an independent body to determine the UK’s infrastructure needs and also to create a gold-standard vocational A Level system.
Katja Hall, CBI Deputy Director-General, said:
“With conference season around the corner, we need all political parties to put forward election pledges which tackle the UK’s challenges head-on so that we deliver prosperity for everyone not just from next May, but for a generation. Addressing the chronic housing shortage should be near the top of every party’s to-do list.
“A perfect storm is brewing in the housing market. With demographic changes and demand currently dramatically outstripping supply, now is the time for action. Political parties of all colours have made the right noises on the need for more homes, but without serious action the ambition to own a home will become more and more out of reach to ordinary people.
“Our research shows the national housing shortage is taking a £4 billion slice out of consumers’ pockets.
“We need a stronger response from politicians who must be ready to take bold decisions from building on low quality green belt land to overhauling Stamp Duty.”
To satisfy current levels of demand, 240,000 new homes need to be built a year. However, over 200,000 homes have been delivered in only four out of the last fourteen years, whilst in 2010, fewer houses were built than in any year since the Second World War. This gap in demand is pushing up prices, with, on average, a 56% increase in house prices nationally since 2004, and a 90% increase in London.
With housing affordability a major political, social and economic issue, the CBI is urging all political parties to commit to increasing supply. Among the measures it’s calling for are:
- The development of ten new towns and garden cities by 2025
- Doubling the number of new homes currently built, to 240,000 a year
- Reforming Stamp Duty to end its distortive impact on the housing market
Other potential areas for action by the next government include:
- Giving local authorities more power to release low quality green belt land
- Spending more on capital support for new homes by redressing the balance with housing benefits
- Introducing fiscal incentives to help older people looking to downsize, or families wanting to extend homes.
Setting out its challenge to all political parties, the CBI launches People and prosperity: The business vision for a better Britain.
The CBI argues that politicians need to make choices that go beyond the usual political cycle timescales to secure the UK’s economic success in the years ahead, including:
- Setting out a roadmap for increasing capital spending – once the deficit is eliminated – as a percentage of UK GDP in the next parliament and beyond
- Establishing an independent body to determine future infrastructure needs and how they should be met without undue delay
- Enhancing the R&D tax credit to ensure the UK reaps the benefit of the investment in research, innovation and science taking place here
- Creating a gold-standard vocational A Level system and a shift of emphasis away from GCSEs
- Setting a target to reduce the gender pay gap by 2020 for the UK to tackle gender inequality in the workplace
- Locking in recent improvements to the tax system then focus on reforming the distortive business rates system
- Unlocking the potential of our medium-sized businesses with targeted ideas to improve productivity and increase access to finance to allow them to grow
- Making the case for the UK staying in a reformed EU and maintain our access to the world’s largest single market
- Re-shaping the education system to encourage the development of the behaviours and attitudes to help young people succeed.
On the CBI manifesto, Katja Hall added:
“Our manifesto sets out how all political parties can give ambitious British firms the best chance to invest, invent, export and expand because business underpins our future economic success.
“That means tackling the UK’s creaking infrastructure so we need an independent body that can set out a clear vision for major national projects.
“In some vital areas we are stuck behind our international competitors with little prospect of overtaking without some hard choices being made.
“We must look at how to attract more investment and enhancing the research and development tax credit could be a catalyst for greater innovation and world-leading research.
“Progress has been made on putting women on an equal footing to men in work, but if we want to make the most of all in our society, we need more women given the opportunity to get to the top and narrow the gender pay gap.”