House building has been one part of the economy in Scotland which has been hit particularly badly in the downturn.
Historically house building was at a peak in Scotland in the 50's and 60's, largely as a result of post war reconstruction, the creation of new towns and the clearance of large areas of sub-standard housing (slums) particularly in the central belt. Completions peaked somewhere around 43,000 a year (many in the public sector) and fell back progressively to a rate of somewhere just under 20,000 completions a year by the early 80's.
When the economy picked up (took off?) in the early part of this century there was a significant growth in house building and in Scotland the number of completions peaked in 2007/2008 at just under 26,000 completions (mainly in the private sector). Even that was not enough so far as the Scottish Government was concerned given the number of anticipated new households and the policy aspiration at that time was to achieve 35,000 completions a year (the Government published a policy document entitled "Firm Foundations" which set out this target).
As a result of the current economic difficulties the upward trend which peaked in 2007 to 2008 has gone into reverse. The number of completions for 2010/200 (the last full year for which figures are available) was 16,320. It seems likely once new figures become available there will be a further contraction given a 14% reduction in the number of houses started in the year to the end of June 2011 with the rate of reduction continuing into the last full uarter for which figures were available (compared to the equivalent quarter the year before).
The Scottish Government published their Economic Strategy in the late summer of 2011. This sets out a number of strategic priorities including:-
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Providing a supportive business environment;
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Translating the economy to a lower carbon economy;
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Investing in learning skills and well being;
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Focusing on infrastructure development and improving the quality of cities, towns and rural areas;
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Providing effective government;
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Ensuring that the benefits of policies are available to all in Scotland ("equality").
While house building is not a specific target of that strategy in itself, the document acknowledges that enhancing the quality of areas in Scotland as places to live and work is an important element of achieving the Government's overall economic strategy. A desire to increase population growth (part of this strategy) of necessity requires the appropriate level of housing for that population. Enhancing cities (part of the strategy) requires the issue of housing to be addressed. This however is not easy in the current economic climate.
The problems in Scotland are not however unique. In the autumn of 2011 DTZ published a paper entitled "Pulling Up the Ladder 2" which looked at the housing situation in England. That paper suggested there was a "housing crisis" with the additions to the housing stock running at somewhere around 130,000 per year with the number of households growing at a rate virtually double that (230,000 per year). The paper noted that while there was a commitment to increasing housing supply in reality the supply was simply not growing due to a number of factors including lack of public and private sector finance, issues in the planning system and a changed emphasis amongst house building companies with the emphasis now being on margin as a means to deliver profit rather than volume. These issues are not dissimilar to a number of the issues which feature in Scotland and which are causing some of the difficulties which the completion rates referred to above evidence.
The Chief Planner in Scotland in a letter dated 29 October 2010 acknowledged the present difficulties but emphasised that Scottish Ministers "continue to place a strong emphasis on the provision of new housing and therefore maintaining a supply of land in the right places which is free of all constraints and can be developed". He referenced in his letter the provisions of Scottish Planning Policy and the need to maintain an adequate supply of housing land.
The issues in England will have to be dealt with in the context of the new legislation on localism. How that will work in practice remains to be seen, not least given the debate which is taking place on the terms of the new National Planning Framework proposed for England and the controversy which the "presumption in favour of sustainable development" appears to be causing.
The DTZ paper suggests that the traditional house building model (as they term it) even sitting alongside initiatives in relation to the provision of affordable housing is simply not going to provide the number of new homes that are needed in England. There is no real reason to believe whether the situation should be any different in Scotland. They suggest alongside traditional models there needs to be a change to the way in which house building is financed with in essence a new funding model which may deliver more houses for rent rather than for purchase. Other issues may need to be addressed including increased efficiency in building homes and flats (thereby bringing down the unit cost) and reduction in the of cost of land required for house building (which probably needs a major reassessment of the part of land owners many of whom think if they hold on long enough land prices will regain the sort of levels seen in 2005 and 2006 – a view not shared by the house building industry).
Clearly the view of DTZ is that a range of "tools" are required. Again it is difficult to see why the position should be different in Scotland. The issue for Scotland is how to address the situation given that the ability of the Scottish Government to "play about" with taxation is strictly limited at the moment. For Scotland it may be the case that the answer to what is quite a significant social issue will depend upon the response to quite significant political issues.
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