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Kate's expectations

Kate Barker鈥檚 Bank of England office in the heart of the City is littered with stacks of papers 鈥� she disappears behind them when she sits at her desk. Asked if they relate to the recent meeting of the bank鈥檚 Monetary Policy Committee, of which Barker is a member, she replies: 鈥淣o 鈥� that鈥檚 all housing stuff that鈥檚 been sitting there since this time last year.鈥� She is referring to last March鈥檚 158-page report, commissioned by the Treasury, that looked at why so few houses were being built in Britain. 鈥淚 used to have quite a tidy office until I did all the housing stuff and it just got the better of me.鈥�

Housebuilders have mixed views as to whether the 47-year-old former CBI economist should have persevered. Her calls for more money to build social housing 鈥� an additional 26,000 units a year 鈥� and her identification of the planning system as the main drag on new residential schemes were welcome. But opinion was divided as to whether introducing a planning gain supplement 鈥� effectively a development tax 鈥� would help or hinder output.

The government took Barker鈥檚 findings seriously and chancellor Gordon Brown鈥檚 spending review last summer allocated funds to build an extra 10,000 units of social housing each year. In addition, the ODPM started making noises about finally changing the planning system and perhaps allowing housebuilders more certainty about the framework in which they were operating.

Barker鈥檚 certainly been doing her bit to take her report on; she鈥檚 made more than 50 speeches in the past 12 months or so. Next week she鈥檒l make yet another to an RICS/Bucknall Austin conference in Bristol, evaluating the success of her report. So, has there been any?

鈥淩eviewers always want progress to be quicker 鈥� that is inevitable. But I鈥檓 certainly happy that lots of work has been done and is still going on,鈥� is her typically guarded response. 鈥淚 was actually pleasantly surprised to see the level of resources that were found for housing in the spending review. Given the focus that this government has placed on education and health in the past, I think that it is really encouraging.鈥�

That鈥檚 all very well, but this has hardly translated into the grand ambitions she envisaged a year ago, such as reform of the planning system. One housebuilder typifies the general feeling in the industry when he says: 鈥淚n the immediate aftermath of Barker there was an expectation that the planning system would quickly be sorted out 鈥� this hasn鈥檛 happened. It looks now that all we鈥檒l be left with after all this fuss is another tax. Great.鈥�

Calls for the government to bring forward its self-imposed deadline to respond to Barker鈥檚 findings by 鈥渢he end of 2005鈥� also came last weekend from industry-wide lobby group Campaign for More Homes 鈥� which includes Barker鈥檚 former employer the CBI and CABE. It said it was 鈥渄isappointed鈥� the government was nowhere near meeting Barker鈥檚 minimum target of an extra 70,000 homes a year.

I think it鈥檚 down to a lot of people to be prepared to stand up and make the case for affordable houses for their children

Somewhat surprisingly for someone so close to government and so disinclined to courting controversy, Barker says 鈥渨e could have expected to see steps taken more quickly鈥�. However, a Barker assertion is followed closely by an entourage of caveats and qualifications, such as her rather bizarre suggestion that the lack of action thus far may be beneficial: 鈥淭his summer is a better time to have the debate as it is post-election 鈥� discussing things out of the heat of an election campaign will give you better policy.鈥� Perhaps, but housebuilders will argue that the whole issue of planning should have been finalised long before the election.

Despite admitting that she is 鈥渄isappointed鈥� with the progress housebuilders have made towards answering her call to improve their customer service, there are areas where Barker offers the industry some hope. She backs the argument that local authorities should not be given power in the updated PPG3 to proscribe housing mix 鈥� 鈥淚 think people who bear the risk should take the decisions鈥� 鈥� and she concedes she should have been more radical and called for larger public sums to be spent on infrastructure. Most interestingly of all, she believes that deputy prime minister John Prescott should do much more to fight a bias in favour of the nimbys in planning decisions.

鈥淭his argument has yet to be won. People are not convinced that improving supply will have any impact on prices. I鈥檓 not sure it鈥檚 down to housebuilders 鈥� in terms of winning hearts and minds this really is about leadership, both centrally and more locally. I think it鈥檚 down to a lot of people to be prepared to stand up and make the case 鈥榙o people want their children to be able to afford houses?鈥� Supply will have to be built to accommodate them.鈥�

Here we come to the heart of the matter. The government has repeatedly said it would build 1.1 million homes in the South-east by 2016 and its 拢38bn Communities Plan was its blueprint. The latest figures show starts in England running at 173,500 a year, with completions at 154,600. Although this is about 8% more than when Barker presented her review, it is still a long way off the 70,000 extra homes she said were the minimum necessary to arrest the climb in house prices. If anything, the prospect of achieving 鈥� in Prescott鈥檚 vacuous phrase 鈥� a 鈥渟tep change鈥� in housing supply has become more remote. Peter Johnson, the chief executive of Wimpey, said last September that tight land supply and stagnant house prices meant that build rates would actually fall.

Barker鈥檚 response is typically realistic yet upbeat. 鈥淭he figures that I talked about are not going to happen in the short term, although I don鈥檛 think it鈥檚 out of the question that you could move up 鈥� certainly towards an extra 70,000 private homes a year. But we have to see big changes in order to reach the bigger numbers. I don鈥檛 think the conditions to do this are quite in place yet. Some industries 鈥� such as construction products 鈥� are going to need more certainty about where the government is going in order to make the necessary investments.鈥�

As for Johnson鈥檚 remark, Barker says he is right in the short term, but 鈥淚 don鈥檛 think he meant five years. Maybe 16-to-18 months. We are in a period of uncertainty about where house prices are going. First-time buyers are reluctant to come into the market, so it鈥檚 not particularly surprising to see the builders holding back on their rate of completions鈥�.

With that she disappears back behind her desk muttering that she must do something about all this paper. At least that鈥檚 one area in which Barker and housebuilders have something in common. It鈥檚 just a shame that she hasn鈥檛 been able to do more to help them.