Cities are still the most viable locations for new housing

Cities are still the most viable locations for new housing

As someone who grew up in Belfast, the “city in the countryside”, I attest to what it is like to walk less than five miles and go from the dense central business district, through suburbia to the leafy hills and fields surrounding. I understand, from a personal perspective, the importance of the relationship, geographically and demographically between urban and green field development and so I welcome the Government’s shift towards prioritizing more urban home building than initially proposed in the summer. Not only that but it makes practical sense for three reasons: existing urban centres have infrastructure in place; cities are where the demand and supply imbalance is most prevalent; and regional economic development will be driven from urban centres tying in neatly with the Government’s levelling up strategy – Ed McGuinness

Existing infrastructure

Using the OECD definition of core cities we have 11. Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. Altogether they accounted for 25 per cent of the UK population, 24 per cent employment and 22 per cent gross value added in 2017. The UK’s major urban centres, outside of London, are in a better position, than blank canvas rural areas, to use existing infrastructure to support further home growth. Of the 11 cities included in the definition, nine have metro or light rail links however most, admittedly, still do remain highly reliant on cars. Shifting the focus from Greenfield sites to developing existing urban centres therefore yields two benefits.

The first presents a needs driven opportunity for investment in core infrastructure services that has been neglected in favour of public capital investment in cars, driving advancement towards climate and lifestyle benefits. Secondly, infrastructure development leads to an increase in general productivity, and, if applied to the urban centres in core cities outside of London, that relative increase in productivity per pound spent will drive recovery in the regions and place urban centres on a more sustainable footing to have a positive impact on their surrounding areas.

Supply and demand

Conservatism has traditionally been a values based political philosophy whereby our values remain constant, but the practical implementation of these values adapts over time – a key aspect of our success as a Party in navigating changing national landscapes over the last 100 years. A rare sustaining policy goal, of home ownership, has remained and for good reason; just like when someone owns a share of a company, owning a small share of the Nation, through homeownership, gives people a real sense of stake in their country and encourages a sense of care about what happens to that nation (back to values). House prices in core cities, whilst cheaper than the rest of the UK, are still high by international standards. To attract younger people to take a stake in society through homeownership, the supply and demand balance must be addressed. COVID has seen a temporary imbalance away from exiting urban sprawls in favour of the countryside. But throughout human history the trend has been to consolidate economic output in key areas and this is unlikely to be upended by the pandemic.

Cities drive regions

A process known as agglomeration makes a given worker or firm more productive in larger cities than in smaller cities. This relationship is robust in many countries but when comparing the core cities of the UK to other comparable cities across the world, the UK lags behind on the agglomeration effect by around three times. This presents a huge opportunity, with data suggesting that if core cities grew by ten per cent, and had comparable productivity improvements as those seen in France and Germany, the average productivity, relative to the national average, would increase by over four per cent. This is a lot of numbers but, bigger picture, when elevated to the national level such growth could see aggregate productivity increase by one per cent or £20 billion of GDP.

So-called Northern Powerhouse cities like Manchester, Leeds, and Newcastle could see improvements of between four and six per cent. Developing urban centres helps the surrounding region. Data from the OECD suggests that urban areas that are within 90 minutes travel time of London have on average a 3.5 per cent higher productivity than would be expected given the characteristics of their workforce, sector mix and population size. It therefore makes sense to prioritise housing development in urban centres as a centrepiece of the levelling up strategy.

Intercity links

Whilst prioritizing home building in urban centres now seems logical and beneficial, there is still the question of intercity and regional transportation. Given the complexities of devolved government – regional mayors, district councils, county councils and nationally devolved administrations, to name a handful – any home building, even inside existing urban boundaries, will need to be at least coordinated centrally, so as links between areas are built and sustained allowing economic development to be transmitted across and amongst regions. This ought to form a cornerstone of any development, should be factored into tendering processes from the outset, and will be a drag on development if not included properly.

Conclusion

Housing policy surely is the driver of the levelling up strategy. What is more significant to a person’s life than where they live? It determines where they shop, how they travel, where they send their children to school, where they work, who they are friends with, and what they believe about our country. To truly level up housing can have real positive effects as it will create an imperative for joined-up infrastructure. If supplied in quality and quantity, it will become affordable and attractive for young people, and as it does so, it will bring jobs and industry which will spread wealth like an ink spot across the region.

Link to original, published on ConservativeHome on 19 Dec 2020.

Published by conservativesitcity

A group set up to bring together Conservatives in the Professional and Financial services sector.

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