With housing starts in a number of regions still below pre-recession levels, is investing in infrastructure the answer to the housing crisis?
Within days of being chosen as the Labour party’s candidate for Manchester mayor, current Leigh MP and shadow home secretary Andy Burnham had already decided his focus would be on housing.
The mayoral candidate pledged to use Manchester’s £300m housing fund, which under current rules has been earmarked for new housing developments by private firms, to improve the public housing stock by buying out “absent landlords”.
Among his proposals are plans to build more affordable homes at sub-market rent and introduce Manchester’s own ‘rent-to-own’ system to get more people on the housing ladder.
Mr Burnham believes the housing market in Greater Manchester is too geared towards higher-end developments in the city centre, calling for more affordable homes needed in areas such as Bury, Salford and Tameside.
There is, he says, a housing crisis in the city – not just in terms of the number of homes, but also affordability.
The new mayor will also have responsibility over transport funding – meaning more money will be available to fund connectivity alongside new, government-funded infrastructure investments like the TransPennine Tunnel, rail electrification and the further expansion of the Metrolink.
Manchester’s problems represent a microcosm of what the Northern Powerhouse is experiencing: not only a lack of housing, but a lack of infrastructure to encourage private development.
So how can housing output be ramped up both inside and outside the Northern Powerhouse and how crucial a role does infrastructure investment play?
Suburbs still struggling
Housing has understandably been a common topic within political debate around the Northern Powerhouse.
And it’s an issue of acute importance in Manchester, with housing starts still lagging well behind pre-recession levels – particularly outside the city centre. The rate at which properties bought under Right to Buy are replaced is also among the lowest in the country.
Given the plethora of cranes and residential towers going up between Deansgate, Oxford Road and the Green Quarter, not to mention major schemes in Salford on Regent Road, Chapel Street and the Quays, you might be forgiven for thinking the housing shortage is being consigned to history.
But look outside the city centre to places such as Bury, Rochdale and Tameside and housing developments are still struggling to get off the ground – in spite of improvements in connectivity linking such areas to central Manchester.
The 2015/16 financial year only saw 300 private housing starts in Tameside, according to data from the Department for Communities and Local Government, down 68 per cent from the 930 starts recorded in 2007/08. In the borough of Trafford, only 100 private housing starts were recorded in 2015/16, down from 850 in 2007/08 – a fall of 88 per cent lower.
This nosedive in fresh activity is apparent not just in the private sector but in public housing, too. In 2015/16, Oldham, Rochdale, Salford, Tameside and Trafford saw just 200 housing association starts between them, down from 530 two years earlier.
With housing shortages all the more evident, then, is Mr Burnham right to earmark the £300m housing war chest to boost public housebuilding?
Mace director of the North Steve Gillingham says the policy “goes against the grain” of what other politicians – even Labour colleagues – have been suggesting, and he questions whether Mr Burnham’s plans to favour public housing represent the right approach.
“The big issue for me is that [£300m] is just one part of the fund,” he says. “Yes, there is a social housing need in Manchester, as there is everywhere else, but there’s also a private sector rental housing need in Manchester which is being fulfilled by the private sector.”
“[The EU referendum result] was a shot in the arm for devolution”
Steve Gillingham, Mace
He adds that much of that is “inward investment” and that providing certainty on the Northern Powerhouse agenda is crucial to encouraging further private investment in the region.
“I’d like to see some more certainty now, with the government being explicit in their support of whatever they want to call the Northern Powerhouse, so that the private sector investment that was lining up for some [of these projects] will have the confidence to invest.”
Royal Town Planning Institute policy and networks manager James Harris argues that it’s not just transport infrastructure that needs support to encourage more housing growth outside city centres.
“One of the problems we come up against is that a lot of the utility companies – for example, in water and wastewater infrastructure – are managed by a regulatory structure that makes it difficult for them to speculatively invest in new infrastructure, unless the demand is there already,” he explains.
“It’s easier to plan in advance for transport infrastructure because a lot of the time there is an underlying purpose for it already. But for other kinds of utilities and infrastructure, it’s hard to do that forward investment to incentivise development to come forward.”
He says the UK as a whole needs “a more growth-focused regulatory approach” to non-transport infrastructure, especially in utilities, and that the government should take steps to let regulators like Ofwat and Ofgem give more development powers to utility companies.
Unlocking private development
With much of the Northern Powerhouse agenda driven by the need for connectivity not just between cities but also within city regions, will investment in infrastructure be the key to unlocking housing growth?
The statistics do not make for encouraging reading. While housing is booming in the city centre, areas linked to the city by its Metrolink tram system have shown few signs, if any, of growth in housing development.
The city’s tram system was extended to Oldham and Rochdale in 2012, with the first trams running to the city centre in June, while trams also began operating between Ashton and the city’s Piccadilly station in February 2013. A rapid transformation in housing development cannot be expected overnight. But while growth in private development is appearing in places, it has been sluggish.
In Oldham, there were 310 private housing starts in 2015/16 – up from only 110 the year before the Metrolink opened, but nevertheless far behind the pre-recession peak of 580 in 2005/06. Similarly, while housing starts in Rochdale have begun to grow, rising to 510 from a recessionary trough of just 120 in 2008/09, they are still 19 per cent lower than in the period before the tram extension opened in summer 2012.
Looking further back, only one borough has shown a boom in housing starts following infrastructure investment. Following the tram’s extension to Eccles in 1998, housing starts in Salford gradually accelerated from 510 in 1998/99 to a peak of 2,920 in 2005/06.
The tram’s extension has boosted connectivity to the high-profile MediaCity development, while ongoing work at Salford Quays and private schemes along Chapel Street and Trinity Way have also been major catalysts behind the growth in starts.
What is clear from the statistics is that a single-track system of investment in either infrastructure or housing does not provide a solution to tackling Greater Manchester’s housing crisis.
Mr Gillingham argues that, even if the government does not support the Northern Powerhouse with additional funds, providing certainty can do more to boost development in the North than anything else.
“We would like to see government get on with that infrastructure investment. The projects in themselves have a regenerative benefit, but they also start to provide the basis for the private sector to make its own investments,” he says.
“Yes, [tackling] an ongoing housing issue is important, but if you want the GDP growth, you also have to tackle all the things the Northern Powerhouse is trying to tackle, which is to make strategic investment to get an agglomerative benefit out of the cities that will act as a counter-weight to London.”
He believes the vote to leave the European Union will have an unexpected benefit to Manchester and other Northern cities. Describing June’s result as “a shot in the arm for devolution”, he says it was as much about “dissatisfaction from outside London about the share of wealth in the UK economy” as it was about immigration or the EU itself.
“If I was in government, sitting in London wondering what to do about the divide in the country that [the vote] has highlighted, I’d be wanting something that I could be using as a tool for getting some of those benefits out to the regional cities,” he adds.
But evidently, the statistics show us that an ‘either-or’ approach to housing and infrastructure does not work; the two must be interlinked, with private investment backed by improved connectivity, if cities like Manchester are to thrive.