How many houses we need to build each year in England is the subject of much debate – but almost equally contentious are the statistics that show how many we are building.
Just a month ago the Home Builders Federation claimed the government was misplacing enough houses to build a town the size of Stevenage. Last year, Channel Four castigated housing associations for failing to build enough homes, but their use of official figures was strongly challenged by CIH and others. As the government prepares to reveal its latest house building figures, here is an attempt to throw some light on the problem.
What might be called the ‘traditional’ figures on house building are the DCLG’s quarterly starts and completions. But DCLG considers those on net supply of housing to be more accurate. These figures are higher, because as well as showing new build completions, they also separately show changes of use and conversions. Five years ago, there was only a 4% difference between the two new build figures, but it has now widened to 25%. The conclusion that the problem is undercounting of quarterly starts and completions appears to be backed by council tax figures and by the 2011 Census, that are both closer to the net supply figures. But why is the difference so big and why is it getting worse? There are three factors.
First, the net supply figures are compiled by planners while starts and completions are assessed by building control officers. The former need to compare real supply with planning targets, so have an incentive to make their figures comprehensive.
Second, a growing share of building control work is now done by private approved inspectors who, unlike local authority or NHBC inspectors, are not obliged to make statistical returns on starts and completions.
Third, the upsurge of purpose-built communal housing (e.g. for students) is thought to lead to further undercounting by inspectors, who count front doors rather than the total units hidden behind them. It is not yet known if DCLG can find ways to fill these gaps. In the meantime, the net supply figures appear to be much the best source of housebuilding data. The problem is that they are annual not quarterly. A six-monthly update may be feasible and would certainly help them to be more widely used.
A related problem is how we measure the number of homes being built by councils and housing associations. Again, the usual starting point is the quarterly starts and completions. But these heavily undercount real performance by social landlords, as they rely on building control officers judging whether a new house is private or social – a tricky task since many social units are delivered by developers via section 106 agreements.
DCLG’s affordable supply figures are more comprehensive. They also have the advantage that totals of ‘additional affordable homes’ can be compared with the net supply figures. So for example in 2014/15 overall new supply was 181,310 units. Of these 60,400 were new build or conversions by social landlords, ie. one-third. The starts and completions statistics, for the reasons explained above, give the impression that the social sector contributed only one-fifth of 2014/15 supply.
These differences help to show why the sector was angry with its treatment last year by Channel 4 and indeed by the Spectator, which both used the lower figures. However, the press can’t expect to appreciate the nuances of official statistics if these are also ignored by politicians. As Daniel Bentley pointed out in City Metric, ministers often use the mix of figures that suits their arguments, and in doing so they may well compare apples with pears.
It’s worth everyone noting the small print in the net supply publication, which already advises using the quarterly figures as a short-term indicator while emphasising that net supply is a ‘more complete picture of the overall supply of housing’. The problem is that as the gap between the two widens, it becomes more difficult to place any reliance at all on the quarterly data, and the HBF’s complaint that they miss output equivalent to a new Stevenage becomes highly pertinent.
Both the net supply (and affordable supply) figures for the year ending April 2016 are due out later this month. The total of the quarterly figures for that year has already shown a significant rise in completions – 12% on 2014/15. The November net supply figures can also be expected to show an increase, and the chances are it will be an even bigger one. But though ministers will undoubtedly welcome the improvement, they should still worry that the figures reveal a growing credibility gap.
Original post: Inside Housing