Emma Reynolds: Competition is the key to building for future

If we want to meet the housing challenge that confronts us, we need a government that will plan for the long-term. We have committed to building at least 200,000 homes a year by 2020.

But we already know that to deliver that long-term housing strategy we will have to face some uncomfortable truths. As currently structured, our country’s building sector has a broken gear stick.

Despite rising demand and prices, we have seen a failure to increase output and respond adequately. Over the past 30 years we have been consistently out-built by our competitors. Japan has twice our population but is building 10 times as many homes – building over 90,000 homes in November alone.

One of the key factors is that our building sector has become less competitive. In the 1930s, when we reached the highest levels of private market house building ever achieved in the UK, the top 10 housing companies had a market share of no more than six to seven per cent. In 1988, firms completing less than 500 units per annum delivered two-thirds of UK housing.

However by 2012 that proportion was less than a third.

As the number of small builders has declined and other firms have grown ever bigger, it has become easier for the more dominant firms to buy up land. This has further denied access to land for smaller builders, resulting in a vicious cycle of decline.

In other countries the building industry is very different. In Canada, France, Germany and the US, self or custom build delivers in excess of 40 per cent of the housing output – in others such as Austria it is up to 80 per cent.

We must introduce greater competition and diversity if we are to increase output.

Custom build gives power to aspiring buyers and allows a local approach to planning, helping to increase design quality and reduce community objections to new homes.

Custom build doesn’t mean building the whole home yourself, it can be like choosing a kitchen.

In a new scheme in Lewisham, the local Labour council is running a custom build scheme that allows the residents to choose the design, select the contractors and specify individual requirements.

While in Labour-run Oldham, the council has bought and cleared the land for a custom build scheme that will deliver homes at 20 per cent less than market value.

To be fair to the Government they have said a great deal about promoting self-build and have even set up a welcome fund to help budding self-builders. But the facts show that the re-entry to the market of smaller firms is currently slower than in previous recessions. And last year, far from doubling the size of the sector, the number of self-build homes actually fell to the lowest level in 30 years.

That’s why I am announcing “Build First” – a package of measures to assemble an army of smaller firms and custom builders to tackle the housing shortage and help the next generation on to the property ladder.

Our aim is to significantly boost the role of the smaller firms, and the self and custom build industry, to help us reach our ambition of building at least 200,000 a homes a year by 2020.

Building those extra homes could bring up to 230,000 jobs and I want to see many of those jobs created by small and medium-sized builders.

Too often a huge emphasis is placed on large land sites by local and national government, ignoring smaller sites.

The next Labour government will require local authorities to include a higher proportion of small sites in their five-year land supply.

We will give guaranteed access to public land to smaller firms and custom builders. Any public land given over for housebuilding will have a proportion dedicated for this purpose.

In addition, we have affirmed our commitment to building a new generation of new towns and garden cities. I can also commit that a proportion of the homes built in these new settlements will be built by smaller firms and custom builders.

The post-war Labour government under Clement Atlee, from a standing start in 1945, was building nearly 200,000 homes a year by 1950 and started to build 11 new towns.

Harold Macmillan treated the position of housing minister as a war job and smashed his target of building 300,000 homes a year. Harold Wilson went on to build even more. Yes, they were different times but we must capture that post-war spirit. It’s not just about building homes after all, it’s about building thriving communities and places where people want to live.

• Emma Reynolds is the Shadow Housing Minister who spoke at the National House-Building Council.