Radically upzoning London and allowing millions more people to move to the capital could make Britain as rich as America with a welfare state surpassing that of Denmark or Sweden, says Sam Bowman
Labour’s announcements on housing have been encouraging so far. The new government seems to “get it” that Britain needs to build more homes to get strong economic growth, and that the planning system is the biggest obstacle to that happening.
But its announcements so far are stop-gap measures. Housing targets do not put homes where they are most in demand. They do not allow prosperous cities to grow above their trend. But internal migration is the norm in any fast-growing economy. During the Industrial Revolution, most of the country’s major cities grew in population by 5-10 times. Cardiff grew 40 times in size between 1821 and 1891. Glasgow grew from 70,000 people in 1800 to over 700,000 in 1900. The US Sun Belt today is seeing large-scale migration from declining Rust Belt states and the country overall is better for it.
Something similar should be happening in Britain today, with people moving to prosperous cities like London, Oxford and Cambridge for better jobs and lives. But they can’t, because we don’t build enough in those places.
Since 2016, London has actually underbuilt for its size. London’s is 15.7 per cent of England’s population, but only 10.8 per cent of housebuilding starts and 12.6 per cent of completions in England since 2016 have been in London. Really, it should be building much more than its share of population.
Even if Labour does succeed in building 1.5m new homes, we need many more than that. The Centre for Cities estimates that we are 4.3m homes short of parity with Western Europe. If Labour’s measures succeed we may build 300,000 homes a year on average. That is a big step up from today, but only 20 per cent higher than we built in 2019. And to reach parity with other Western European countries, we would need to build 450–650,000 homes a year for decades.
Much of our existing housing stock needs replacing. British homes are the smallest in Europe. Many are drafty, ugly, and even unsafe. Everyone, whether they are a homeowner, a private renter, or a social tenant, should be able to expect live in a house that is warm, beautiful, spacious, and within range of a well-paying job.
There are many way Labour could get these homes built. One of the most effective would be to radically upzone London, allowing millions more people from around Britain to move here.
The housing secretary could do this without primary legislation. She could make a Special Development Order granting the right to build up to eight stories on residential land within the Greater London built-up area, and within half a mile of any tube, commuter railway, or Elizabeth Line station. Greater London’s housing stock could double over a few decades.
Labour could couple this with new mechanisms for local approval of design codes, decided on by ordinary voters, not planners or architects. Low-density places like Stockwell and Peckham could become as beautiful as dense Bloomsbury and Marylebone.
To avoid a Nimby backlash, Labour could learn from Houston, where contiguous areas of the city (neighbouring blocks and streets) were allowed to opt out of a major city-wide upzoning if 51 per cent of the homeowners signed a petition to do so. Areas could keep things the way they were without stopping upzoning across the rest of the city. Only a small share of the city opted to do so.
“Land value capture” could fund the new transit this would require. New Tube stations give nearby landowners a large windfall in the value of their properties. Taxing that windfall would capture a lot of the benefit of new Underground lines, and make it possible to pay for new ones altogether.
The economic effects of all this could be huge. Study after study estimates large wage, economic growth and innovation gains from making it easier for people to move to rich, dense cities.
We could be as rich and dynamic as America, with a welfare state surpassing that of Denmark or Sweden. That’s what growth gets you, and we all now agree that more housing is how to get that growth.
So let’s go for 20m Londoners. Take away the limits on our city’s growth, work to get housing abundance, and let London become the beautiful, dense, booming global capital that it wants to be.
Sam Bowman is editor of Works in Progress