Housebuilding: The goose that lays the golden egg is dead

Let’s start with a short analogy. Picture a small manufacturer beginning the week. They make a respectable product, price it with care and hope that, if the stars align, next year might allow a new machine or two.

Now imagine informing this same firm that, from tomorrow, anywhere between 35 and 50% of its output must be handed over at cost or less. Its designs will no longer follow customer demand but the preferences of a committee with no intention of ever buying the product.

A slice of its revenue will be siphoned into public good initiatives entirely unrelated to the business. And if, despite all of that, it still turns a profit while carrying every ounce of risk, a clawback will be on hand to sweep up whatever margin remains.

No credible observer would expect this arrangement to survive in any other sector. Yet this is the framework in which we expect homes to be built and, more strikingly, it enjoys near universal political approval.

To understand how we arrived here, you have to go back to 1991. Before then, the state still accepted that infrastructure and affordable housing were public responsibilities, funded through taxation and delivered accordingly.

What had previously been financed collectively through the state was now attached to individual planning consents

The Planning Compensation Act 1991 changed that foundation completely. By creating the modern section 106 regime, it redefined the relationship between development and public goods.

What had previously been financed collectively through the state was now attached to individual planning consents. It wasn’t just a tweak. It was a transformation in the economic model of an entire industry.

Once that shift had occurred, everything else followed its logic. Contributions originally conceived as limited and site specific hardened into expectations that every scheme would part-fund the social infrastructure once paid for by government or councils. And, because this was now the foundation, subsequent legislation simply added more weight to the same mechanism.

The 2008 Planning Act and the community infrastructure levy did exactly that. Rather than replace section 106, it sat on top of it. Two systems now pursued the same pot of value and the commercial space for delivery narrowed again.

By 2013, the Growth and Infrastructure Act introduced viability testing, an implicit admission that the cumulative burden had begun to undermine the very schemes meant to carry it. Yet instead of rethinking the model, the state kept adding to it.

The question now is not whether another public obligation will be attached to development but which one

The 2021 Environment Act and the 2023 Levelling Up and Regeneration Act brought biodiversity costs, net zero-aligned requirements and the proposed infrastructure levy. None of the earlier obligations were retired. The camel was not only handed another straw. It was expected to walk faster.

And, because each layer has normalised the next, the question now is not whether another public obligation will be attached to development but which one. Support for the triple lock perhaps? A cushion for frozen council tax? Or whatever fiscal gap emerges in the red book this autumn – said with tongue firmly in cheek, yes, but it illustrates a serious point: The logic of the system has expanded far beyond anything its architects ever intended.

Apply any of this to a normal manufacturer and the business would collapse before the model reached the boardroom. Yet housebuilding is expected to carry these demands indefinitely and still produce the homes the country insists it needs.

The contradiction is now visible in stalled sites, shrinking output and an industry that looks less like a golden goose and more like a bird that has been plucked past the point of survival.

If the government is serious about reversing that decline, it must start by recognising the scale of the shift that took place in 1991 and everything that has been piled on since.

Politics is always a matter of trade offs. For 30 years, this one has been quietly avoided. It cannot be avoided any longer.