Why London’s housing challenge demands radical action

Last week, BusinessLDN, in partnership with Arcadis, welcomed the latest guest to our Westminster Dinner series, the Rt Hon Sir James Cleverly MP, Shadow Secretary of State for Housing, Communities and Local Government. Sir James offered his assessment of the housing challenge facing London and the wider UK, as well as a wider take on the UK economy and current global events.

Sir James prefaced his comments on housing with an observation that the backdrop to the dinner is one of uncertain times, with global instability increasingly a permanent feature rather than a temporary shock. That uncertainty has a direct bearing on how London and the UK position themselves in the world. The range of possible economic and political outcomes is wide, and future governments will need to design policy with that volatility in mind.

In Sir James’ view, high gilt rates are a signal of weak confidence that the right decisions are being taken on the economy. And in this context, London’s role becomes even more critical with the UK needing the capital firing on all cylinders to drive growth across the country. When London underperforms, the consequences are national.

Housing delivery sits at the centre of this challenge, but momentum has been lost. Sir James pointed to the cumulative impact of the regulatory and tax environment, which has weighed heavily on the construction industry, slowing delivery and undermining confidence. At current build rates, ambitions such as delivering 1.5 million homes look increasingly unrealistic – targets detached from the reality of what the system is producing.

For Sir James, affordability is where the challenge becomes most acute. London’s offer is eroded if people on ordinary wages cannot afford to live here. The effects are immediate – employers struggle to recruit, productivity suffers, and high streets lose vitality and footfall. Pressure has intensified across the housing system as supply in the private rented sector has fallen sharply, reducing choice and driving up costs. Finding credible ways to help ordinary Londoners get onto the housing ladder is essential to sustaining the capital’s competitiveness.

Sir James was sceptical that housing targets alone will fix this. In his view, a target restates the obvious – that demand is high – but comes with no meaningful penalty for failure and little incentive for local politicians to approve more homes. The result is a system that rewards delay and reinforces risk aversion.

Planning reform must therefore focus on delivery. That means front‑loading decisions through clearer local frameworks, such as local design codes, so expectations are set upfront. If schemes meet agreed standards, the default should be approval rather than negotiation. There is also a need to be tougher on quality – knocking down poor‑quality, low‑density housing and replacing it with well‑designed, higher‑density homes that make better use of scarce land.

When the conversation turned to infrastructure, Sir James was clear that new homes cannot be delivered in isolation. New supply must come with the right supporting infrastructure – transport, schools, health services, and public realm – if communities are to support growth. Without this, local opposition is inevitable. Done properly, development can strengthen places, support vibrant high streets, and boost local economies. He also thought there is a strong case for taking a harder look at land use across the capital, conducting an audit to help identify capacity, unlock regeneration, and support growth in the right locations.

Sir James emphasised that London and the UK are operating in a more fragmented and less predictable political landscape, which is likely to shape how a future government approaches housing and planning. That may require a more interventionist stance than in the past, alongside a significant repair job across housing, planning, and local government. 

Underlying many of these challenges is the state of local government finance. The current model is broken – constraining capacity and reinforcing cautious decision‑making. Without reform, councils will struggle to take the proactive role required to deliver homes at scale.

The message from the evening was clear. Incremental change will not be enough. Delivering the homes London needs must be prioritised, backed by radical action on planning, infrastructure, and finance. London matters to the UK’s future – and getting housing right in the capital is essential.