| LONDON
LONDON Britain needs more housing and is looking to build its way out of its worst slump since the 1930s, but a shortage of finance and grassroots resistance are proving hard to overcome.
The government and the opposition Labour Party are competing to come up with plans to unblock the financial bottlenecks holding up new construction.
Economists question their impact and some point to a much deeper problem blocking further housebuilding - the mixed feelings existing British homeowners have about it.
Although many Britons worry about slow growth and costly housing - which has led to some of the smallest newly built homes in Europe - they treasure the green space around cities and access to often overcrowded local schools and hospitals.
The views of Norman Hunt, a retired builder living in a London suburb that saw its last big wave of construction in the 1930s, are typical. "I'm not in favor of building anywhere around here, but if they did it elsewhere, and it got things moving again, then we definitely should," he said.
City limits have changed little since post-World War Two legislation encouraged municipal councils to halt expansion in favor of redeveloping Victorian-era slums and bombed-out city centers, and to use a 'green belt' to stop suburban sprawl.
This meant that unlike the United States or Spain, Britain did not see a boom in house-building before the financial crisis. Despite this, new housing starts almost halved in 2008 and have yet to significantly recover.
To change this, the Conservative-led coalition is working on proposals to rush through 10 billion pounds of construction loan guarantees and changes to planning law. And on Monday, Labour called for an expected 3-4 billion pound windfall from the sale of mobile phone airspace to be used to build 100,000 homes.
QUICK ROUTE TO GROWTH?
House building has support from many economists because it could offer a short-term boost to an economy that has not recovered the ground lost in the 2008-09 recession, and is forecast to shrink a further 0.3 percent this year.
In the last financial year, just 105,000 new homes were started in England, compared to a pre-crisis peak of 183,000, and surveys suggest house building will contract further even as other parts of the economy pick up.
Business minister Vince Cable has evoked as a promising model the construction boom that saw 300,000 houses built each year and led the way out of the 1930s depression.
Compared to other areas of government spending, economists argue that house building offers a good bang for the buck for a government constrained by a huge budget deficit. It is also faster than building infrastructure such as rail or airports.
"It's certainly first on my list on the grounds that if you want to stimulate demand and employment, then housing is something you can do very quickly," said Jonathan Portes, director of macroeconomic think tank NIESR.
The government has taken some steps to ease constraints that have made it hard for builders and home-buyers to borrow since the financial crisis. A scheme open since August offers lenders cheap finance via the Bank of England if they lend to households and businesses, with up to 60 billion pounds available for now.
A BoE survey showed banks now expect to make mortgages more widely available, though they were unsure of consumer demand. Any benefit has yet to appear in mortgage approvals figures.
While low interest rates mean the share of disposable income to service a mortgage is at a 15-year low, according to figures from lender Halifax, banks seek much larger deposits than before the crisis - a stumbling block for many first-time buyers.
The 10 billion pounds of loan guarantees, which will not come into effect before early next year, aim to reduce the cost of finance for builders and help institutional investors who want to buy portfolios of homes to rent out.
Rough calculations suggest they would add something in the region of 0.2 percent to GDP.
"I would think tens of thousands of new homes - low tens of thousands," said Henry Overman, a professor of economic geography at the London School of Economics.
PLANNING STRIFE
Richard Breen is the type of person the government hopes will build more homes. He is non-executive chairman of Horizon Homes, which has planning permission to build 60 houses outside Totnes, a small town in southwest England, and has for years has advised construction firms on how to navigate planning rules.
He identified a lack of bank finance as the most immediate constraint on builders, something he was unsure the loan guarantees would resolve. But close behind came planning laws.
"The planning process is still in the dark ages. The more effort central government make to make that easier, the harder individual planning officers dig their heels in and say they will not be dictated to," he said.
To gain approval for a development, builders have to agree with local authorities how much social housing to provide, and what they will pay towards infrastructure for the new community such as schools or community centers.
This takes time, and some deals agreed in good times look less viable now that house prices are more than 10 percent below their pre-crisis peak.
Eric Pickles, Conservative minister for local government, says this has stalled the construction of 75,000 homes, and has proposed laws to give developers more scope to appeal rulings.
But he has met fierce opposition. Local authorities say they have given permission for 400,000 homes that developers have yet to build, with some sitting there waiting for prices to rise.
"Construction could stimulate the economy if developers would get off their backsides, to be perfectly blunt," said Clyde Loakes, a Labour Party councillor and vice-chairman of the non-partisan Local Government Authority's housing committee.
Looser planning rules are not the answer, he argued. "We are the ones that ultimately will have to pick up the pieces of any poor housing developments while the developer moves on with a fast profit."
However, some analysts say a real shake up to planning is needed to permit building on green belts, which have changed little since the 1950s despite big shifts in population.
Land on the edge of London or Oxford can be 20 times more valuable with permission to build housing rather than farming.
A scheme to allow local authorities to capture a larger share of this profit could help build infrastructure and compensate locals who feel disadvantaged, said LSE's Overman.
"If we are going to tackle the house price affordability problem, we have to supply more houses," Overman said. "I don't see how some towns are meant to do it based on their urban footprint from 1947."
(Additional reporting by Peter Schwartzstein; editing by Philippa Fletcher)