Dr. Robert Kelly:

That point is very well made. In essence, what we are talking about here is the capacity of the labour market to grow. When we bring this aspect right down to the essentials, this is what someone having somewhere to live comes down to. We undertook an exercise some years ago that came up with a number in the mid-30,000s as the demand. Within that, though, we would have had scenario analyses that would have examined factors such as migration patterns and household formation numbers, for example, as well as headship rates within households. We have seen that the estimates we would have had are on the upper regions of those figures. If we were to look at how we would think it has played out, we would be talking about the mid-40,000s to mid-50,000s as being the range of what we would see as being needed in terms of housing delivery now.

When we bring this aspect back to the public finances, we do see a continued increase in the delivery of housing. This will be up towards 37,000 units by the end of the forecast horizon. The real challenge, though, is how we can make this figure jump up another 10,000 units. I really do think this aspect speaks to what Dr. Kelly said concerning the need to think about prioritising developments. One problematic aspect we are constantly seeing, and I am not necessarily an expert in this area, is with the provision of water in our cities. We cannot build houses if this infrastructure is not in place. There are also other elements that may be seen as frictions within the system. I refer to the time and length of the planning process, for example, and delays in the planning system. All these elements, essentially, add to the cost and slow down the delivery of housing. I think, therefore, that there is a financial element involved and this will also be a part of this context. Equally, however, these enablers I spoke of and removing frictions in the system are what is really required to allow us to start thinking about how we can make this jump up to providing an additional 10,000 units annually.