
Table of Contents
Summary
Oxford is one of the least affordable cities in the UK, which itself lags behind other OECD countries in homes built per capita.
Oxford is a global centre for tech innovation. Making Oxford more affordable can be done in a way that also boosts growth for the whole country.
Every extra thousand homes around Oxford, with accompanying infrastructure, would deliver an additional 0.01% of national GDP.
The Challenge
Oxford’s global success has led to crushing housing challenges for the working people of Oxford. As a world leader in life sciences and other technology, Oxford has taken 5% of all European venture capital life sciences investment over the last decade. As a result of this leadership, demand to live and work there has soared, making it one of the most unaffordable cities in the UK. In 1999, a home in Oxford cost 5 times the average annual salary. Today it costs nearly 14 times.
The housing shortage has also held back the number of good jobs in Oxford, which holds back Oxford’s own economy and that of the country as a whole. Oxford is a leading global centre of innovation in tech and life sciences, but its population has only grown by 35,000 people since 1980. It also lags far behind global competitors such as Boston for laboratory space. Housing is a major challenge for other workers and employers in Oxford, for example in the automotive industry.
Better transport links into Oxford can help to mitigate housing challenges, while allowing agglomeration benefits along those links, creating more jobs in the wider area. Better transport between Oxford and Cambridge will help with that. The only realistic way to completely address Oxford’s housing challenge is to ensure a plentiful supply of affordable housing for current residents, together with all the health facilities, schools and transport required for those new homes.
But the city of Oxford has a tight political boundary. That boundary, and green belt restrictions around Oxford, have long been a complaint of the city’s leadership as a barrier to meeting the need for homes. More could be done to enable some gentle infill development of high-quality homes with community support, but that needs to be accompanied with more affordable homes outside the current boundaries.
Given current fiscal constraints and the Government’s mission for growth, making Oxford affordable needs to be done in a way that also boosts Oxford’s benefit to the whole country, and without the need for substantial upfront funding from the Treasury.
The UK has an acute housing crisis driven primarily by the undersupply of homes in England’s cities and areas with concentrations of high-wage firms. New homes in England have failed to keep pace with our growing urban populations, living standards, and need to address the climate crisis, because we have failed to plan for those homes. The impact is that cities at the forefront of the global economy, like Oxford, cannot even build enough homes for key workers and vital innovators.
Leading firms cannot grow and help the local and national economy if the workers they want to hire cannot afford to live in Oxford. That means that opportunity in Oxford is reserved for the privileged few who can afford the high cost of market-rate housing.
There is strong evidence that these sorts of barriers to social mobility limit opportunities for training, for research and for high wage jobs, which prevents the most productive firms from growing.
The Opportunity
There is an enormous opportunity to ensure that Oxford’s unique position as a global leader in science and technology, rather than being a problem for many of the residents of Oxford, becomes a source of better living standards both for them and for the country as a whole.
The high value of homes around Oxford compared to the cost of building more homes with accompanying infrastructure provides an enormous opportunity to create value and national economic growth by building more. That can be done without having to wait for the fiscal position to improve, because it should not require a large subsidy from HM Treasury. Instead, the necessary infrastructure and social homes can be funded from the value created by building new market homes for sale and rent.
Cities like Oxford, at the forefront of global science and technology, have a critical role to play in Britain’s growth ambitions. There is strong economic evidence that clustering or ‘agglomeration’ effects, like the concentration of high-tech research and manufacturing businesses in Oxford, are powerful drivers of higher wages. In addition, inventors moving to be near other inventors generally increases the number of inventions that they generate, which increases overall growth and improves the quality of life for all through innovation. Some argued that remote work has meant the death of distance, but the evidence is that physical clustering is still key for innovation.
Firms locate in Oxford because it is a cluster of global excellence that is not easily replicable. For them to grow, create high wage jobs, and pay more taxes to fund better public services nationally, we have to plan to allow them to hire the workers that they need. That will also help to fund investment in other places to ensure that those places can develop high-wage clusters of their own.
Allocating more land for homes would also enable more space for life science and other technology firms to innovate and grow, and help to ensure that there is a more healthy balance between other jobs in Oxford and the University.
Providing more homes, business space, services and infrastructure around Oxford will ensure private investment in British growth industries, jobs and growth. This can be done while safeguarding all of the precious environmental and landscape sites around the city. For example, Oxford has 2,000 hectares of land to the west with no special environmental or amenity status that is not in any flood zones. A small fraction of that land would be space for thousands of homes. Oxford Parkway railway station to the north of Oxford has good rail connections and is surrounded by a golf course, car park and fields, making it a good candidate for sustainably connected homes. The rail links to Kidlington and Bicester also place them within short, easy commutes of Oxford. Cowley, to the east of Oxford, currently has a freight railway line being considered for mixed-use that would make the surrounding land a short journey from central Oxford.
After review to protect all of the sensitive sites, some of the land around Oxford should be used for new homes, offices and space for growing companies at attractive, walkable densities already familiar in the centre of Oxford. Those will deliver the best use of land without needing high rise and will make better public transport viable. Oxford currently has one of the best bus networks in the country, which is widely used. There is a clear appetite for good public transport. Land value capture can also fund new tram routes to reduce the carbon footprint of new and existing Oxford residents.
The Government is determined to deliver more homes and better economic growth. Oxford is a key candidate to be part of any large-scale homebuilding plan to drive growth because of the opportunity to crowd in private investment and act as a bold blueprint for economic growth.
Plan of Action
Building more homes and spaces for jobs around Oxford has enormous potential to drive national economic growth and provide thousands of affordable homes, while delivering climate benefits through better insulated homes and upgraded public transport.
Extending existing successful cities can deliver economic benefits for entire regions, as demonstrated by Barcelona’s Eixample or Edinburgh’s New Town. Extending Oxford would be an attractive way for the Government to deliver on some of its housing ambitions at no net fiscal cost.
There are several different options that would not require primary legislation through which the Government could deliver additional homes around Oxford. The Government should create a taskforce to study how best to address local housing needs and enable good growth in Oxford. It could consider a range of powerful legal tools, including powers over local plans under the PCPA 2004, Special Development Orders, and development corporations. If a development corporation is used, primary legislation should give that development corporation proper powers to deliver transport and other infrastructure. However, the fastest and legally most secure option would be a short hybrid bill to enable the relevant infrastructure to be provided without lengthy and expensive judicial proceedings.
Preliminary work must be done to lay out the masterplan for new homes, businesses and lab space and to plan community infrastructure and public transport.
Work is required to accelerate delivery of the new sewage treatment facilities. The lack of capacity is currently a major block to further investment in homes and jobs around. The government should also accelerate the current plans to build a new reservoir near Abingdon to increase water supply for up to 15 million people. This will involve radically strengthening the regulatory incentives that Thames Water faces to deliver the reservoir through both positive incentives and potential penalties. The Biden administration’s electricity regulator (the FERC) strengthened the duties of electricity companies to provide infrastructure for the next twenty years’ need.
The Abingdon reservoir is being progressed as an NSIP, with the Development Consent Order expected to be submitted in 2026. The Government should request that Thames Water commits to delivery of the reservoir by 2028. Failing that, compulsory purchase, with a short hybrid bill if necessary, could be considered.
In the medium term, the Government should create duties on water companies to provide sufficient capacity to accommodate new homes in unaffordable areas with a housing shortage, and the regulatory regime should be adjusted to fund that development from a fraction of the overall economic uplift created through providing such capacity. That could include a simple tariff of direct fees for developers in water constrained areas, so that the burden of new infrastructure does not fall on consumers.
The master plan should set out the intended streets, roads and tram routes. Build out can be phased along with additional bus routes and/or tram lines, starting with the parts nearest Oxford, to allow development without car dependence. There is ample land for the extension to include additional lab space for the life sciences industry and space for other employers.
We suggest tram lines to integrate the extension into Oxford, connecting the city centre, neighbourhoods and employment centres. Currently, Transport and Works Act Orders for trams must be made by the Secretary of State. This system should be more generally reformed to give local authorities power to make such orders. As an interim step, the Government could pass hybrid legislation specific to Oxford to devolve this power to the city authority, at least within its own area. Options outside the current city boundaries include a development corporation or extending the city boundaries.
Capturing some of the value generated to fund infrastructure and wider government priorities can be done in different ways, depending on the route chosen. Some of the above would allow compulsory purchase at current (agricultural) use value. In others, value could be captured through taxes imposed in a Finance Bill.
Local authorities currently have the power to levy increased business rates under the Business Rates Supplements Act 2009 and to implement a workplace parking levy. Business rate supplements can be used to capture the increased value of businesses benefiting from the tram. Central government should also give the local authority the ability to collect stamp duty uplifts and a council tax supplement on new development, to capture the value of the new properties and uplift accruing to business. This would allow the council to borrow against future expected tax receipts as was successfully done in London for the Elizabeth Line.
FAQs
Why Oxford?
Oxford has among the most unaffordable housing in the country, and a particularly strong case for government focus due to the potential national impact. But this model could be applied to other unaffordable cities such as York or Reading.
What are the costs?
Oxford’s leading global position in innovation means that there is huge demand to invest in housing, workplaces, and infrastructure that is currently prevented by political and planning barriers. Expansion can be self-funding once central government overcomes those investment barriers with a small seed investment in a master plan and infrastructure.
How will this benefit the residents of Oxford?
Oxford’s high housing costs drive inequality and reduce the quality of life for many working people. Building more homes will help to alleviate the housing pressure in Oxford and will mean more and better housing options for residents. Development profits can also be captured to build new council homes and infrastructure for residents, including healthcare and schools. The majority of England’s new council homes are provided through new developments.
What would the pushback be?
Building more council and market homes in Oxford will greatly help residents with their housing challenges. But there will inevitably be some criticism. People may push back in the areas where development will happen. For that reason, it is key to define strictly targeted sites and ensure that residents have confidence that they will share the benefits of that development and that all the needed infrastructure will be delivered, to avoid congestion in roads and further strain on healthcare and other public services.
Has this been done before?
Yes. Barcelona's Eixample and Edinburgh's New Town are two obvious examples of existing cities expanding to meet resident needs.
Kane Emerson is Head of Housing Research at YIMBY Alliance, founder of Labour YIMBY and a former aide to Emily Thornberry MP. Kane is also Vice-Chair of Islington South & Finsbury CLP and Treasurer of the Labour Party Irish Society.