Michael Gove has endorsed the idea of building more social housing. The housing secretary wants to spur private building by replacing affordable housing requirements and section 106 agreements with a simple levy from developers to councils. One way of countering concern from charities about eliminating such rules is to highlight how local authorities could use the revenues to build council houses.

It’s fashionable to blame Margaret Thatcher’s right-to-buy scheme and the failure to replenish council housing stocks as a big cause of sluggish homebuilding since the 1980s. A timeline implies that as the state retreated from construction, the market failed to fill the gap. Today, some Tories even suggest that an uncompetitive housebuilding industry is actively withholding permitted development. The obvious solution to these “market failures”, if true, is more government housebuilding, rather than shelling out more in housing benefits.

The conventional wisdom, though, is faulty. After years of inducement, annual private housing completions ticked up to 130,000 per year in the late 2010s, a number dwarfed by the 293,000 new homes completed in 1934 and 176,000 per year through the 1960s. Historically, the market sector had no trouble producing plentiful housing when permitted. A “market failure” thesis must therefore explain what changed.

And, indeed, why it is more of a problem here than in other nations. Across 32 OECD countries, only the Netherlands, Denmark and Austria have a higher social housing share than the UK. At 17 per cent, the proportion of dwellings that are council or housing association owned here exceeds France (14 per cent), Italy (4 per cent) and Germany (3 per cent). All of them have many more dwellings than us relative to population.

We also lead the OECD in subsidies. Our housing benefit and allowance spending, at 1.4 per cent of GDP, is more than double Denmark, the next country. The choice between benefit bills or government-owned bricks is a false dichotomy: we have plenty of both.

What explains the UK private sector’s failure to build enough homes, especially relative to other countries? The answer is the tightening noose of our planning system. A decades-long failure to make more land developable in areas where people want to live has led to supply being less responsive to population and income growth. As cities hit arbitrary boundaries imposed by green belts, density restrictions and Nimby groups, completions declined relative to population, with median house prices doubling relative to earnings in England, and tripling in London, as incomes and the population grew.

Councils buying land at prices inflated by artificial scarcity to offer subsidised housing is no cure for this underlying disease. Indeed, every indicator screams that this is a general supply problem. We have the smallest floor space per household in western Europe, the lowest housing vacancy rate in the OECD and land values that rocket when granted planning permission.

A concentrated housebuilding sector with “land banks” is a consequence, not a cause, of these failures. Dwindling developable land makes the planning process costly and risky, which favours big players over self-builders. Conscious of rejections, housebuilders tone down their applications’ housing ambitions to increase approval chances, while setting aside approved land to ensure workers and machines remain in continual use. They are then accused of withholding development, with high approval rates said to prove that planning is no constraint.

The truth is that high UK house prices no more make the case for state housebuilding than high food prices would state-run farms. The UK doesn’t lack social housing. It fails to match housing demand with supply because permitted land is too scarce and development too difficult. With backbench Tories spiking green-belt reform and neutering housing targets, Gove wants more modest ways to boost supply. But he should not follow the misconception that poverty-entrenching council homes are a substitute for planning reform.