Britain’s real planning scandal

Figures released today in HBF’s latest Housing Pipeline report reveal that approvals for just 32,900 homes across England were granted in Q3 of this year, a 10% decrease on the same period last year. This number is half that required to build the homes needed to meet demand – and half the permissions granted each quarter in 2006 and 2007.

These shocking statistics come on the same day that the media are reporting the awful experiences for those suffering homelessness at Christmas and a report from a Select Committee of MPs saying that the Government’s planning reforms are too biased in favour of developers at the expense of the environment.

The MPs biggest gripe appears to be the default ‘Yes’ that is built into the proposed National Planning Policy Framework.  What they have failed to miss is that if a local authority adopts a local plan, there is no presumption in favour of development – the local plan takes precedent. 

The local plan led system is the essence of localism.  Local councils have been required to maintain an up to date local plan since 2004.  However, eight years on, two-thirds still have no such plan in place.  Why is this?

Local plans require local councils to undertake housing assessment studies to identify what housing demand and housing need is expected over the plan period.  Once they have done that, they have to allocate a credible amount of land to meet those housing requirements.  The reality is that many Council’s do not want to face up to this challenge.  They don’t want to make the difficult decisions about where we build the homes of the future.

If there is no local plan in place, councils can throw out major planning applications on the grounds that they are ‘premature’, i.e that the applications must come after the local plan.  If the local plan does not come forward, nor can those planning applications.  It is a loophole NIMBY councils have exploited time and time again to throw out legitimate plans for development.

The consequence of this action has been a substantial fall in planning approvals, as reported by the HBF.  It is time the Government put a stop to it and this is exactly what the National Planning Policy Framework will do.  Those councils that do not adopt a plan will find the presumption in favour kicking in.  My guess is that at that moment, councils will stop dragging their heels and start working on their local plans.

The Localism agenda gives huge powers to local councils.  The NPPF will ensure that they use those powers responsibility.

Having it two ways with Housing

The Government’s Housing Strategy announced yesterday is an example of Coalition policy making at its best and its worst.  Its presentation was also a welcome improvement from a Government that has lost its way in media management in recent months - Cameron and Clegg speaking as one, supported by an articulate spokesman in Grant Shapps who spent the day touring the TV studios and rebutting his critics on the Blogosphere and Twitter.

The mortgage indemnity scheme is a nod to Tory champions of home ownership, while the bung to do up empty homes has long been a Lib Dem priority.  Lib Dems can point to land auctions which have been developed by their CentreForum think tank; Tories to the FirstBuy scheme which helps First-Time Buyers onto the property ladder.  The Tory policy to extend the Right to Buy has been tempered by a Lib Dem sensitivity to spend the receipts on building new social homes.   In doing so, the Coalition has framed a radical, comprehensive and innovative set of policies to promote housing and housing growth.  

The most welcome aspect of yesterday’s announcement is the realisation by both Tory and Lib Dem leaders of the central importance of the housing market to the wider economy.  As with every recession since the 1930’s, it might have been a Housing Bust that got us into this mess, but it will be a Housing Boom that will get ‘Britain back to work’.  When people feel good about the money in their home, they are generally quite happy to spend on holidays, new kitchens and other consumer durables.

The plan to underwrite mortgages comes straight out of Roosevelt’s New Deal.  The beauty of that initiative was that it enabled the Federal Government to subsidise lower mortgages at no cost to the taxpayer (so long as things didn’t go wrong.)  It helped trigger a housing boom that became American suburbia.  But it was also the first in a series of events that would ultimately lead to the sub-prime catastrophe.  The scheme proposed by the Coalition might be a short term mechanism to stimulate housing demand, but it is not a solution to the real problem which is a chronic under supply of new housing.

And it is here, on the supply side reforms, where the proposals look weak and confused trying to appease both its localism rhetoric and the economic reality.  The Government say they want to promote “a wave of larger-scale projects…. where there is clear local support and private sector appetite".  The problem is where are these sites?  Where communities want more housing development, there are no investors; and where builders want to build, there is normally an army of NIMBY objectors.  By trying to have it both ways, there is a danger that the Coalition will end up pleasing no one and delivering nothing.  Ultimately, the Government might have to decide whether it is on the side of the Parish Councillor or the First Time Buyer.

In defence of the National Planning Policy Framework

Middle England is in revolt and the issue that is attracting their fury is planning.  Or more precisely, the Government’s proposed new National Planning Policy Framework (NPPF) and its presumption in favour of sustainable development. 

The Editor of Country Life, Clive Aslet, claims that “the object (of the NPPF) is to let development rip through those parts of Britain that aren’t formally protected as National Parks or part of the Green Belt. This is most of what us still regard as our green and pleasant land – ‘all fields, high hedges, and deep-rutted lanes’, as George Eliot put it.”

Shaun Spiers from CPRE adds, that “the presumption in favour of development is clearly about development, not sustainability. The message for local authorities is ‘build, build, build.’”

Government Ministers appear to be at war with the countryside’s leading advocates.  The complaints from groups such as the National Trust and CPRE, hitherto seen as part of the true blue brigade, are dismissed by Ministers as “a carefully choreographed smear campaign by Left-wingers based within the national headquarters of pressure groups."

The Countryside Alliance’s Dylan Sharpe, says “It's time to call an armistice and for all parties to get back round the table.”

It’s funny, they weren’t calling for that when the Government ripped up the regional strategies and introduced localism.  Some 220,000 homes that were planned under the previous Government, have now been scrapped as a consequence of the abolition of the regional plans.

The reality is that no local authority that puts in place a local plan has anything to fear by the NPPF and the presumption in favour of sustainable development.  What the Government are trying to do is prevent a repeat of the 2004 Planning Act.  Between 2004 and 2010, despite requirements to do so, just 13% of councils put in place a local plan.  If you believe in localism and a plan led system, it requires a local authority to have a plan.  You can’t allow them to drag their heels in the hope that difficult decisions will go away.

Aslet is wrong when he says that “a carefully evolved system of checks and balances has been junked in favour of a presumption that big development will get its way.”  The NPPF is an attempt to ensure that a system of checks and balances remains in place under localism, and that councils face up to their new responsibilities. 

In opposition, the Conservatives always said they wanted more development and to build more homes.  They argued that the problem with the top-down regional strategies was that it built the wrong homes in the wrong places, where they were not wanted.  Their solution was localism.

There are legitimate debates to be had about whether we concrete over greenfields or whether we cram more people into our built up areas; whether we create sustainable new settlements or whether we disperse development over wider areas.  Under localism, it will be for local communities and their community leaders to grapple with these issues and policy dilemmas. 

This could result in a loss of greenfields in certain areas, but that is only because those communities have decided that is a more desirable outcome than cramming people into high rise, small boxes in our town centres.  

The rural countryside lobby is quite happy to take the bits of localism that empowers people to say no, but they don’t want councils to face up to the responsibility that goes along with having these new localist powers.  The NPPF does just that.

Ministers, stick to your guns.

Will there be a public backlash against the New Homes Bonus?

Wyn Evans

Britain desperately needs to build more homes.  A recent YouGov poll found that 81% of Britons accepted this.  The problem is that they don’t want them built in their own neighbourhoods.

Tackling this dilemma is the single biggest challenge facing the development industry.  The last Government’s attempt to impose top-down housing targets only brought resentment and public anger.

The Coalition Government is pinning its hopes on the New Home Bonus.  It believes that by giving local councils’ financial incentives to support development, communities will come round to the idea.  Asked what Plan B is if it fails, one minister replied that they will simply increase the Bonus.

I’m a big supporter of the New Homes Bonus.  I have seen at first hand schemes approved that would have definitely been thrown out under the old regime.  But I have also seen its drawbacks.

About six months ago, I was brought in by a developer just two weeks before committee.  The scheme was recommended for approval by officers but had generated over 1,800 objections.  Ordinarily, the application would have had no chance.  However, the site was located in an opposition held ward and the New Homes Bonus brought the council the promise of a £7.5m windfall.  Despite there being 400 objectors packed into the public gallery, the councillors from the ruling group voted it through.

I was so impressed at the power of incentives, that it became a central feature of the next consultation I ran.  We asked the public how they would want the New Homes Bonus spent?  But far from winning people over, it triggered the accusation that we were trying to buy and bribe our planning permission.

This could become the New Homes Bonus’ Achilles heel.  In using the incentives’ package to justify development, councils will antagonise local resident groups.  Far from winning over community support, it will provoke further cynicism about the planning process.

In three years’ time, it might be Labour that is hoovering up the NIMBY vote by promising to abolish the hated New Homes Bribe.

What do you think?  Will the New Homes Bonus help build more homes?  Will it help win over local communities to the need for more housebuilding? Or will it be seen by the public as an unacceptable bribe?

Wyn Evans is the Founding Director of Forty Shillings.

Guest Blog: the end of the Thatcherite consensus?

Jayant Chavda

Just like buses, major political events often come in threes. This week has seen the near-collapse of Southern Cross, the care home provider, a survey by Halifax which revealed that 64 per cent of 20-45 year olds questioned do not believe that they will get on to the property ladder in the next five years, and growing concern by leading economists that the Government’s deficit reduction strategy is damaging the economy. These three events are significant because they undermine the Thatcherite political consensus which has prevailed in Britain since 1979: the private sector can be trusted to run public services; home ownership is within everyone’s reach; and cutting public spending is the best way to help an economy grow.

Southern Cross – Britain’s largest provider of care for elderly people with 30,000 residents in 750 homes – is in serious financial trouble (current half-year losses are £311m) because its rent payments have increased by 2.5 per cent whilst local authorities have cut spending on social care by 10 per cent thus reducing their income sharply. The company was owned up to 2006 by the private equity firm, Blackstone, which pursued a strategy of buying care homes then selling them and relying on fees to cover the rents.

This business model – like the other one favoured by private equity during the credit boom, taking on huge debt – now looks bust, and provides yet another cautionary tale about the risks involved in bringing in profit-making companies to run essential public services. Yet the Government is ploughing on with allowing “any qualified provider” to run health services, as part of its disastrous NHS reforms. There is very patchy evidence regarding the private sector’s ability to improve the quality of services yet right-wing think tanks like Reform, and former New Labour ministers and advisers, such as Lord Warner and Julian Le Grand, insist on greater competition in health care.

The Halifax survey of 8000 20-45 year olds was a depressing reminder that the UK housing market has huge barriers for first-time buyers with property prices still far too high, lending criteria far too strict, and young people far too unlikely to have the requisite savings to put down a deposit. The average age for a person to get on to the property ladder without parental support is now 37.

One of New Labour’s great failures was to reverse the trend of the Thatcher era and build enough homes (especially of the affordable kind) to meet the needs of the population, which would have helped to put downward pressure on house prices. It is something that the Labour leader, Ed Miliband, needs to address seriously if he is to deliver on his concept of the “British promise,” that the next generation does better than the last.

It has taken an awfully long time, but some of the country’s leading economists have finally realised that the Government’s savage public spending cuts will severely hamper Britain’s already faltering growth prospects. In The Observer today, a number set out their worries as consumer spending falls, business investment declines, and exports stagnate – whilst unemployment and inflation are high, and government borrowing is up by £46bn.

Tim Besley, a former member of the Bank of England’s Monetary Policy Committee, who organised a letter to the Sunday Times last year supporting the Coalition’s deficit reduction programme, said, “Everybody has been disappointed with growth……I would like to see from the Government …a much more clearly defined growth strategy.”

Professor John Muellbauer of Oxford University, who signed the letter to the Sunday Times, said, "Things are going badly. I had hoped that the focus in the Budget would be on improving growth in the places where there are growth prospects, and also maintaining infrastructure investment, and that they would tackle failures of planning."

It was perfectly obvious to those of us with less economic credentials than Mr Besley and Professor Muellbauer that George Osborne’s massive gamble of reactionary cuts and tax increases when the economy was clearly still fragile was doomed to failure. Nearly all independent economic bodies, including the Office for Budget Responsibility and the OECD, have revised their growth forecasts for the UK downwards, a damning indictment on Mr Osborne, who has consistently lied to the public about the causes of the budget deficit and the rationale for his unnecessarily deep cuts.

Margaret Thatcher famously proclaimed that there was no alternative, and the Labour Party pretty much concurred with her during the Blair-Brown era. In light of this week’s troubling developments, there has never been a better time for Ed Miliband to start articulating clearly and passionately how he would do things differently if he reached No 10.

Jayant Chavda is a freelance political consultant and a former Labour Party researcher.