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Housing - if not radical reform now, then when?

By Paul Goodman
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Policy Exchange's housing plan might have been written to offend vested interests...

Screen shot 2012-09-01 at 08.42.33In our Comment Section today, Alex Morton of Policy Exchange urges the creation of a Secretary of State of Housing in the coming reshuffle, so that this new Cabinet appointment can drive through radical planning reform.  He also argues that the current centralised system has failed and that localism will succeed: under his scheme, set out in the think-tank's paper Cities for Growth and in previous Policy Exchange papers, planning would be taken away from local councils and given to local communities.

In short, these would vote on development proposals for their own backyards, and yes votes would bring compensation for those affected.  NIMBYs would thus have an incentive to become YIMBYs - Yes-In-My-Back-Yardies.  Local plans would be stripped down.  Section 106 agreements would go.  Quality control would be more about local material, less about high density and zero car spaces.  When supported locally, building would be easier on brown field and green field sites - but there would be a green belt improvement levy to improve the parts of it that aren't built on.

...Within the Treasury...

I will turn later to the merits and demerits of Policy Exchange's plan, but one point is obvious right from the start: it might almost have been devised to upset every vested interest in government departments - in particular at the Treasury and CLG, the two main ones concerned.  It would be a gross over-simplification to say that the former is a creature of the developers and the latter the property of the planners, but as in many cases the caricature is recognisable.  The likely reaction of both to the Policy Exchange scheme helps to prove the point.

The Treasury seeks first to control spending and next to control other departments.  In its perfect world there would probably be no planning controls at all: housing would eat up the green belt, the economy would grow and HMRC would bank the tax proceeds.  But if there has to be planning it must, from the Treasury's point of view, be driven from the centre.  It thus felt at home with Labour's failed regional spatial strategies.  Treasury civil servants would freak out at the uncertainty of housebuilding numbers and compensation costs under Policy Exchange's plan.

...And CLG

CLG, meanwhile, helps to prove the truth of the old Norman Tebbit joke about departments existing for the benefit not of the public but client groups - so, as part of it ran, the Agriculture Department is for farmers and the Foreign Office is for foreigners.  CLG's client group is local authorities - and therefore, in this case, the planners they house.  The Policy Exchange scheme would mean taking planning out of their hands.  They would run screaming to their councillors.  Those councillors would, in turn, run screaming to Eric Pickles.

Let me be clear.  I am not suggesting that the estimable Communities Secretary is a trussed-up captive of local councillors.  Indeed, he has proved to be quite capable of waging war on Tory councils when he believes it necessary - for example, over council tax levels.  Nor am I implying that George Osborne has a map of the green belt pinned to the wall of his office, disfigured by yellow post-it notes detailing new housing sites (though the Treasury is interested in building on the green belt - see today's Telegraph - though broadly within the current planning framework).

...So David Cameron would have to be up for a big fight to back it...

But I am saying that each of their departments has an institutional bias.  So do newspapers: restrictions on building mean rising property prices, and rising property prices mean a gain for those who own homes - no small consideration when, given the level of interest rates, it is very difficult to profit by investing elsewhere.  The Daily Telegraph's Hands Off Our Land campaign was thus defending the interests of its readers, and it succeeded in forcing the Government to water down its National Planning Policy Framework (NPPF).

The Policy Exchange scheme thus depends on the Prime Minister being up for another big fight over reform - and seeing it through first by appointing a brand-new Housing Secretary of State, and then backing him to take on institutional resistance at the Treasury and CLG.  The anxieties of Conservative councillors would doubtless be reflected by Tory MPs, and David Cameron will  anyway be wary of re-starting the row over the NPPF all over again.  The view that the newspapers that ignited that row would take of the Policy Exchange plan is uncertain.

...But if not radical reform of a failing system now, then when?

Indeed, there is no organised lobby for reform: those priced out of the housing market are less organised than the planners. And whatever may be possible by way of rewritten guidance and secondary legislation, it is hard to imagine that a big scheme of this kind - which would tear up the planning framework established since the 1940s - could be done without a Bill.  So as with the Treasury's own schemes to build on the green belt, short-term growth wouldn't come as a result (though easing restrictions on brownfield development would certainly help).

But readers will have spotted a theme to most of these problems - namely, that they are always there.  In simple terms, the winners from the present system are the planners (plus homeowners in better properties).  The losers are the taxpayer, because of social housing billls; people who can't get into the housing market at all, and those who want to own their own home: the average age of a housebuyer is now 35.  The position of developers is more ambivalent, although some gain from banking land as its value rises - which present building restrictions allow it to do.

The choice is simple.  Even if immigration is controlled as the Government has promised, there will still be pressure for new housing - and in 2010, housebuilding fell to a record low of scarcely more than 100,000 homes.  Britain either presses on with a planner-driven system which was framed in the era of Attlee - and thwarts the needs of under 40s - or it plumps for something more liberal and local.  Policy Exchange's scheme poses plenty of questions (such as the affordability of adequate compensation).  But if not it, then what?


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