Planning matters

Providing sufficient housing, especially genuinely affordable housing, is arguably one of the biggest challenges facing London. Increasingly, there is concern that the younger generation of talented professionals will be driven away from London, or avoid London from the outset, because the city is unable to deliver the significant level of homes required, leaving house prices and rents sky high. In June 2016, the average price of a property in the UK was £213,927¹, compared to London where this was over double, at £472,000².

This leaves no doubt as to why home ownership in London is becoming an increasingly unrealistic aspiration for many younger professionals – something which may mean businesses find it challenging to recruit and retain the people they need to grow and prosper. In this vein, Cambridge has been crowned the best UK city to work in, whilst London did not even make the top 20 due to the high cost of living and the competitive job market. Towns and cities such as Nottingham, Leeds and Reading however ranked third, fourth and seventh retrospectively, due to their competitive salaries and job prospects, combined with a significantly lower cost of living³.

London needs to address the lack of housing and in particular the lack of affordable housing as a matter of priority in order to remain attractive to young professionals and even established professionals alike. However, more worryingly, whilst affordability (or ‘unaffordability’) was once a London-focused issue, there is evidence to suggest the crisis is spreading across the UK, with Manchester and other larger northern cities at the forefront. Recent Local Government Association  (LGA) research ⁴ suggests that even if the UK achieved full employment by 2024, around four million people would still need access to some level of affordable housing.

Londoners may be fortunate in that the relatively new Mayor, Sadiq Khan, has made it clear from the outset that building more homes is a top priority for him. In particular, a 50% affordable housing push was Khan’s headline policy during his campaign to City Hall.

Khan has now been Mayor of London for around 4 months and whilst Brexit has  undoubtedly made his start a challenging one, what have we seen from him so far and how could his intentions help London and Londoners?

Khan’s initial pledge was that all new housing developments should provide at least 50% of homes which are ‘affordable’ – this pledge however has quickly become a “long-term strategic target” as Khan looks to calm fears that this would make schemes unviable. Now, a lower percentage of 35% seems more likely. It is anticipated that draft supplementary planning guidance will be issued this autumn to provide policy detail that addresses the issue of viability and that includes a benchmark for developers to ensure 35% of homes in new developments are affordable. However, is a 35% target anything ground breaking? A number of London Boroughs, such as Hillingdon, Hounslow and Croydon (amongst many more), already have 35%, 40% and 50% targets in place (respectively).

Despite this, Khan’s commitment to boosting the supply of housing is clear. The Mayor recently released the first details of his plans to set up a 'Homes for Londoners' team at City Hall to oversee homebuilding in the capital, tasked with seeking to boost the delivery of new and affordable housing. To assist, Khan is recruiting experts to scrutinise viability assessments. Khan will also lead a new 'Homes for Londoners' Board, comprising developers, housing associations and London Boroughs. This Board will oversee the delivery of housing, land assembly and investment decisions, and will draw on expertise from across both the housing and property sectors to help develop new policy for London.

Khan has also recently given the go-ahead to Transport for London (TfL) to sell sites at considerably lower than market value in order to assist in improving the viability of schemes, in the hope of driving up the ability of developers to provide a higher number of affordable homes. However, whether this ‘saving’ will actually be seen through to an increased level of affordable homes is something which we will have to wait to find out.

Whilst Khan has clearly made a positive start as Mayor of London, moving forwards, what can we expect from him in relation to housing delivery? Given the uncertain economic backdrop, it will be more important than ever that viable and commercially deliverable housing schemes are prioritised. Despite the uncertainty surrounding Brexit, Khan may be fortunate in that, whilst politically opposed, the relatively new Prime Minister, Theresa May, has also made clear that housing growth and the delivery of affordable housing, are amongst her key priorities, building towards what she is promoting as a ‘one nation vision’ and ‘social justice’. This political will is something which Khan will need to harness in a bid to assist with his own agenda of boosting housing supply. The two opposing politicians will therefore have to work in tandem to achieve increased housing delivery in London, something which they both state is a key priority, in a pragmatic and delivery-focussed manner to assist in developing a strategy for the housing crisis facing a great many people wanting and needing to live in London.

The capital has a real opportunity to be at the forefront of developing initiatives to overcome unaffordability that could lead the way for other UK towns and cities. Other cities may therefore have a lot to learn from London, but not yet.

[1] https://www.gov.uk/government/statistics/uk-house-price-index-summary-june-2016

[2]https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2016

[3] http://www.independent.co.uk/news/business/news/cambridge-named-best-uk-city-to-work-in-but-london-does-not-make-the-list-glassdoor-says-a7132986.html

[4]http://www.local.gov.uk/research
 

With German and Spanish family members, the ongoing debate surrounding the UK’s future relationship with the EU is certainly a hot topic in our household. And being based in Newcastle, the potential impact that future changes could have on the North East economy – and inward investment – is of particular concern.

As explored within our latest TRIP report, foreign investment such as the investment by Nissan in Sunderland - which has strong links to the EU market - generate huge benefits for our region as a whole. For instance, an analysis of the commuting patterns within the area surrounding Nissan indicates that c.60% of the 6,700 workers based at the Washington site live outside of the host authority of Sunderland, across the wider region. A further 11,000 North East jobs are also supported in the main supply chain, generating further employment, wage and expenditure benefits for the wider region as demonstrated in Table 1 below.

Table 1: Total direct and supply chain employment impacts

Source: NLP analysis / Made in Sunderland

However, whilst the region’s FDI performance increased in 2015, in recent years, the relative performance has declined and the share of job creation captured across the North East remains below the pre-recession average. A smaller number of larger projects (in job creation terms) have also been secured over the past decade, leaving the region more vulnerable to closures such as SSI in Redcar, than would be the case with a wider, more balanced FDI portfolio.

In the context of the above and the wider uncertainties surrounding Brexit, it is even more important that our region’s partners work together to secure a higher level of FDI activity going forward. A number of recent publications have highlighted the need for more central leadership to drive such growth and to provide a consistent and strong message to all potential investors. However, as demonstrated within our TRIP report, a total of 14 organisations are currently engaged in FDI, with a high level of cross-over in sectors being targeted at the local level.

Greater levels of collaboration and co-ordination within and across LEP boundaries would help to strengthen the region’s attractiveness as a location for FDI and generate a clearer picture of the strengths of different locations within the region. Whilst it is recognised that this approach could present a number challenges politically, the ultimate aim should be to ensure that the region is best placed to compete for FDI and to capture and retain FDI economic benefits within the North East.

It is recognised that this challenge is not a North East issue alone, with Foreign Direct Investment (FDI) playing a key role in the economy of all regions of the UK. Indeed, as identified by Gordon Brown during the recent EU referendum campaign, a total of 10,000 European-owned businesses employ workers within the UK and a further 200,000 individual UK companies trade with Europe.[1]

In addition, Ernst & Young’s most recent attractiveness survey highlighted that despite an improvement in overall UK FDI performance during 2015, the future outlook is less certain than at any time in recent memory.[2]

Whatever the impact of invoking Article 50, it is clear that action is needed to boost FDI activity across all regions of the UK in response to the findings of the attractiveness survey. In the context of the Nissan example, there is real scope for FDI partners across the region – including DIT, LEPS and local authorities – to work together more closely to secure FDI. The prize – a strengthening of the region’s performance as a whole – can only bring benefits to the region, and, in turn, the national economy.



[1] http://labourlist.org/2016/05/gordon-brown-protect-jobs-and-the-environment-by-staying-in-the-eu/

[2] Ernst & Young, (2016), Attractiveness survey UK 2016:  Positive rebalancing?

This blog gives a flavour of the emerging discussions on housing delivery in Scotland, as the Scottish Planning Review moves towards a White Paper and Bill.

I was delighted to be invited by Kevin Stewart MSP, Minister for Local Government and Housing, to join the housing working group and have just spent two days “workshopping” the five recommendations for delivering more high quality homes.

Nineteen of us from planning, housing and development backgrounds in both the public and private sectors shared our experiences and while we perhaps didn’t conclude the debate, we did put forward a number of views to inform the next steps and the initial drafting of the White Paper.

Unsurprisingly, this elicited much debate. A key point was made that there is currently a disproportionate amount of time spent by local authorities debating housing numbers. Indeed, there was probably a disproportionate amount of workshop time spent discussing the numbers too!

It was felt that the removal of the housing numbers debate from the Local Development Plan-making process would free up time to concentrate on quality, place and deliverability. The importance of housing market areas was stressed, and of regional level planning. If housing numbers were set at a national level, it was felt that this would need to be done more regularly than the 5 year, wider National Plan-making cycle or there would need to be significantly better synchronising of plans.  Also, that any numbers expressed should be minimums using language such as “at least” rather than as targets which could suggest “up to” and perhaps constrain growth.

It was felt that it was not the “definition” of effectiveness that was the problem – the Scottish Planning Policy is really quite clear – but rather it was the interpretation of what was effective that was inconsistent.

There was a view that the testing of effectiveness needed to be improved, including the testing of the deliverability and viability of chosen sites.

It was noted that there had been some successes using Simplified Planning Zones (SPZs) in commercial areas and where zoning was used elsewhere in Europe, it brought certainty to the future developer. But, it was felt that scarce planner resources would be better spent on determining planning applications than on putting in place SPZs.

There was a good suggestion that perhaps a new, streamlined planning application process could be used for sites that have been debated through the plan-making process and that have an allocation.

Land reform proposals were debated and how to avoid state aid problems. Again, European models were debated and the need for significant financial resource to make them happen here.

The view was generally that some local authorities use available powers and mechanisms well but there is perhaps a skills shortage and scarce resources.

The sharing of best practice was recommended and also greater support from Scottish Government, financial and otherwise, to enable the better use of the powers that already exist - and for the provision of supporting infrastructure.

Time was running out by the time this recommendation was debated and it was not as fully discussed as others. However, the feeling of the group was that we should not rely on national solutions but rather local authorities should be supported to develop appropriate solutions for their areas.

There was a general feeling in the housing working group that further debate would be required, once Scottish Government had had time to digest the initial feedback from the first two workshop days.

 

The following is an extract from a paper I presented at the 44^th Joint Planning Law Conference held in Oxford over last weekend.

The Housing and Planning Act 2016 is very much at the forefront of Government reform of the planning system. After a rather difficult passage through the two Houses of Parliament, a huge amount of the detail has been left to be legislated for later. This process of making secondary legislation has just started and it seems that it will continue with the ‘new’ Government.

The mere existence of the Act reflects an escalation in importance of recognising the housing crisis within Government and Westminster – the vast majority of planning reform centres on addressing it, and has done for some time. Whilst the main political parties describe the problem in much the same way, the approaches to finding the solution are different - influenced as they are by different ideologies. Home ownership has for a long time been a central plank of Conservative party housing policy so the starter homes and the extension of the right to buy come as no surprise in that regard.

Precisely what impact the Act will have is difficult to decipher at this juncture, such is the huge amount of detail left for regulations, policy and guidance later. Starter homes will no doubt be popular with those who will benefit from the initiative. One of the drivers of reform is to win the next election and if starter homes gain traction over the next three years, as it must currently be anticipated that they will, the Government will undoubtedly appeal more to the twenty and thirty year old age group than otherwise might be the case. With affordability arguably being at the root of the current crisis – particularly for first time buyers - a subsidy of this scale will undoubtedly be a major fillip to those who stand to benefit.

The underlying solution to the housing crisis must be to create a step-change in the delivery of housing so that future supply far more closely matches the needs that should be provided for as a nation. It is highly unlikely that starter homes will provide this step-change but they may have an impact at the margins.

The Act, in isolation, will support some incremental and modest growth of year-on-year housing delivery, notwithstanding the possible challenges that might be presented should economic downturn or recession result from the decision to leavethe European Union, or for any other reason. However, the Act must be examined in the context of the wider reforms at play across a number of different fronts. For example, if the recommendations of the Local Plans Expert Group (LPEG) were implemented, local plans should have a greater and more significant impact on housing delivery by being far more resilient, flexible, and better able to respond to change. The Group’s recommendations would help ensure local plans are able to confidently tackle ‘the big decisions’ within reasonable timescales – those that really would make a difference to housing delivery, without the fear of being found unsound or Government intervention.

With the Autumn Statement not too far away, we wait to hear what the Chancellor of the Exchequer meant when, on his visit to China in July, he referred to possible plans to ‘reset’ economic policy and we will then see whether this might have any implications for planning policy or decision-making. Within, or in parallel to, the timescale for the Autumn Statement (it is due on 23 November), amongst other things, we might expect to hear more about some of our long-awaited major infrastructure projects, an announcement about the work of the LPEG and further provisions relating to the Act coming into force.

The Government knows where it wants to get to. It wants to be re-elected having provided for one million new homes, 20% of these being starter homes. It refers to the one million new homes in terms of an ‘ambition’ it is striving towards; the language used probably reflecting the doubts the Government itself has about achieving such a number. In my view the target won’t be met. It won’t be met because the imperative to be re-elected will continue to compromise the Government’s ability to put in place the necessary reform that has a realistic prospect of dealing with the underlying housing problem for the longer term, such that we can once again provide for the needs of future generations, in a way that we haven’t been able to for decades.

Image credit: @willupton (Twitter)