Posted by: Adam Roake | November 5, 2010

SO WHAT DO WE KNOW NOW?

I’ve not written anything for a while, partly because I’ve been busy earning a living and partly because there’s been little to say about housing or planning policy. For a while, we were all waiting for the Comprehensive Spending Review and then for the White Paper on Sub-national economic growth. Both have come and gone and whilst some areas are a little bit clearer, in many ways there are now more unanswered questions.

For example we now know the first batch of LEPs, which the coalition want to see developed, but we don’t know how they will be funded (other than they won’t be getting any central government funds); whether they will get any control over inward investment; how they will be involved in the planning process or what influence they will have over the Local Authorities included in their area. They could yet be toothless talking shops (see the Centre for Cities blog) and of course we have no idea what happens in the areas where they don’t have a LEP. Will it even matter?

We know that Tax Increment Funding will be “allowed” but not what that might mean in nuts and bolts terms. Will it offer significant forward funding or will the rules be overly restrictive. It is after all a bit of a financial gamble to pay out now on anticipated future tax revenue and I thought that’s what got us in the current financial pickle.

We know that there will be much less money available for social rented housing, so the numbers of new affordable homes delivered will plummet. It’s not clear quite how much longer government ministers will be able to argue that the last government failed to deliver housing, when CLG’s own figures showed record numbers of affordable homes delivered in 2009/10. It is interesting to note that the press release announcing this publication has been deleted from the CLG website.  Next year perhaps they could argue that house building is coming out of the worst recession for years but will that remain tenable in 2012/2013?

There will be £946million put aside to pay for the New Homes Bonus over the next four years. But how many homes will this actually pay for? Supposedly the council gets a bonus equivalent to the council tax on each new home for each of its first six years and the average council tax is apparently £1,400. So if we are still intending to build at least 250,000 new homes a year, which everyone seems to agree is the minimum necessary to deliver a stable housing market, then in year one the government will fork out £350million, twice that in year two, three times that in year three and four times that in year four. By my reckoning that’s £3,500million not £946million. Do the maths but as far as I can see the incentive will only pay out for about 68,000 new homes per year, about one in four of the homes we need to build.

We are told that the remaining money, around £2,550million, will come from adjusting other Local Government grants;  CLG will rob Peter, the council which doesn’t build new housing to pay Paul, the council which does. It seems that there will be a big fat stick after all for those councils that don’t build new homes regardless of whether they want or need them. Not very bottom-up unless that’s where the stick is supposed to land! This coupled with the general presumption in favour of “sustainable development” is beginning to point towards a developer friendly approach to development at the macro level but responsibility for allowing or preventing it concentrated at local level. Effectively those boroughs that don’t allow development will get much less central government funds; “Allow housebuilders to build homes or you won’t get money to empty bins”! I wonder if those NIMBYs will really turn into YIMBYs, when they realise that the bribe incentive they are being offered is only about a third of the penalty they will pay for not rolling over. How long will the opposition take to use that to their advantage? 

We still have the Localism Bill to look forward to at the end of the month and, who knows, perhaps that will provide a few more answers.  Perhaps I’m just being impatient but then again…  What is sure is that the current uncertainty about the direction of  housing and planning policy will only lead to a downturn in housing numbers delivered.  This might not be a problem in the short term when housing demand is artificially dampened by the recession and the continued unwillingness of lenders to lend.  But in the longer term there will be a drag on economic growth if homes aren’t built where they are needed and the spectre of another housing bubble as supply fails to match demand in the upswing.  Wouldn’t it be sensible to at least think about planning for that problem now when we can rather than producing panic policy in the future when it’s too late?

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Responses

  1. […] authorities in the South East have already spotted the distinct prevalence of stick over carrot (see previous blog) in Grant Shapp’s flagship policy to promote house building. The South East Strategic Leaders […]


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