The planning system isn’t to blame – it’s developers and the banks

By Nicky Gavron AM

Nicky is Labour Housing and Planning Spokesperson on the London Assembly.  She is on the Executive Committee of Labour Housing Group and of London LHG.  She tweets @nickygavron

The economy is not flat-lining because of the planning system or because of Section 106 agreements for much needed affordable housing, it is flat-lining because of the lack of confidence and demand, caused by the government’s failing economic plan.

Figures published last week by the Local Government Association show that in London alone, there are 93,000 houses with planning permission, but which haven’t been started or have been stalled by developers. And this figure is probably an underestimate. London Councils reported last year that around 170,000 homes in the region already had planning permission but have not been built.

These figures show it is not planners or the planning system holding back housing.

These homes are not being built because banks are not lending to developers, and because house builders want to limit supply to push up prices and increase their profits. As Barratt’s 2011 annual report said:

During the year we have focused on securing the best price for every sale. Across the Group we have focused on maximising value rather than driving volumes.

The government is misdiagnosing the problem.

The culprits are the big house-builders who ‘land-bank’ – sitting on land without building – and the big banks that ‘don’t bank’ – not providing mortgages to people.

Since the election the government has cut London’s affordable housing budget by 70% and introduced sky-high rents for new ‘affordable’ housing. Now they say developers do not even need to deliver these. Their proposals are not a viable plan for growth; they are part of an ideological attack on affordable housing and will exacerbate London’s housing crisis.

And what is the Mayor’s record? On Boris Johnson’s watch affordable housing starts in London have fallen to their lowest level for a decade due to the cut in funding and the Mayor’s inability to get the new – much reduced – programme rolling.

So, while the government are busy blaming everybody but themselves, Londoners are suffering. More than ever, there is an enormous need for decent low-cost rented housing in the capital. Home ownership is becoming a distant dream for many and private sector rents are soaring well above inflation. At the same time, 200,000 families now live in overcrowded housing and rough sleeping is rising rapidly after years of decline.

The Mayor and government desperately need a plan for jobs and growth. The last thing the country needs is a misguided ‘growth’ programme based on ideological zeal, they need to look at the evidence and accept that their policies are hurting, but aren’t working.

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10 Responses to The planning system isn’t to blame – it’s developers and the banks

  1. Paul Cordock says:

    If Nicky Gavron or Steve Hilditch had worked in the Private Housebuilding industry, or had been an entrepreneur in this industry, they would see how increasing regulatory burden; S106/AH/education/open space; CfSH; CIL; is killing the industry. The big boys (Barratt, Persimmon, Taylor Wimpey etc) will survive, but medium-sized and small firms are packing up because there is insufficient incentive.

    The government should roll back regulatory burden starting with removing AH from S106/planning. Unless this is done, the industry will continue to shrink and die, and volumes will do likewise.

    I write, having 36 years experience in private housebuilding.

  2. Pingback: Fiddling while Rome burns | Red Brick

  3. Thanks for the further comment Tom, and the interesting information about the Greens.
    Just to be clear on comments. the WordPress system means that the first comment from a new correspondent has to be moderated and approved before it appears. After a person is approved once every subsequent comment goes on automatically – published then moderated as you suggest. So now you have a free hand!

  4. Pingback: Some “growth plans” that won’t work « jon stone

  5. Thomas Dean says:

    I agree that Land Value tax is a part of the solution.

  6. Tom, such impatience! You might guess that no-one gets paid to do Red Brick, we don’t have a team of staff waiting to moderate comments as they come in. In fact this morning I was at the launch of the Housing Voice report, about which a post might appear very soon. It’s very rare for us to not publish a comment received, normally only if it’s offensive in some way, and we have never refused to publish one just because we don’t agree with the comment made. Anyway, I agree with LVT in principle and want to see it properly debated, in particular the practicalities of implementation.
    So keep the comments coming!

    • Tom Bowker says:

      Just surprised you don’t publish then moderate, rather than the other way around – doesn’t seem the kind of topic where you’re going to attract hugely offensive posts. Anyway, apologies for my impatience, and thanks for your good (voluntary) work highlighting these issues.

      Amusing that both Thomas and I open our comments by saying we each have *the* solution! We probably both have part of the solution, as Thomas says above. I really think that LVT would provide huge benefits in the UK, though I’m sure it would also have knock-on effects which we haven’t yet thought of – and I’d be fascinated to see what those would be. In any case I’m sure the end result would be an improvement on today’s situation.

      Would be great if Labour could get properly behind LVT, as the Green Party has. There was an excellent, educated and informed debate on it at Green Party Conference last weekend where all sides got a good airing. I, and the majority in the room, came out (still) true believers in LVT. A chap called Andy Wightman put together a great report on what LVT would do for Scotland, and has now been commissioned by Caroline Lucas to do the same for England. Publication is imminent, I believe.

  7. Tom Bowker says:

    So my comment’s been waiting 4 hours now for moderation. Are you consulting your legal team?!

  8. Tom Bowker says:

    The solution is Land Value Taxation. Developers won’t bank land if they’re paying tax on every square foot – especially valuable land in urban areas. The tax would force them to use it productively – i.e., to develop it! The land taxed at the highest rates – that in city centres – would have to have blocks with multiple dwellings in, so the land tax could be shared between more households. Therefore we properly incentivise efficient use of land and significant new home-building.

  9. Thomas Dean says:

    Land monopoly, it is as simple as that.

    People can’t grow their own food, let alone build their own houses. Have had a few rants on here and slated nu-labour, in particular the pathfinder program. I don’t believe that this part of the labour party was for pathfinder, but I haven’t seen the pathfinder program opposed or slated by RedBrick. Red Brick is associated with labour, it must first make apologies on behalf of labour for the likes of pathfinder, and then propose new radical solutions – for them to be accepted seriously – the simplest and most rational being to build more council housing! And to lower rents – they have risen above RPI inflation for a decade whilst workers wages have not kept up.

    The rent rises were set by the labour govrnment – or should that be ‘RENT’, because they represented only landed interests and not LABOUR!

    I live in a community where people have poor housing, overcrowding is rife, multiple languages are spoken, the police are often about, windows get smashed, drugs are sold openly on the street. Unemployment is endemic, I often find myself unemployed, and so do my peers and neighbours.

    A block of flats where but one or two works in the private sector sporadically, where one is employed full time in the public sector and generally all the rents bar the one (what one can only call enforced public sector – housing salary sacrifice) are paid for by housing benefits – which has risen far faster than wages and even JSA for that matter. Rent used to be but 20% of wages, now it is 33-50% of wages, before council tax benefit is withdrawn – let alone transport costs which aren’t even taken into account – and gone are the days of public transport, it’s way too expensive. JSA used to be more than rent, rent now exceeds JSA!

    What pains me most, is that I come across so many that want to work, and who not through a lack of trying, cannot find a job.

    Many of my friends lost their jobs tending cemeteries. And I now often hear older people and those whom have lost loved ones complain of the disrepair in them. Was speaking to a young lad the other day, and he would happily work full time doing that (and all the mates of mine that used to!)

    Good people doing a socially useful job forced into poverty, what people would be happy to have their council tax spent upon. A couple have manged to find work in the private sector, but they have no job security, and work through agencies. One is doing quite well selling ‘bubble’ in the black market. Bubble has become a lot more common (mainly workers who can afford to dabble like), working people who can’t afford cocaine no more I suppose.

    The way things are going, only the black market can save us, the real economy for all intents and purposes is DEAD.

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