Disaster capitalism – coming to a building site near you

  • By guest blogger Monimbo

The Growth and Infrastructure Bill going through parliament at the moment is a threat to affordable housing supply.  Is it also an example of what Naomi Klein calls ‘disaster capitalism’?

Writing in the Guardian about responses to the destruction in New York caused by Hurricane Sandy, Naomi Klein describes how big firms are moving in offering private sector solutions and shows how the hurricane’s aftermath is in danger of becoming ‘just one more opportunity for further deregulation’.

In Britain we haven’t (recently) had a Hurricane Sandy but we do have our own ‘crisis born of corporate greed’ which has led (among many other things) to a collapse in the housing market. Everyone knows that builders aren’t building enough houses because potential buyers can’t get mortgages and in many cases also because builders themselves can’t get finance from the banks. To give some credit where it’s due, the government has recognised this with its FirstBuy and NewBuy schemes, although there is criticism that they are too focused on first-time buyers of new property. Local authorities are also doing their bit with several launching mortgage schemes, such as Sandwell.

But we are also getting a dose of disaster capitalism as developers lobby hard to get rid of regulations that supposedly stand in the way of the investment they would otherwise undertake.  The evidence that the planning system continues to be an obstacle to development, even after detailed guidance was replaced in March by the 50-page National Planning Policy Framework, is mixed at best.  There is even less (no?) evidence that building regulations hold up development, but that hasn’t stopped the government setting up an independent review to look into how many of them can be dispensed with in the supposed interests of ‘economic growth’.

As is happening with homelessness and allocations policies, the government is also tripping over its own initiatives in its hurry to act.  It’s been anxious to weaken (and is said to have considered abolishing) the planning requirements to provide affordable housing, known as section 106 agreements.  At first it was content to let councils renegotiate them, which 40% have apparently already done.  Then in August it decided to consult on renegotiating any agreement that dated from before April 2010. It also announced that expert brokers would be used to get projects moving that were stalled because of section 106 deals.  Its stimulus package of 6th September promised:

‘…removing restrictions on house builders to help unlock 75 000 homes currently stalled due to sites being commercially unviable. Developers who can prove that council’s costly affordable housing requirements make the project unviable will see them removed.’

Although consultation on the August document didn’t close until 8th October, within ten days it published the Growth and Infrastructure Bill which will allow any section 106 agreement (irrespective of date) to be challenged immediately.  It is hard to see how the Bill can possibly have taken into account responses to the consultation, several of which were submitted close to the deadline.

This week the Bill has been examined by Commons committee.  David Orr from the NHF has already seen his argument that the Bill could stop the development of 35,000 affordable homes dismissed by Eric Pickles.  Gavin Smart from CIH argued that Pickles’ evidence that 75,000 housing starts were held up includes a range of reasons for delays, such as lack of bank finance or lack of buyers who can get mortgages. It doesn’t give evidence of specific problems about section 106.  In the impact assessment for the Bill, the government says it is targeting sites where housing markets are weak.  But it is far from clear how changing section 106 deals will make a scheme viable if the overall market is still moribund.

Compared to the use of the banking crisis as a smokescreen for massive spending cuts and attacks on welfare and public services, deregulation may seem a minor problem.  But as Gavin Smart also pointed out, section 106 led to 29,000 affordable homes being built as recently as 2010.  This was a huge contribution, even if this scale of output is unlikely to be repeated soon. As direct government subsidy is drastically curtailed, the last thing we need is an irresponsible end to the main source of indirect subsidy: obligations on builders either to provide affordable homes within new developments or, if not, to pay for them to be built elsewhere.

None of this will stop the government, of course.  Disaster capitalism isn’t interested in evidence-based policies, but in deregulation, and much more besides.

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