Only local government can break the developer’s strangle hold on the housing market

Copied from Sunday Telegraph Sunday 16 April 2017

Economic Agenda
The key to opening up the housing market

By Liam Halligan

For decades across much of the UK far too few homes have been built. The average house now costs almost eight times annual earnings – an all-time record. In London and the South East, of course, this ratio is even higher.

Much of “generation rent” is simply unable to buy a home. For millions of youngsters, even those with professional qualifications and good jobs, property ownership is an ever more distant dream. Ten years ago, 64pc of 25 to 34-year-olds, the crucial family-forming age group, owned their own home. In 2015, it was 39pc.

Three fifths of an entire generation of young adults is locked out of the property market. Over half of first-time buyers get assistance from “the bank of Mum and Dad”, rising to two thirds in the South East. The housing market, once a source of social mobility, has become a source of growing resentment.
Part of the solution, as we so often hear from our politicians, is to “get Britain building again”. Yet the March PMI construction index, which monitors the UK’s leading building firms, last week pointed to a housebuilding slowdown. During the final three months of last year, 2pc fewer new homes were completed in England than the same period in 2015.

Over 2016 as a whole, while the construction of 5pc more homes was started than the year before, the number of new-builds actually completed was 1pc lower. Just 168,000 new-builds came to market across the UK as a whole in 2016 – way below the 250,000 needed annually to meet demand. The UK has built, on average, 100,000 too few homes a year since the 2008 financial crisis. For decades before that, housebuilding was also too low. The last time we did build a quarter of a million homes was back in 1980 – and 113,000 of those were council houses. With council-housebuilding now barely a few thousand each year, the UK’s housing needs are largely reliant on the private sector.

Although few homes are built, the UK’s three largest developers still report surging profits. Barratt saw a 40pc rise to £295m during the second half of 2016 – despite completing fewer homes. Taylor Wimpey made £733m last year, up 22pc. Persimmon’s full-year profits were £775m, 23pc higher.

These three developers now build a quarter of all new homes, with the eight largest accounting for over half. Small developers, suppliers of two thirds of new homes in the 1980s now build less than a quarter. It’s hard not to conclude the big housebuilders, who control so much of the land granted planning permission, are deliberately building slowly, to keep prices and profits up. Waiting to build creates a shortage and means their extensive land holdings also rise in value.

The “big developers” have “a stranglehold on supply”, said Communities Secretary Sajid Javid, at last October’s Conservative Party conference. They are “sitting on land banks”, while “delaying build-out”. The House of Lords economic affairs committee has also weighed in, saying the UK housebuilding industry has “all the characteristics of an oligopoly”. These two statements alone, in my view, mean our competition authorities should take a closer look. The UK’s housebuilding giants deny any go-slow, of course.

When the long-anticipated housing White Paper was published in February, some of us were disappointed at the lack of bold measures. While admitting “the UK’s housing market is broken”, there was no mention of a previous pledge to build a million new houses by the end of this Parliament – so, by 2020. That’s probably because, in the words of Paul Cheshire, a professor at the London School of Economics and probably the UK’s top housing academic, there is “more chance of me living on the moon”.

‘It’s hard not to conclude the big builders are deliberately building slowly, to keep prices and profits up’

Since the White Paper was published, though, having followed various behind-the-scenes struggles across Westminster and Whitehall, I’m pleased to report a little-noticed development that may soon help unlock UK housebuilding.

This column has previously called for the creation of powerful Housing Development Corporations (HDCs) – state-initiated bodies that acquire land, grant themselves planning permission, selling on the land in parcels to private developers. The HDCs then use the “planning gain” from the sharp rise in land value to fund new schools, hospitals, roads and so on. If new housing means local public services are significantly enhanced, there would be far fewer objections from existing residents. Variations of this model have been successfully used in countries from Germany and Holland to Singapore and South Korea.
Under existing “New Towns” legislation, national government can set up HDCs – which, crucially, can buy land at “existing use” value. Arable land, for instance, is purchased as arable land, bringing a healthy upside once residential planning is granted – guaranteeing ring-fenced cash for extra local infrastructure. That’s far better than current “Section 106” negotiations, under which powerful housebuilders hold most of the cards and often spend less on local amenities than councils expect.

What’s new and interesting is that an amendment has been made to new housing legislation allowing local government, with central government permission, to set up HDCs. Councils can buy land for a large development, partnering with the private sector if needs be – but, crucially, the planning gain receipts stay at the local level.

Such cash can then be used to build local amenities or even give residents a council tax rebate, which should make housebuilding much more popular.

This could massively empower local government, while finally sparking the housebuilding the UK so desperately needs. “If councils are considering a sizeable development,” says an insider at the Department of Communities and Local Government, “they should give us a call”.

Some insight into why our competitive edge will always be blunt

A couple of weeks ago now, I was in the company of a number of senior people from one of of our major national developers.  We were all at attending a conference and  they were representing the sponsor of that evening’s conference dinner.

it was fast approaching midnight in the bar and the mood was jocular and relaxed with plentry of banter between politicians and developers present, as one might expect.  The conversation turned to the skills shortage and in particular the shortage of bricklayers in their industry.  In another life one of the politicians had been a builder, so was quick to agree with the developers’ complaints about the national apprenticeship scheme used to train brickies.

I won’t bore you with the details of their complaint, but suffice to say, that anything involving the principles of good bricklaying, was totally pointless when it came to training bricklayers, in their collective opinions.  As far as those in the know were concerned, it should only take a couple of months at the most to ‘knock out’ a capable bricky.

On the face of it, many people would sympathise with any employer who objected to paying for staff to be trained to a depth they believed would never be used ‘in anger’ so to speak, which of course is why these developers were complaining about apprenticeships for bricklayers.

However, if the belief that the absolute minimum will do when it comes to skills training, is common across all industries that make or build things in this country, we will always lag behind the rest of the world when it comes to increasing national productivity and therefore competitiveness.

The Germans have a far greater respect for non-academic skills than there has ever been in this country.  A qualified engineer in Germany is given the title Herr Doctor to acknowledge their skill and training for example.  Of course I’m not suggesting that all our young Waynes, Jacks, Jills and Johns should now be trained to the level of Herr Doctor Bricky.

However, if you give a young person a good grounding in their chosen career, then they are more likely to aspire to go further than where they started when they first started work.  There are plenty of 30+, or even 40+ tradesmen and women out there doing exactly what they were doing when they were 20, but could now be doing so much more, had they had the right training at the start of their careers.

Teaching somebody more than just how to lay one brick after another in a straight line, until somebody tells you to stop and go back to the beginning and start again, should be welcomed as an investment in our country’s future, not resented as an annoying delay in building your bottom line at the end of the financial year.

Short-termism infects every area of government and private industry in this country – at least government has the partial excuse of the election cycle for this.  This continues to put us on the back foot when it comes to competing with the competition globally.

Seems I could become one of the last planning committee chairman under this government’s plans

Housing bill amendments branded ‘privatisation of planning’
5 JANUARY, 2016 BY DAVID PAINE

Copied from Local Government Chronicle online
Concerns have been raised that the government is privatising the planning service after it tabled a number of major last-minute changes to the Housing and Planning Bill.

Amendments put forward by the government this morning include plans to let developers choose who processes planning applications.

Also planned are changes to let local authorities set their own planning fees, a new section 106 dispute resolution process, and giving ministers the power to force councils to sell off land.

MPs are due to debate the bill, and 100 pages of proposed amendments, in the House of Commons this afternoon.

New clauses proposed by communities secretary Greg Clark will allow planning applications to be processed by an approved “designated person” if an applicant “so chooses”. While local authorities will still be responsible for the final decision on any planning application, regulations will in due course outline the circumstances under which an external recommendation by a “designated person” will be “binding” on a local authority.
Hugh Ellis, head of policy at the Town & Country Planning Association, called the amendments “extremely controversial”.

“It raises the prospect whereby the advice of a private consultant on a planning application could be more or less binding on a planning committee,” Mr Ellis told LGC. “You don’t have to be a rocket scientist to work out that what’s happening here is a fundamental assault on the public interest objectives of planning.”

A part of the amendments will force local planning authorities to share relevant information, such as the planning history of the land to which an application relates, with the designated person as well as the communities secretary.

Mr Ellis called the amendments “very worrying” and added: “People have talked about the privatisation of planning services and I think that’s probably what this is.”

He added: “I do wonder if people, particularly local councillors, who haven’t got their heads stuck in the Housing and Planning Bill will wake up to a particularly nasty shock over what this legislation has resulted in overall.”

Another government-proposed amendment will let councils locally set planning fees. The District Councils Network has repeatedly called for that, and in a briefing document on the latest amendments the Local Government Association voiced its support.

However, the proposed wording of the legislation gives the communities secretary the power to “prevent the charging of fees that he or she considers excessive”.

Plans to amend the Local Government, Planning and Land Act 1980 and give the communities secretary the power to direct councils, and other public authorities, to dispose of the land they hold were condemned by the LGA.

“Councils are best able to manage locally their assets to meet the needs of communities and are on track to bring forward significant levels of development on their land up to 2020,” it said. “Local authorities should retain the flexibility to manage their own assets.”

Another proposed new clause would give the communities secretary the power to impose “restrictions or conditions on the enforceability” of how many affordable homes, including ‘starter homes’, local authorities want built on a site.

The LGA said that should be for councils to “determine locally”.

The LGA also expressed concern over government plans to introduce a new dispute resolution procedure in relation to section 106 negotiations. The amendments will allow for an appointed individual to oversee disputes.

“Strengthening requirements for the upfront negotiation of S106 agreements would be a more effective means of avoiding delays than offering an alternative route for resolution,” the LGA said.

Timely and welcome support from my fellow ward member

This is the text of a letter submitted by my fellow ward member, councillor Christine Lawton, to our local press.

“I am pleased that something amuses Mr Cronin, although I did not find his unhelpful attitude at the steering group which looked at the possibilities of building a community centre for Wygate at all funny. On the question of delay perhaps he should consider “motes and beams”.   

As to his central question “Why are the residents being restricted to a building?”, the simple answer is that the 106 money from developer was for a community building.  Like my predecessor (before your time Mr Cronin) I too am a simple soul – I believe that a facility which could accommodate such excellent groups as cubs, WI, dancing classes for children, a meeting place for the retired would be in principle a fine idea.  That is why the Wygate community is being surveyed  (by an independent charity) to ascertain the wishes and desires of the local residents.  That sounds pretty democratic to me!

I value team-work and loyalty and wish to associate myself with the efforts of Cllr Gambba-Jones and others in this attempt to discover the appetite for a centre for Wygate residents.  Let the people decide – it works for me.”

I’ve taken the liberty of adding the link to Wikipedia for those, like myself, who are unfamiliar with the parable, or just read the panel below.  I couldn’t have said it better myself – no actually, my education doesn’t stretch that far, so I couldn’t have said it at all; thank heavens for Christine!

South Holland to benefit from working with the big boys?

Clearly, the landscape for local government will continue to be very uncertain, no matter what combination of political parties make up the next government.  Much as I would hope to see certainty and a Conservative majority returned, the British public seem so confused by what’s being offered to them and have such a short memory when it comes to the damage done by Labour whilst in power, that anything could happen.

It’s worth remembering that Labour didn’t just drain the national bank account dry and borrow billions of pounds on our behalf,  they also spent their time in office, unravelling much of what we consider to be the British way of life.  As well as liberalising the gambling industry, that now sees us suffer non-stop bingo, casino and betting adverts on the television, it was Labour that liberalised the licensing laws, leading to the town centre, drink sodden no- go areas, our police have to combat every weekend.

Labour also failed to take up the option of limiting access to the UK, from countries joining the EU, claiming that only 20,000 would come, when in fact 1 million did, and then dismantled our boarder controls, because they would now no longer be needed.  There’s a whole swath of badly drafted, back of a fag-packet policy, dreamt up by Tony Blair and his sofa cabinet, that we are still suffering the consequences of, yet some 30%+ of the British public remain willing to forgive and forget.  Come on Labour supporters, even if you can’t bring yourselves to vote Conservative, don’t let Labour and the two Eds back in so that can screw things up all over again, vote LibDem, or the Greens, they’re both pretty harmless in small numbers.

Copied from Local Government Chronicle online.

Proposal for Peterborough based combined authority 22 April, 2015 | By Mark Smulia

 The leader of the Local Government Association’s Conservative group is backing a proposed combined authority that could stretch across four counties and two unitaries.  Gary Porter is also leader of South Holland DC where the local Conservative party election manifesto said the council would work with “new partners from Peterborough, Cambridge, Leicestershire, Norfolk and Lincolnshire to create a combined authority”.
This would seek to improve local transport, increase economic development and drive regeneration, the proposal added.  Cllr Porter told LGC: “It would not cover all the counties mentioned just the economic area with Peterborough at its centre.  “We’ve had talks among leaders and chief executives are working on ideas to go to a roundtable discussion after the elections, but I can’t say now who would be in and out.”
A South Holland council report last month said that councils potentially interested in a combined authority were Fenland DC, Peterborough City Council, Kings Lynn & West Norfolk BC, Rutland CC and South Kesteven DC and that Boston BC formed part of a ‘functioning economic area’.  Peterborough leader Marco Cereste (Con) told LGC the idea was “most definitely something we’re exploring”.
Chief secretary to the Treasury Danny Alexander has previously mooted a ‘Greater Cambridgeshire’ combined authority including Peterborough and Cambridgeshire CC. The two authorities are currently piloting a scheme allowing them to retain 100% of business rates growth.  Cllr Cereste said he did not see “any conflict between what Gary and I are doing and our work with Cambridgeshire”.  “If that works it could be extended across any new structure that is created,” he added.  “No matter who wins the election local authorities are going to have to look at new things as times will still be difficult.”
But Boston leader Peter Bedford (Con) said: “Boston hopes to end up in whatever arrangement the [Lincolnshire] county council does.”  Asked about the idea promoted by South Holland, he said: “That is Gary’s thinking, but ours is to be with Lincolnshire. We’re 35 miles from Lincoln and from Peterborough and we are a rural area.”
South Holland’s initiative is a further attempt to solve the vexed question of how to create combined authorities in East Anglia.  The council voted last month to join the Greater Cambridgeshire Greater Peterborough Local Enterprise Partnership in addition to its membership of the Greater Lincolnshire LEP.

Kings Lynn & West Norfolk leader Nick Daubeny (Con) last week said he’d spoken “in general terms” to Norfolk councils, Peterborough and Fenland about the combined authority idea, while South Norfolk Council leader John Fuller (Con) predicted councils would “cluster round Norwich, Ipswich, Peterborough and Cambridge”.

Cambridgeshire CC leader Steve Count said: “There are a lot of different ideas around at the moment and its right everyone puts theirs forward and see where we get to.”  Rutland leader Roger Begy (Con) said: “The council like many others is considering a number of possible options.”

Top Tory leaders admit doubts over right-to-buy extension

For all those people who think we dance to the Party’s tune on every issue, below is an article that tells a different story.

I echo Gary’s concerns and fear that the ordinary working class people, that the cities depend on to run it’s services and pander to the needs of the rich and powerful who can afford to buy a home, no matter the price, will soon be banished to locations, not even classed as the suburbs, by this sort of policy.  London will undoubtedly lead the way, with social housing within the M25, often falling foul of the ‘most expensive on the books’ category.

Without stringent controls on these proposed sales, such as a profit claw-back clause, if the house is sold into the private sector with a certain number of years, or changes to the capital gains taxation rules, the only social housing available, will be on remote sink estates, in the back of beyond and populated by people that have no other choice available to them.  Underlying all of this, is the implausible suggestion that the sales will fund their replacement with modern, cheaper housing.  The numbers don’t add up, especially as the proposal is for the government to manage the redistribution.

Copied from Local Government Chronicle online article of 21 April, 2015 

By David Paine

 Two senior Conservative politicians have expressed doubts about their party’s proposal to extend the right-to-buy, as it emerged housing minister Kris Hopkins had previously warned the policy could mean a huge cost to the public purse.  The Conservative manifesto, published last week, said the party would force councils to sell off their most valuable homes to pay for a new right-to-buy for housing association tenants.
However, the proposal was met with widespread opposition with the National Housing Federation claiming it would make it more difficult for housing associations to borrow to build more homes. These concerns appeared to be shared by Mr Hopkins in a letter he sent to Tessa Munt, Liberal Democrat parliamentary candidate for Wells, in October 2013.
In it he said if housing associations were “obliged to consistently sell off their stock at less than market value they might find it difficult to borrow” and added that could “impact adversely” on investment in existing properties and “affect the future provision of affordable housing”.  Mr Hopkins’ letter added the government at the time did not “consider that it would be reasonable to require housing associations to sell these properties at a discount” as extending the scheme could result in “a high liability for the public purse”.
In response, Mr Hopkins said his letter showed “we would look at expanding home ownership through extending right-to-buy” and added his party’s “sensible, affordable” proposal would “ensure that housing associations are compensated”.  The maximum discount under right-to-buy on council properties is £77,900 across England, except in London boroughs where it’s £103,900.
Leader of the Local Government Association Conservative group Gary Porter told LGC he had “not fully bought in to the party’s position” while Kent CC’s leader Paul Carter told LGC he had “some empathy” with housing associations that face losing homes.  Cllr Carter said he was “a great believer in home ownership” but thought the way to “encourage more housing to be built” was to invest in infrastructure, especially transport.
Cllr Porter, leader of South Holland DC, said the right-to-buy was a “great idea and long overdue for homes that were built with public money” but added: “If they weren’t built with public money then they shouldn’t be touched, it shouldn’t apply.”  Catherine Ryder, head of policy at the National Housing Federation, which represents housing associations, told LGC legislation would almost certainly have to be amended or introduced as housing associations are currently exempt from right-to-buy due to their charitable status.
Ms Ryder said extending the right-to-buy could impact on housing associations’ ability to borrow “even if the discounts are funded”. She said: “If you’re selling off your assets the certainty of your income is more difficult to predict so it’s going to be more difficult to borrow money to build new affordable homes.”  She also questioned how quickly high-value properties sold off by councils to fund the scheme would be replaced and where they would be built.
A recent survey by the Local Government Association, Chartered Institute of Housing, and the National Federation of ALMOs found only half or fewer of homes sold under the existing right-to-buy for council homes had been replaced.

As well as firing blanks this time, he’s also got his eyes shut!

 

Independent election candidate, had his eyes closed when he came up with this.

Independent election candidate, had his eyes closed when he came up with this.

Below is the text of a letter I have sent to The Lincs Freepress / Spalding Guardian, in response to an extraordinary letter sent by one of my independent opponents.  You can take a look at what he’s got to say for himself here:  http://www.spaldingtoday.co.uk/news/latest-news/politics-a-community-is-built-by-giving-people-choices-1-6696891

I have to say, I couldn’t buy this sort of publicity, well I could, but the price would be a bit steep and probably break the rules on election expenses!   As mentioned in my previous post about the independents election leaflets, this candidate has a personal axe to grind with me on this issue.

Looking at the impressive list of things he’s inserted himself into within the district, he clearly feels robbed of the opportunity to add management of the Wygate Park community centre to it.  Far be it from me to suggest that he was angling for the job of centre manager, given his current employment status, but there must be more to his anger, than a simple difference of opinion with me.

 

Choice – exactly what’s on the table

In response to the letter about the community survey currently underway in Wygate Park, Spalding.  Clearly, the writer has allowed emotion to cloud his ‘view’ and has failed to read the covering flyer, or even the survey form itself.

Both of these documents refer to ‘a community facility’ not a building, although that is indeed an option.  The documents were drafted and approved by Community Lincs and South Holland District Council respectively, not by me.  As a courtesy, I was supplied with a draft copy of these documents, but I had no involvement in their drafting.  I also supplied maps of the area and lists of roads within a 10 minute walk time of the potential site for any facility.  On behalf of the highly professional officers from both organisations, I believe the writer owes them a public apology, for questioning their integrity, impartiality and professionalism.

Despite his previous profession, the writer continues to ignore the legal framework that made both the land and the financial contribution available in the first place.  A legal agreement, a section 106, was signed between South Holland DC and Allison Homes, the original developer.  Allison Homes agreed to build a community centre, on part of the public open space, adjacent to what is now the Wygate Academy School – nothing else. A new legal agreement would be needed to use the actual money for anything else; something that Kier, the new developer, can choose not to do.

The steering group was formed in the hope that the community would, either agree to seeing the proposed building managed by South Holland Community Church, for and on behalf of the community, or decide to form their own community group, to take on the task.

For various reasons, the first option is now off of the table, in part at least, because of the written hostility of the letter writer in emails he circulated.  I also believe that this aggression played a significant role in reducing the group’s membership.

The second option is still available to anybody, including the writer, wishing to take up the challenge.  The results of the community survey will become valuable evidence for any group when bidding for the additional grant funding, essential to making the project a success.

Finally, if you live in Wygate Park and are one of the 1435 households to receive a survey, please take the time to read it carefully and make up your own mind as to whether, or not a building is the only choice available.

Once you’ve seen for yourself that it isn’t – so there’s no need to spoil your ballot paper on the 7th May  – please do complete the survey and leave it outside your front door for collection on 9th May.  There are also details about how to complete the survey online.

Flyer delivered to 1435 properties by Community Lincs.

Flyer delivered to 1435 properties by Community Lincs.