Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Third Report

4  Housing Growth and Urban Regeneration

89. Over the last five years there has been a strong policy and development focus on regenerating urban areas. The policy instrument which targeted urban areas was the revised version of PPG3, published in 2000. It said:

"The housing needs of all in the community should be recognised, including those in need of affordable or special housing in both urban and rural areas. To promote more sustainable patterns of development and make better use of previously-developed land, the focus for additional housing should be existing towns and cities. New housing and residential environments should be well designed and should make a significant contribution to promoting urban renaissance and improving the quality of life...

"The Government is committed to promoting more sustainable patterns of development, by:

concentrating most additional housing development within urban areas;

making more efficient use of land by maximising the re-use of previously-developed land and the conversion and re-use of existing buildings;

assessing the capacity of urban areas to accommodate more housing;

adopting a sequential approach to the allocation of land for housing development;

managing the release of housing land, and

reviewing existing allocations of housing land in plans, and planning permissions when they come up for renewal".[69]

In July 2005 the Government published a discussion document, Planning for Housing Provision, that was to provide the basis for a replacement of PPG3 to be called PPS3.[70] This was followed by the publication of draft PPS3 in December 2005. While submissions to our inquiry referred mainly to the Planning for Housing Provision document, we have related their comments where relevant and our recommendations to the proposals in draft PPS3.

90. The fundamental change introduced in draft PPS3 is to make the planning system more responsive to market demand. Draft PPS3 identifies the major challenges facing the planning system as worsening affordability, land supply constraints and providing an adequate response to the housing market. In draft PPS3, the ODPM sets out reforms

"which will require local authorities to take account of affordability and housing market information alongside other factors such as the environment and infrastructure when deciding how many homes to build.

Improve affordability in the housing market by allocating and identifying sufficient land for housing where it's needed. Local authorities will be required to identify a rolling supply of at least five years' worth of developable land for housing, with a further 10 years supply identified for future development".[71]

91. Several of our witnesses raised concerns that the Government's proposals would compromise the role of the planning system as a mediator between a large number of pressures on the physical environment by requiring it to give greater consideration to the needs of the housing market; and could undo much of the good work which has been achieved over the last five years with PPG3 in supporting the regeneration of urban areas and the re-use of brownfield sites. The Royal Town Planning Institute said that it was their belief that

"the Government's plans go too far, and instead of making the planning system responsive to housing markets, we risk making the planning system subservient to housing markets. Housing allocations, as proposed, will follow housing demand, not need…Housing demand is directed by housing aspirations, therefore allowing development to follow demand will place further pressure on areas of existing growth, and will ignore areas of market failure that have a recognised need for new development".[72]

92. The planning system has traditionally played a key role in mediating different pressures on the physical environment. With current proposals, it is expected to give particular weight to market considerations and as a result there is a risk that environmental and social issues may be overlooked. We recommend that PPS3 ensure that economic, environmental and social issues are given equal weight when housing sites are first considered.

93. Bolton at Home suggested that the role of planning was to help regenerate areas where demand is not yet present: "The spatial dimension of housing demand is of immense importance. Planners have a crucial role to play in working with housing in delivering Regional Plans that not only locate present and future demand, but also, help to shape and direct demand away from hotspots so as to contribute to regeneration of areas in decline".[73] The Campaign to Protect Rural England's Director of Policy, Neil Sinden, told us that its concern was that "in making the planning system more responsive to the market, we will lose sight of the long-term strategic objectives of promoting urban renewal and making best use of existing infrastructure".[74] The West Midlands Regional Assembly made similar comments. [75]

94. The proposals for the release of land would reduce the powers of local authorities to target development on urban brownfield sites. PPG3 introduced a sequential approach to the release of land with urban brownfield sites being released first. The future of the sequential approach is not clear. In oral evidence to the Committee's inquiry into the Ministerial Informal on Sustainable Communities, the Deputy Prime Minister assured us that it would remain but it is not included in the draft PPS3, with Councils being required to identify a five year supply of developable housing land, and not allowed to phase the release of sites. [76] Draft PPS3 places emphasis on the use of brownfield sites but it appears to deny local authorities the tools necessary to implement that objective.

95. The Royal Society for the Protection of Birds was critical of the Government's proposals to weaken the sequential approach to prioritising housing sites:

"This policy has made an important contribution to urban renaissance and the protection of greenfield sites around settlements. Although the proposed approach retains elements of the sequential test, its general emphasis is to identify sites which are developable in the short term…greenfield sites are more likely to be developable in the short term, thus leading to a bias in favour of greenfield sites. This effect will be exacerbated by the ability of developers, in high demand areas, to bring any sites in the 5 year land supply forward for development at any time. This approach does not give local authorities and other public agencies the necessary encouragement to tackle the constraints which may exist on previously-developed land and to bring this land forward for development in preference to greenfield sites".[77]

96. The Planning Officers Society warned that the inability of local authorities to phase the release of sites could lead to developers cherry picking easily developable sites:

"There is clearly a risk in the current ODPM thinking that addressing supply side factors out of context could lead to a serious risk of the market losing its focus on brown field sites as it cherry picks longer term phases of later reserve green field sites and responds to demand rather than need".[78]

Friends of the Earth warned that development could be diffuse and poorly coordinated if Councils cannot phase the release of sites:

"Phasing is a vital part of plan, monitor and manage. Where significant growth is intended it is even more important that phasing delivers such development in a rational sustainable way. Public understanding and confidence in the planning system is undermined if the five year supply is effectively a free-for-all. This may result in a whole series of individual local authorities' early releasing land in areas of high demand. There must be a clear view of how this new form of diffuse urban growth will deliver a wider pattern of sustainable development both inside and between high demand regions".[79]

97. The West Midlands Regional Assembly was particularly concerned that the Government's proposals to weaken council powers to prioritise brownfield sites could undermine its initiatives to retain households in urban areas. It is seeking to halt the out migration of households from the conurbation.

"The proposed approach by ODPM is market led with the potential for increased development on Greenfield sites in areas of high demand. The West Midlands Regional Spatial Strategy may be ambitious, but is realistic and there is now good evidence of it beginning to work, e.g. developers increasingly providing more new housing in the Major Urban Areas. West Midlands Regional Assembly fears that ODPM proposals will undermine developer confidence in the growth of the Major Urban Areas and lead to demands for an ever increasing rural residential land release and further out migration to the Shire Counties. This approach would be highly unsustainable and wholly against the principles of the West Midlands RSS".[80]

98. Every year about 80,000 people move out of London. The Greater London Authority is seeking to promote housing development within the urban core to stem the loss of middle income families to surrounding suburban areas and satellite towns. Alan Benson, The Head of Housing and Homelessness, Greater London Authority told us:

"We do not expect to stop all the people that migrate out of London, but we may be able to stop some of those people. One thing you notice is that we have the richest people in the country and poorest people in the country living cheek by jowl in London. What we are losing are those people in the middle - the second, third or fourth income quintiles, who are moving out of London…If we can stem [the loss of] some of those people we would have a sustainable community".[81]

99. We welcome the Government's commitment in draft PPS3 to promote house-building on brownfield sites but we do not consider that as currently drafted it gives Local Authorities the tools necessary to implement this commitment. The sequential approach to prioritising brownfield sites in PPG3 has contributed to the revitalisation of many urban sites, increasing the proportion of housing developments on them. We are very disappointed, despite assurances from the Deputy Prime Minister, that the draft PPS3 appears to abolish this approach. We recommend that draft PPS3 be revised to provide for the retention of the sequential approach.

100. We accept that Local Authorities should ensure an adequate land supply to meet their housing targets: proposals in draft PPS3 to restrict their ability to phase the release of sites could undermine their ability to prioritise brownfield urban sites and allow developers to cherry pick the easier sites. These sites may be on the edge of towns and cities, so promoting urban sprawl and encouraging flight from urban centres. We recommend that draft PPS3 be revised to provide Local Authorities with the power to manage effectively the release of sites.


101. Some of our witnesses argued that the demand-led approach to locating new housing development could undermine urban regeneration objectives and initiatives, particularly in the North and the Midlands, where there are areas of low demand adjacent to cities suffering from excess demand. Agencies in areas suffering from low demand raised concerns that their efforts to rebuild their housing markets would suffer if more housing development was allowed in nearby places with affordability problems because of high demand. The Yorkshire and Humber Housing Forum pointed out that

"There is not enough recognition of low demand markets and how these need to be addressed, e.g. restraint in areas adjacent to low demand markets and support to reengineer urban areas needing to deliver significant land use change due to economic restructuring and functionally redundant social housing provision".[82]

102. Sefton Metropolitan Borough Council, for instance, suggested that by regenerating low demand areas, the pressure can be taken off the areas of Liverpool suffering from high demand. It could also reduce commuting into Liverpool from suburban areas.

"The issue in Sefton and the wider Merseyside sub regional area is more related to the dangers of an excess supply of new housing potentially damaging the urban regeneration of the fragile housing markets in and around the HMRI Pathfinder areas. Hence Sefton (as with Liverpool and Wirral), on the firm advice of Government Office for the North West, has introduced a housing restraint policy to, in major part, ensure that too many houses are not built, thereby supporting the HMRI process in South Sefton and Liverpool and to a lesser extent in Wirral. On the other hand, a lot of people in the North of the Borough commute into Liverpool. If the right housing, retail, leisure, and environmental 'offer' was made available for these people, so that they chose to live in South Sefton, that would reduce pressure on the housing market in the North of Sefton. The important thing here is that regeneration of low grade areas can help rebalance markets".[83]

103. The latest household projections reveal considerable growth not only in the southern regions but also in areas in the North and the Midlands. According to the ODPM, "The projections are higher than previous projections due to higher household growth in the North and the Midlands with 20,000 additional households a year compared to previous forecasts".[84]

104. The Government's proposals to boost house-building in areas with high housing demand could undermine attempts to regenerate nearby areas with low demand, particularly in the Midlands and the North. Many of these areas include under-utilised housing, which, with some improvement, could make a significant contribution to meeting housing demand and to reducing the pressure on those nearby areas with high demand. The evidence of growing demand in the Midlands and the North points to the need for strategic planning to ensure meeting housing demand is managed in such a way as to utilise the spare housing capacity in nearby low demand areas.


105. Responding to housing demand, where it arises, could take households away from major employment centres and cause longer commuting times. As Devon County Council argued

"The use of market information to signal the release of land does not have regard to the wider issues of "balanced" development - in particular the desire to locate housing close to employment and areas of employment potential, in locations where opportunities for sustainable transport can be maximised".[85]

The West Midlands Regional Assembly pointed out that by responding to demand for housing in the shire counties and greenfield sites, households would be encouraged to move away from the major conurbations, which are also the major employment centres.

The Town & Country Planning Association suggests that concentrating new house-building in urban centres can actually improve the quality of life by bringing jobs and housing closing together. It said

"Extended commuting patterns and the high carbon emissions they entail can be drastically reduced by new housing provision. In Milton Keynes the excess of commuting coming into that city (over those commuting out) makes it an excellent location for housing expansion".[86]

106. If new house-building is concentrated in areas of high housing demand on the edges of towns and cities, there is a danger that commuting times will be increased and quality of life will suffer. It is vital that urban sprawl is avoided and, where possible, the new housing is concentrated in existing urban centres offering employment opportunities nearby.


107. There are currently about 680,000 homes standing empty which is about 3% of the overall housing stock. Some of these could be used to help meet the increasing demand for housing. About half of those homes have been empty for more than six months and about 80% are in the private sector. A higher proportion of the empty homes are in the North in areas suffering from low demand, but more than half are in the South with 90,000 homes in both London and the South East.[87]

108. The total number of empty homes has declined over the last five years, but the Government recognises that greater progress could be made. In its Five Year Housing Plan published in January 2005, the Government set a target to reduce the number of long-term empty private properties by 25,000 by 2010.[88] In its response to the Barker report, the Government said it would explore the scope to go further than this. In its response to the Government's response to the Barker report the Empty Homes Agency welcomed the commitment to review the target suggesting that it should be more demanding. It urged the Government

"To develop a more demanding target for bringing long-term empty homes back into use. We would like to see a 50% reduction in the number of homes empty for more than 6 months by 2010 (in practice reducing the long-term number from 300,000 to 150,000) and

To net-off all long-term empty homes brought back into use against the number sought for new build".[89]

109. The Government is giving Local Authorities powers to take over empty dwellings through the 2004 Housing Act. The Act allows Local Authorities to issue empty dwellings management orders on homes which are empty and where the owners have refused any assistance to have them occupied. Local Authorities will then bring the houses back into use. Many of our witnesses welcomed these new powers.

110. Our predecessor Committee's reports on Empty Homes and the Role of Historic Buildings in Urban Regeneration have highlighted a perverse fiscal incentive, which favours new housing development over refurbishment and renovation.[90] Renovation and refurbishment work on existing homes is generally subject to VAT while new-build housing is zero-rated. In the 2001 Budget, the Chancellor introduced lower levels of VAT on works to bring empty homes back into use, with works on homes empty for more than ten years being zero rated, and five per cent being charged on homes empty for more than three years. For property that has been empty for less than three years there is still 17.5% VAT on renovation work.[91]

111. The Royal Institution of Chartered Surveyors said:

"There must be a level playing field between the levels of VAT levied on new build and that levied on repair and refurbishment. A more equitable regime would encourage the use of existing properties and assist in rejuvenating existing urban areas. It would also encourage the better maintenance of the existing stock, provide less of an incentive for the black economy and support the broader objective of maximizing the use of brownfield land".[92]

112. The Government's target to reduce the number of long-term empty private properties by 25,000 by 2010 is insufficient. We recommend that it should set a more ambitious target of a 50% reduction in the number of homes empty for more than 6 months by 2010.

113. The Government has gone some way to reduce the VAT on refurbishment and renovation to promote the reuse of empty homes and to redress the preference given to new housing. It should now consider reducing the VAT on all empty properties to five per cent.


114. Some rural areas are suffering from severe housing affordability problems and a shortage of affordable homes as a result of inward migration from elsewhere in the UK, an increasing number of second homes and low local incomes. The stock of social housing has been depleted as a result of right to buy more than in urban areas. They also have a disproportionately high number of elderly people. There are high levels of homelessness among young people who cannot afford the high property prices.

115. As a result of these factors, the provision of affordable housing within rural areas is a source of particular concern. According to the Commission for Rural Communities, the proportion of social rented housing in rural areas is lower than that in urban areas: "Overall in rural areas public sector housing continues to comprise a smaller proportion of overall housing stock…13.4% compared to 22.4".[93] The Commission suggests that the loss of Local Authority Housing Grant cut off an important source of funding for social rented housing. In terms of private housing for sale, it said that the scale of increase in the supply of housing for sale is unlikely to have any impact on affordability. "The modest scale of new development envisaged for rural towns and villages to meet environmental and design criteria is unlikely to have a strong impact on local house prices by itself".[94]

116. Devon County Council illustrated the way in which planning policy supports urban areas but does not give sufficient regard to the needs of rural areas.

"National policy preferences for urban concentration underplay the realities of life in rural counties where the need for affordable housing is high, yet the application of national policy through Regional Spatial Strategy restricts greenfield supply. Many of the rural households requiring affordable housing are already living and working in the countryside and are essential to the social and economic fabric of their communities".[95]

117. The Government's Rural Housing Commission looked at the housing needs of rural areas in greater detail and published its report towards the end of our inquiry.

118. The level of demand for private housing in some rural areas fuelled by migration from elsewhere in the UK and the desire for second homes exceeds the potential supply to the extent that any increase in house-building would be unlikely to affect affordability. The provision of social rented and affordable housing is therefore particularly important in these areas. We recommend that the Government increases its allocation to the Housing Corporation for rural areas.

119. Government housing and planning policies must be flexible enough to allow new housing to take place in smaller settlements to support their regeneration and to enable them to support a wider range of services. We endorse the objectives of the report by the Government's Rural Housing Commission and urge the Government to consider its recommendations seriously.

The design and maintenance of the new housing

120. It is important that the new homes are well-designed, mortgageable and easily maintained. To streamline the construction of new housing the Government is encouraging the use of modern methods of construction (MMC), which involve producing many of the components off-site on a production line, thus reducing activity on-site mainly to assembly. The Government underlined the advantages of MMC also in terms of achieving higher quality products and environmental efficiency. About 40% of the Housing Corporation's development programme uses this system of building.

121. Some of our evidence recalled the mistakes made when prefabrication was last widely used in the 1960s, raising issues about the design quality, durability and ease and costs of maintenance. Bolton at Home said that

"The need to use modern innovative construction methods to produce housing at a price between £60,000 and £70,000 is both admirable and pertinent. The danger to be avoided is to produce housing without a reasonable shelf-life. One salutary lesson from the 60s is that cheap dense low cost housing may solve an immediate problem but without tough quality control during construction and a consideration of impact of infrastructure it can become obsolete very soon. This is evidenced by the demolition of so many 'modern' high rise and deck access property. Perhaps the solution is to look at providing housing that may be low cost but has the potential for growth, flexibility, and continued development along the lines of a lifetime home".[96]

122. To achieve the advantages of mass production, the components have to be standardised. This standardisation can constrain design. Paul Pedley, Executive Deputy Chairman of the construction company Redrow, told us that

"The social rented sector is probably one of the most advantageous places to use [MMC] because the Registered Social Landlords generally have a standardised form of housing. Therefore you can use it… It is more expensive than using brick and block. …The only way you can make it work commercially is to have a fairly high volume going through which means you need the planning system to limit their comments to elevational treatment, not looking at the fabric of the house. Once they get to the fabric of the house, if you are changing the dimensions, you have to go through the whole process again of re-engineering the house. That just means it is totally cost disadvantageous to us to do".[97]

123. An early review by the Commission for Architecture and the Built Environment of housing schemes funded by the Housing Corporation using MMC concluded that

"Although some were satisfactory, none of the schemes reviewed exhibited outstanding design quality. Performance standards likewise were generally not exceptional… There are substantial risks for all those involved in pioneering construction techniques. These inhibit take up and hence reduce the potential for improvements to be developed".[98]

124. Concerns about the build quality achieved with MMC were raised by the Council of Mortgage Lenders (CML), who referred particularly to previous experiences of prefabrication:

"Lenders are supportive of moves to create conditions in which innovation can thrive but are conscious that past generations of innovative housing construction have not always produced happy results. Much pre and post war prefabricated housing has been characterised by long-term defects and there appears to be some connection between the use of such techniques and low demand. Lenders have a long-term interest in property that has to stand as security for a mortgage of up to 35 years term".[99]

Peter Williams, the CML's Deputy Director General, said that a certification standard for modern methods of construction was being developed with the Building Research Establishment, known as LPS 2020, to guarantee the build-quality which, he urged, should be widely adopted:

"We are waiting for the publication of LPS 2020, which will be the new certification standard for modern methods of construction. We would like to see ODPM and the Housing Corporation embrace that fully in a way that they have yet to do…In the absence of that standard, the risk is that we will be getting people into new homes which then have no long-term life and our concern is that, if we are not careful, we will repeat past mistakes".[100]

125. The Report from the Committee in the last Parliament on the role and effectiveness of the Housing Corporation, published in June 2004, also highlighted the need for such a standard.[101]

126. The experience of previous house-building programmes using prefabrication demonstrates the potential problems of poor design and the major maintenance problems which can arise. We agree that MMC has some benefits, but it is important that design considerations are not again compromised. We recommend that the Commission for Architecture and the Built Environment monitor closely the design quality of homes emerging under the Housing Corporation's new programme.

127. It is important that both house buyers and house builders are confident that their new homes are mortgageable. We recommend that the Government make the building standard LPS 2020 a requirement for all homes built using off-site manufacturing.

69   PPG3 Housing, ODPM, 2000, paras 1& 21. Back

70   Planning for Housing Provision Consultation Paper, ODPM, July 2005. Back

71   FACTSHEET 3: Planning Draft Planning Policy Statement 3: Housing. Back

72   Ev 349 Back

73   Ev 145 Back

74   Q 253 Back

75   Ev 239 Back

76   Oral evidence taken before the ODPM Committee on 7 February 2006, HC (2005-06) 702, Q 18. Back

77   Ev 237 Back

78   Ev 203 Back

79   Ev 353 Back

80   Ev 239 Back

81   Q 403 Back

82   Ev 319 Back

83   Ev 116 Back

84   More single households and growth in the Midlands and North increase housing demand, ODPM News Release 2006/0044, 14 March 2006.


85   Ev 175 Back

86   Ev 313 Back

87   See Empty Homes Agency website Back

88   Sustainable Communities: Homes for All - A Five Year Plan from the ODPM, ODPM, January 2005. Back

89   Empty Homes Agency statement Barker Response - a good start on Empty Homes, 7 December 2005. Back

90   ODPM Committee, Eighth Report of Session 2004-05, Empty Homes and Low-Demand Pathfinders, HC 295; ODPM Committee, Eleventh Report of Session 2003-04, The Role of Historic Buildings in Urban Regeneration, HC 47. Back

91   VAT Notice 708, HM Revenue and Customs, July 2002. Back

92   Ev 218 Back

93   Ev 393 Back

94   Ev 394 Back

95   Ev 177 Back

96   Ev 144 Back

97   Q 146 Back

98   CABE Design and Modern Methods of Construction Review, June 2004, page 15. Back

99   Ev 187 Back

100   Q 53 Back

101   ODPM Committee, Eighth Report of Session 2003-04, The Role and Effectiveness of the Housing Corporation, HC 401. Back

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