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


Memorandum by the Town and Country Planning Association (TCPA) (AH 73)

1.  INTRODUCTION

The TCPA

  The Town and Country Planning Association (TCPA) welcomes the opportunity to respond to this consultation. The charitable purpose of the TCPA is to improve the art and science of town and country planning. It is the only independent organisation for planning and housing covering the UK and the longest established environmental development charity in the world. Its key objectives are to:

    1.  Secure a decent home for everyone, in a good human-scale environment combining the best features of town and country.

    2.  Empower people and communities to influence decisions that affect them.

    3.  Improve the planning system in accordance with the principles of sustainable development.

  The TCPA campaigns for improvements to the places in which we live and strives for the best in the new communities of the future.

Introductory Comments

  The TCPA strongly supports the provision of more homes to address both need and demand and comments set out below should be seen in this context. It welcomed the Barker Review of Housing Supply and is a founder member of the Campaign for More and Better Homes, a coalition of business, social and, in the TCPA, an environmental development charity, that believes:

    "There is a housing supply crisis which must be tackled by making output more responsive to need and demand. Our objective is to make this a national priority. The agenda set out in the Barker Report is the best opportunity for achieving this and should be implemented in a socially, environmentally and economically viable way that delivers well designed, sustainable communities."

  This mission statement is supported by the coalition partners: Shelter, the TCPA, the Commission for Architecture and the Built Environment, the Joseph Rowntree Foundation, the Confederation of British Industry, Unison and the housebuilders Wilson Bowden and Wimpey. The National Housing Federation also supports the coalition.

  The Select Committee's call for evidence focuses in many ways on the recommendations of the Barker report. While supporting the general thrust of the Barker report the TCPA does not believe in the implementation of its recommendations uncritically. The Association welcomes proposals in the current consultation paper from the Office of the Deputy Prime Minister "Planning for Housing" because they introduce the principle of affordability as a planning consideration. However, planning must maintain proper consideration of economic, social and environmental factors, and any reform should ensure that planning for housing is informed by the market but not driven by it.

2.  RESPONSE TO SPECIFIC QUESTIONS

2.1  The potential benefits of and scope to promote greater homeownership

  The TCPA campaigns for a decent home for everyone and believes that the provision of sufficient housing (through both the private and the public sector) and the widening of access to home ownership are likely to be part of the solution to achieving this aim. Nonetheless it is vital that sufficient affordable housing stock remains available in the context of tenure transfer.

2.2  The extent to which home purchase tackles social and economic inequalities and reduces poverty

  The Government's Homebuy initiative is welcome in that it ensures the retention of equity within housing developments addressing the problem of social housing being lost to the system through right to buy. The TCPA particularly welcomes moves by English Partnerships that provide and will ideally retain ownership of the land in perpetuity—in its hands or in those of a registered social landlord. Wide experience in the development of the New Towns in the past and in the more successful RSL developments today has highlighted the very significant contribution that endowed property can make in terms of generating future income streams for social housing and long term community services. This success is exemplified by the Milton Keynes Parks Trust, which generates income of £2.7 million per year from its endowed property portfolio. The potential for RSLs to increase their development output of affordable homes funded through long term land holdings should be better explored. Also demand in the affordable housing sector needs similar attention to that given to supply by the Baker Review. The TCPA would like to see a "Barker Two" review of access to and provision of affordable housing. The TCPA is also concerned about the possible delays in bringing forward the Homebuy scheme.

2.3  The economic and social impact of current house prices

  The spiralling of house prices further beyond the reach of increasing numbers of people on average incomes is a consequence of a massive mismatch between demand and supply, which along with growing homelessness represents a crisis in the supply of housing in this country. This crisis should be addressed through the provision of significantly more, intelligently built homes in well designed neighbourhoods. This crisis affects local areas within every region of the country. As set out in the TCPA's recent research "Housing the Next Generation" around 175,000 extra households per year will form in England up to 2021. In our report Prof Alan Holmans, Christine Whitehead of the University of Cambridge estimates that in total an extra 200,000-220,000 new homes are needed per year to meet rising demand and to address the backlog caused by demolition and vacancies. (Although a vacancy rate of below 3% to allow for the buying and selling of houses is unlikely to be bettered.)

  The Barker Review recommended that 35,000 affordable homes are needed (as part of the overall provision for England) if the backlog of unmet need for affordable housing is to be addressed along with arising need.

  There is a misconception in some circles that the need for more homes results mainly from an increasing influx of immigrants into the UK and the TCPA therefore commissioned Holmans and Whitehead to investigate this in "Housing the Next Generation" (see Town & Country Planning Oct 2005). The conclusions are striking. Of a projected need for 220,000 homes per year only 18% of this total can be attributed to immigration. Greater longevity (the indigenous population living longer) accounts for 30% and an increase in the number of people reaching adulthood (the remainder of the baby boomer generation reaching maturity) accounts for 11%. Combining these two figures from the report we can see that the biggest single factor in the need for more homes is that there are there are more of us - the settled population—and we are living longer. The greater size and longevity of the settled English population accounts for approximately 41% of the need for more homes.

  A significant impact of current and rising house prices is the 100,000 homeless families that exist in the UK with over 40,000 in London alone according to the London Housing Federation. A range of groups suffer from inadequate housing supply including first time buyers, disabled people and key workers. The Guardian reported on the case of a firefighter commuting to Reading from Wales in order to find an affordable home. John Grooms Housing Association has pointed out that 300,000 disabled people are waiting for wheelchair accessible homes, there is little chance this objective will be met unless plans for wider housing provision are addressed.

  The Select Committee does not ask about the environmental impact of failing to supply enough homes. 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. Improving the quality of the environment through sustainable housing, renewable energy provision, better water and energy efficiency, and more sustainable transport patterns will improve quality of life for communities.

2.4  The relationship between house prices and housing supply

  The relationship between housing supply and house prices is hotly debated but the link indisputably exists. The relationship between the two is not as simple as in completely untrammelled free markets where raw materials are not in such short supply as is land in the housing market. However to deny there is no such linkage between supply and price is to deny a fundamental reality of housing markets. Indeed it is unlikely that house builders would have planned or constrained rates of supply in the past (one of the key concerns expressed in the Barker Interim Report) if oversupply was not likely to depress prices.

  The most significant link between supply and price of new housing is likely to be in specific locations where a major influx of new homes onto a limited local market can affect price. It is sensible therefore for planning to have regard to price and affordability in its deliberations.

  The TCPA believes that it is frankly staggering that house prices and affordability have not been one of the considerations to be taken into account in planning for new housing to date and it welcomes Government moves in this direction. It believes however, that Government should avoid price determination of planning decisions to the exclusion of other factors, such as demand and affordability. Price does not necessarily give the full picture. The relation between incomes and house prices should be considered, as well as local markets, and quality of life. It also supports the maintenance of sustainable development as the key statutory aim of the planning system, which the TCPA successfully lobbied for in its representations on the recent Planning and Compulsory Purchase Act.

2.5  Other factors influencing the affordability of housing for sale including construction methods and fiscal measures

  It is undeniable that construction costs contribute to housing costs. The Government is investing in off site manufacturing and system built housing to speed up and economise in housing production. Whilst welcoming the fact that off site manufacture (OSM) can fulfil a proportion of need in the housing market the TCPA does not believe this solution can be a panacea to the housing crisis. The long term durability and therefore the sustainability of these house types must be in question. Whilst financing models take into account a shorter life span of OSM housing (indeed this is seen as a virtue in meeting changing consumer demands in housing) it is unlikely that the higher energy use associated with the more frequent redevelopment of shorter lifespan house types has been taken into account. There is also a worrying trend of reducing space standards in house types produced for key workers often through OSM. According to the designer Wayne Hemingway internal room sizes have fallen by 14% in recent years and Peabody Housing Trust has been developing homes of 26m2 total area. Since the abolition of minimum room sizes there is a need to ensure that it is not those who have little housing choice that are expected to accept these dwindling standards of amenity.

  Fiscal measures as they currently exist are unlikely to have a significant direct effect on prices since marginal increases in cost are realised in the price paid to the landowner rather than in house prices. The issue of whether or not to introduce a Planning Gain Supplement—a tax measure recommended by Kate Barker—is currently under consideration by Government. The TCPA believes some key criteria need to be fulfilled to make a PGS workable including crucially a link to funding local expenditure and the need for a reasonable rate of taxation (the TCPA suggests this should be limited to 20-25% of land value uplift). There are commentators who suggest the Development Land Tax (abolished in 1986 and replaced with a frequently avoided Capital Gains Tax) placed a drag on the housing supply market because it involved a disincentive on development. However at this time the rate of taxation was 40%. The TCPA believes that through a combination of a lower rate of PGS, a scaling back of Section 106 contributions and through the dedication of the amounts raised (or a proportion of them) to funding local infrastructure, additional housing (both market and affordable) could be brought forward without increases in house prices.

2.6  The scale of the Government's plans to boost housing supply

  The TCPA estimates around 220,000 homes are needed per year to meet need and demand. The Government's Sustainable Communities Plan allowed for an extra 200,000 homes to be built above current plan provision up until 2021. Current plan provision fluctuates widely, the ongoing Examination into the East of England draft plan is hearing evidence from the East of England Assembly which has reversed its support for 478,000 new homes in the region up until 2021 due to a lack of investment in infrastructure. In the Southeast proposed levels of housebuilding in the Assembly's draft plan have been reduced to well below any independent estimate of what is needed. The Government's plans while welcome fall short of the total needed, and even these are unpopular with many local communities and may yet be undermined by this pressure. Government needs to do more to take forward the supply of more homes but equally local authorities and all those involved in the debate about housing and planning (including the TCPA) need to do more to explain the case for more homes at the local level.

2.7  The relative importance of increasing the supply of private housing as opposed to subsidised housing

  The suggestion that subsidised housing can be provided to the exclusion of private housing is short sighted and seriously flawed. The two are inextricably linked—particularly in a society that aims for mixed income communities—and therefore equally important. Failure to provide market housing further reduces the supply available. Since the number of households is increasing (in all regions) further upward pressure is put on prices, thus increasing pressure on affordable housing provision. It is important to maintain a focus on subsidised housing and the TCPA therefore recommends a major Government review of the provision of affordable housing.

2.8  How the planning system should respond to the demand for housing for sale

  The TCPA supports the notion in the Government paper "Planning for Housing" that "Using housing market information and an understanding of housing markets to inform plans does not mean market demand alone determines the level and distribution of housing". However other parts of the paper emphasise the role of the Regional Spatial Strategy (which is owned by the Secretary of State) in determining housing numbers. It needs to be made clear that in these circumstances too price and affordability will be one consideration that will be tested against other social and environmental factors in reaching a decision. One reason to allow for different approaches to be taken in different areas is given by Kate Barker, a member of the TCPA, shortly to be published in the in the Association's Journal (Town & Country Planning November 2005) where she explains:

    "Local authorities around cities in need of urban regeneration will need to contain their new supply in order to avoid damaging the regeneration work. It is partly for these reasons, but also due to the need to plan for infrastructure provision, that the recent consultation puts weight on the sub region for deciding the allocation of housing."

  In this context it is essential that new housing is sustainable. There is no reason why new housing developments, particularly where healthy land values exist, should not display the highest sustainability standards including Eco Homes "excellent" and lifetime homes standards. The TCPA is urging the Examination in the East of England to insist these standards are met, but Government has yet to make such standards mandatory. Energy neutral developments—in which new housing and mixed use developments generate as much energy from renewable sources as they consume—are crucial to tackling Climate Change. The TCPA (having established a coalition across the public and private sectors) has written to Government to request a cross-departmental statement outlining the crucial role that planning should play in tackling climate change.

2.9  The scale of housing development required to influence house prices and the impact of promoting such a programme on the natural and historical environment and infrastructure provision

  The scale of housing needed to influence house prices in a local market may in some circumstances be well within currently planned levels. In Milton Keynes for example major expansion should allow for reasonably priced accommodation to be obtained partly because of the increase in supply. On a national scale the Barker Review set out scenarios (not recommendations) showing the possible affects on house prices of different levels of overall supply. The Review estimated that "zero house price inflation an extra 200,000 extra private sector houses to be built" and qualified the statement about the need for other factors to be considered. The impact of an extra 200,000 homes on the historical environment could be beneficial (giving historic villages a new lease of life with an influx of young economically active people and affordable homes). The impact on the natural environment could also be beneficial depending on how it is carried out (see best practice in Biodiversity By Design published by the TCPA). The TCPA would support the provision of at least an additional 120,000 homes per year. In the unlikely event of this all being concentrated in the Southeast region this would mean using an additional 0.75% of land area of that region. However the Government is likely to continue to face significant opposition to house building plans unless justified concerns about sustainability—namely the impacts of climate change and infrastructure—are addressed. Funding for infrastructure provision is in particular a key obstacle the Government needs to address to make additional provision of almost any level possible.

2.10  The regional disparities in the supply and demand for housing and how they might be tackled

  Regional development needs to be given a higher priority if housing pressures are to be distributed more evenly across the country. It would be a mistake to believe that restricting housing supply in the south will inspire economic growth and investment in the north. The solutions are likely to lie in connectivity of regions more distant from the Southeast of England and in skills and research and development expertise. The TCPA has established an all party Commission of Inquiry "Vision for England's Future" under the chairmanship of Peter Hetherington, Regional Affairs Editor of The Guardian to address these questions.

  In the field of housing in particular it is important to revive housing markets in the Midlands and the North. The TCPA believes the Housing Market Renewal programme is right in of its focus on equity and as a necessary complement to the growth agenda of the wider South East. It will be publishing a policy statement addressing some of the criticisms of the HMR programme shortly.





 
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