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

Memorandum by Friends of the Earth (AH 84)

  Friends of the Earth England, Wales and Northern Ireland welcomes the opportunity to provide evidence to the Committee's inquiry into the affordability and supply of housing. Friends of the Earth is an NGO with 100,000 supporters and local campaigning groups in 200 communities. We are also a member of Friends of the Earth International, which has member groups in 57 different countries. Friends of the Earth has worked on planning and housing for over 25 years, and we are convinced that the land use planning system is a key mechanism for delivering sustainable development.


  This memorandum Friends of the Earth does not attempt to answer all the questions raised in the Committee's press notice, but focuses primarily on the implications of ODPM's recent policy announcements on housing policy—in particular the July 2005 consultation paper "Planning for Housing Provision" and on the Government's intention to place price mechanisms at the heart of planning decision-making, as a purported means to tackle affordability.

  The response sets out the consequences this approach would have for the effective delivery of social housing, sustainable patterns of development and public participation. This analysis is informed by a scoping paper written by Professor Ian Cole based in the Centre for Regional Economic and Social Research at Sheffield Hallam University. His paper, is attached as Appendix 1. We also offer an outline of some alternative policy solutions.

  Finally, housing policy will be essential for delivery of the Government's targets on climate change—particularly in terms of standards and targets for energy efficiency and micro-renewables. This is currently a major omission in current Government housing policy and Friends of the Earth would welcome the opportunity to provide the Committee detailed evidence at an appropriate time.


  Friends of the Earth believes that current Government policy on housing provision is a major obstacle in achieving sustainable development in the UK, conflicting with the Government's own stated aims in its 2005 UK Sustainable Development Strategy1.

  Existing policy, exemplified by the Sustainable Communities Plan2, the Barker Report and the recent Consultation paper "Planning for Housing Provision" is essentially a reflection of a market-driven conception of how to meet housing needs in England.

  This model assumes that increasing supply is the prime means for tackling affordability, and that releasing more land in areas of high prices is the prime means for increasing this supply, in effect making house prices the key arbiter of the amount and location of new homes. While this objective appears to offer a simple "fix" to the current undoubted shortages in social housing provision, it ignores a whole series of fundamental policy issues. As a result, in practice this approach will not be effective in tackling affordability, and will also result in a series on unwanted consequences, particularly concerning exacerbation of inequalities and environmental impacts, and the erosion of public participation in decision-making.

  Friends of the Earth remains deeply concerned at this direction for the Government's housing and planning policy because:

    —  Increased housing supply through private sector provision will at best stabilise house-price inflation in the owner-occupation sector. This in itself will do nothing for those in greatest social housing need.

    —  Government is predominantly focussing on supply-side measures, with inadequate emphasis on demand-side pressures for housing such as the unsustainable focus of economic growth in limited geographic areas for example the south-east of England.

    —  The over-emphasis on market mechanisms to determine the location of housing and to deliver increased supply will focus growth-on-growth, strongly exacerbating regional inequalities, environmental impacts, and compromise the aims of the Government's Communities Plan.

    —  There is little or no strategic consideration in Government planning of how meeting market-demand can be integrated with important issues such as environmental limits or the provision of adequate social and economic infrastructure.

    —  Government policy has accepted uncritically that the planning system is a supply-side constraint. The evidence for this is weak and underplays the importance of planning in delivering democratic and sustainable outcomes. Government policy should increasingly focus on the private sector's inability to increase housing supply on the permissions it already holds.

  Housing provision cannot be properly addressed without a national spatial strategy which deals with both demand and supply side issues and can integrate these fully be social need to environmental limits to deliver sustainable future. Ultimately Government should recognise that the failure to deliver for those in greatest social housing need is directly related to the inadequate investment in direct provision through the public sector and particularly the failure to reinvest to counter the negative effects of right-to-buy.

  The rest of this memorandum sets out more detailed arguments for the above points.


The Role of Market Information in Decision Making

  1.1  The Government has laid out its policy approach to the increase supply of housing in the consultation paper "Planning for Housing Provision". This paper makes clear that "plans should use market information, in particular prices in determining the level and distribution of housing provision" (Box 2.2). Friends of the Earth believes this a radical and regressive policy development which places crude market indicators at the heart of decision making.

  1.2  Sustainable Development, as PPS 1 makes clear, is the fundamental objective of the planning system and must underpin housing policy and be reflected fully in the forthcoming draft PPS3. In line with the new Sustainable Development Strategy (SDS2005), this means that economic, social and environmental objectives should be integrated. SDS 2005 is very clear that "integration" is essential, and that integration is different to "trading-off" or "balancing" of the different objectives. This recognition should be made more explicit in PPS3 by, at the least, replacing "reconcile" with "integrate" whenever Sustainability Appraisal is mentioned.

  1.3  We understand that the detail of how market information will be used to determine housing numbers will be left to a later consultation. However, the principles by which this is done materially affect the conduct of strategic and local planning decisions. It is clear (paragraph 2.2) that ODPM consider market information; "in particular price" should be a critical element in determining housing numbers, alongside other factors. This elevates price to the status of a sustainability objective. There are two problems with this.

  1.4  First, the social objective for sustainable development is around securing housing need for everyone. House prices are a very poor proxy indicator for this. Even slightly more sophisticated price indicators—ratios of, for example, lowest quartile income to lowest quartile house prices—are poor indicators, because, for example:

    —  Affecting this ratio does not in any way guarantee that people in housing need will be able to buy these houses—low price houses are open to all to buy—speculators as well as people in housing need.

    —  This ratio only deals with the owner-occupation tenure.

    —  Housing is not an "ordinary" commodity and does not behave in a simple rational way. As Professor Cole points out "it is geographically fixed; it is a long-term asset; it is very expensive—requiring a complicated financial and legal machinery to assist consumption, though an array of mortgages, rents and public subsidies—and housing is a positional good, connoting social status as the more tangible physical attributes. What is seen as `desirable' in housing market cannot be reduced to a series of measurable components—the `externalities' weigh heavy" (See Appendix 1)

  1.5  Second, the means of tackling whatever price indicator is chosen has already been deemed to be increasing housing numbers. However, if the policy objective is some target around price, then the mechanism of increasing housing numbers is almost certainly not the most efficient nor only means of meeting it. First, increasing housing numbers is not likely to be effective in its own right:

    —  There is no guarantee that the houses built be affordable, or in the "lowest quartile".

    —  Supply-demand is not simple for housing—building more houses in an area can make the overall house price go up.

  1.6  Perhaps more importantly though, there are many more policy mechanisms which could and should be used to meet housing objectives, not just building more houses. These include:

    —  Setting a higher percentage of affordable homes in any development.

    —  Lowering the size-threshold below which developers must build affordable homes.

    —  Tackling the incentives which are fuelling the growth of second homes (eg council tax rebates and the proposed SIPPS revisions).

    —  Tackling demand side issues. For example relocating jobs from higher to lower demand for housing areas.

  1.7  The above mechanisms and the more detailed proposal in Part 2 of this memorandum, all need to be considered to achieve the optimal policy outcome. The relative use of each of these mechanisms would all affect the total numbers of housing provision needed to meet any affordability target. In addition the use of policies to improve the social rented and private rented sectors also need to be considered to ensure that measures to tackle housing need do not just focus on the owner-occupation sector.

  1.8  As a result, market information—because it is a poor proxy for the social objectives of housing—should not be elevated to the position of a sustainability objective, and also housing provision should not be seen as the prime means of meeting a market-information based indicator or target.

  1.9  This is not to deny the importance of market based information, as one part of the information on housing need—but in order for the Government to meet its sustainable development objectives housing policy needs to be clear about the extent of the role this information can usefully play at the regional level. The consultation paper is not clear as to whether price is a determinative or advisory factor in decision-making. This tension is revealed in a different expression of the language in Box 2.2 of the consultation as opposed to paragraph 6 immediately following.

  1.10  Finally, to deliver on all three elements of sustainable development—economic, social and environmental—requires that these aims are integrated at the beginning, rather than having a policy focus on one element and treating the other two as bolt-ons which are to a greater or lesser extent traded-off against the supposed "main" objective. The primary focus here on increasing supply neglects major side-effects on inequalities (further growth in the strongest economic regions) and the environment (more housing where there are greatest environmental pressures) and is a prime example of failing to integrate at the start of the policy making process.

Local Implementation

  1.11  There are a number of important concerns about how local authorities will respond to market information. The consultation paper recommends that regions will establish three kinds of housing market, although it's not clear how this will be determined. Those local authorities that sit within a high demand housing market will have a major role in responding to affordability issues. They will be required to gather information about local housing markets. They will be required to have a supply of at least five years of land available for immediate development at any one time and identify a further 10 years worth of supply. They will be required (Page 19) to bring forward land from future provision if market information indicates higher than expected demand.

  1.12  This represents a second tier of market sensitivity which may require the bringing forward of land in areas of high demand and at much faster rates than either the RSS or adopted Local Development Framework expected and prescribed. This raises a whole series of difficulties not just in terms of the role of price as discussed above but also of the practicality of identifying sustainable locations in areas where marketing information indicates that large-scale growth should take place.

  1.13  Many local authorities in areas of high demand are already struggling to find new housing land in sustainable locations which don't impact on existing protective designations. Careful consideration is needed for how these areas will meet the requirements of five years of developable land being available at any one time. Some of these areas will not be able to continually meet the requirements of allocating ever more housing land in what is essentially an open-ended market sensitive system. We are concerned that these new pressures will lead to the Government relaxing its key environmental target to develop 60% of new housing on brown field sites.

  1.14  We do not support the proposal that developers should be allowed to bring forward any site in the five year supply in high demand areas. 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 of the planning system is undermined if the five year supply is effectively a free-for-all. While an indicative view of a further 10 year supply of housing land is desirable this must also be carefully phased so that its release delivers the most sustainable outcomes in terms of location and infrastructure provision.

  1.15  We remain uncertain as to how the local tier of market sensitivity will interact with regional forecasts. For example, we know that at the time of adoption the LDF must deliver five years of housing land to meet the requirements of the RSS forecast. In areas of high demand the early release mechanism will mean an increase in the amount of housing land and housing numbers in the five-year local supply number. Will local authorities be required to maintain five year supply at the RSS forecast level or at the new level prescribed by local market information? This is fundamental since a whole series of high demand local authorities all increasing their 5 year supply will not only create all the principal problems discussed in our response but will also begin to override the regional forecasting mechanism and most importantly the strategic role of the RSS. This view of the "tail wagging the dog' distracts from the role of strategic planning and compromises the effectiveness of RSS in dealing with the social and environmental implications of new housing supply through the provisions of the SEA directive. Indeed growth will happen, at least until the RSS "catches up" through a partial review, beyond that analysed in the RSS SEA. This in itself raises interesting legal questions.

Public Participation

  1.16  "Planning for Housing Provision" suggests (page 19) that the early release of land will be achieved not by reviewing the LDF but by means of supplementary planning documents (SPDs). This proposal is wholly unacceptable and unworkable and contrary to existing policy on public participation in both PPS 1 (ODPM 2005) and "Public involvement in planning: the Governments Objectives" (ODPM 2004). It is already the case that planning for housing provision is the most centralised aspect of the planning process. Housing figures established at the regional level are enshrined in the RSS. There is no right to be heard for the public in the adoption of these documents despite the fact that they are legally binding plans and that they impose housing figure son local authorities. The LDF process offers a number of participative standards which act as important safeguards to communities. SPDs do not contain such safe guards. There is no public inquiry and consequently no right for public to be heard by a planning inspector.

  1.17  To be effective LDF must allocate housing sites and indicate the phasing of those sites in a clear and transparent way (this is vital if SEA and SA are to be meaningful). Changing the phasing can only be fairly and sustainably achieved by a proper review of the plan which can consider the spatial consequences of faster development rates and ensure public participation and therefore the legitimacy of decisions.

The Spatial Consequences of the New Housing Supply Methodology

  1.18  The introduction of market mechanisms into planning for housing has two significant spatial consequences, the first relates to the behaviour of individual local authorities and the second to the wider macro implications for national regional inequalities.

a.   Localised spatial consequences

  1.19 The rationale of the Government's Communities Plan was to focus growth in those areas best able to be serviced with sustainable infrastructure. It was intended as a focused spatial policy in response to growth in the South East of England. The consequence of the current recommendations will produce precisely the opposite effect. As well as the growth provided for in the Communities Plan, regional and local planning authorities in the south-east will be required to meet their affordability targets implying significant growth beyond the identified growth areas. The requirement for those local authorities in high demand areas to early release land identified in LDF's will for reasons discussed above in paragraph 1.15 exacerbate this trend. 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. Ultimately, the proposals need to be carefully considered in relation to its impact on overall regional inequalities.

b.   National Spatial consequences

  1.20  The Government has accepted the fundamental premise of the Barker Report that to stabilise housing markets, increased housing provision should be made in areas of high demand. This would have huge and obvious implications for regional inequalities by concentrating unlimited growth in a limited geographic area to the detriment of all other regions and nations of the UK. Paragraph 1.54 of the Barker report explicitly acknowledges that some areas will decline and that "this might mean taking a much more active approach to demolitions and clearing stock that is no longer required." The social cost of such extreme free market urban policy would, particularly in areas already defined by poverty and racial tension, be incalculable.

  1.21  The report's implicit endorsement of the "golden arc" Treasury model is a profound barrier to the sustainable development of the United Kingdom because focusing growth-on-growth will exacerbate inequalities between regions and increase environmental impacts in the areas which are facing the greatest environmental stresses.


  2.1  Friends of the Earth recognises that the environment sector has not always fully and responsibly engaged in the policy debate on housing needs. Friends of the Earth accepts that housing poverty reflected through homelessness and poor conditions is a major contributor to social exclusion. The level of poor housing conditions for children and the elderly are of particular concern. We also recognise that demographics and particularly the growth in household formation has created a demand for new homes and new kinds of homes. We do not accept, however, that "predict and provide" in relation to new-build provides an effective or sustainable solution to these problems. We also strongly reject the assumption that increased housing provision will tackle house-price inflation. In order to achieve a lowering of house prices through market mechanisms it would be necessary to generate an oversupply of housing, which would breach the principles of sustainable development.

  2.2  Friends of the Earth's view is that there is an overwhelming social justice case for meeting the demand for social housing in every region in the most efficient manner possible. In practice this means moving away from a model based on the private sector provision of affordable homes through mechanisms such as planning obligations (essentially a form of cross-subsidy, so that higher value housing can subsidise low cost units). This is inefficient in terms of land use and has not always ensured the right tenure choice. Instead radical reform of the funding and delivery of social housing is necessary which recognises that it is a lack of public investment not the planning system which is the prime cause of the social housing crisis. This reform should be based on three principles:

    —  Significant increases in central Government funding to provide for the direct delivery of social housing.

    —  A return to the direct delivery of housing by local authorities.

    —  Decentralised participative governance of housing management.

  2.3  Direct public sector provision allows for the efficient use of land and the greatest integration of housing provision with the planning process. Public sector control allows the rate of housing unit production and the quality of design to be effectively delivered.


  2.4  Friends of the Earth is extremely concerned by the Government policy on design and layout. Specifically we believe the Communities Plan approach to the implementation of sustainable housing is a major impediment to sustainable development by failing to provide sufficient regulation and incentives to affect the radical changes we need to make in housing design, particularly regarding climate change. A clear illustration of how the Government regards the implementation of sustainable housing standards can be gained from the recent publication3 of proposals for a Code for Sustainable Building (CSB) which contains a range of excellent proposals on energy efficiency, floods resilience and water conservation. Unfortunately this code only has the status of best practice. This exemplifies the clear gulf between the available technology and design proposals (exemplified in the detailed work of WWF "One million sustainable homes"4) and the Government's unwillingness to identify effective delivery mechanisms.

2.5  The solution to this problem is:

    —  Provide a greater degree of prescription in building regulations to ensure new build and conversions enshrine proven resource conservation technology including small-scale renewable technology and meet the Eco homes excellent standard.

    —  Provide much greater prescription in a new PPS 3 on housing in relation to master planning and the layout and service provision of new housing.

    —  Provide greater integration between the Environment Agency and planning authorities in relation to future flood risk and sea-level rise in order to provide strategic guidance based on best available modelling from the Met office.

    —  Specify in PPS 115 a C02 reduction target for the delivery of new housing to be enshrined in Regional Spatial Strategy.

    —  Increased investment for the retrofit of existing houses with energy conservation technology.

    —  Underpin the new drive for sustainable housing by enshrining the above objectives in a new Public Service Agreement (PSA) target for ODPM.

  2.6  There is no doubt that such development will add cost to the delivery of new housing units. However, such upfront capital cost will result in long-term savings particularly in energy costs for users. Such savings will disproportionately benefit those on low and fixed incomes who spend a higher proportion of their income on energy. In the wider context, the contribution of sustainable housing to reducing the negative impacts of climate change is likely to be significant (These costs have been assessed in the recent DEFRA report6).

A National Spatial Framework for Housing

  2.7  There is, in our view, a manifest need for a layer of strategic spatial planning which allows us to deal effectively with regional development inequalities in a comprehensive and long-term way. This National Spatial Framework (NSF) is the vital missing link in building effective strategic implementation of sustainable development in England and the UK, and would address issues of over-development of the South-East, housing abandonment, quality-of-life and negative inter-regional competition.

  2.8  This NSF should have the prime objective of redistributing demand pressures from areas of growth in the South-East to areas of low demand in the North and West. Such a policy should also address the need to deal with the drivers of housing demand by restricting and decentralising public and private sector commercial growth from South to North. This policy should achieve the systematic redistribution of population and industry to areas of low demand. Failure to deal with this issue strategically will lead to the continued decline of some communities and to the overcrowding of others, with all the attendant political controversy and reduction of quality-of-life.

  2.9  The recent publication of census data reinforces the decline of regions such as the North East and North West while areas such as Milton Keynes have seen growth of around 60% in the last 20 years. Government must address the need to deal with the vacuum in policy left after the abandonment of comprehensive regional redistribution policies in the early 1980s. Friends of the Earth believes that housing policy should no longer attempt to meet general demand in all regions. While social housing needs must be delivered everywhere, the continued expansion of housing in the South East is not sustainable in the medium and longer term.

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