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.
INTRODUCTION
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.
SUMMARY
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.
PART 1—DIFFICULTIES
WITH THE
GOVERNMENT'S
PROPOSED APPROACH
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.
PART 2 ALTERNATIVE
APPROACHES TO
MEETING SOCIAL
HOUSING NEED
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.
DESIGN AND
LAYOUT
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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