5 Housing
Housing targets
82. A primary driver for the abolition of RSSs is
the Government's view of housing targets. The Government believes
that much of the resistance to house building around the country
has derived from the imposition of targets through regional plans,
but that if authorities were left to take responsible decisions
for themselves, they would choose to build more houses than have
been built in the recent past. DCLG claimed:
Our proposals will stimulate housing development.
By abolishing Regional Strategies local planning authorities will
be able to work with communities to see their vision for development
realised. A key element of this will be decisions about housing
and planning policy, including housing numbers and the pattern
of development, which should rightly be taken locally.[98]
83. The DCLG also argued that housing targets were
"all stick and no carrot. They were an ineffective incentive
for housing delivery."[99]
The Minister for Housing, Rt Hon Grant Shapps MP, told us in an
oral evidence session in September last year on the priorities
for the work of the Department that one of the measures of its
success will be whether more houses will be built annually in
future than were built immediately before the recession:
Building more homes is the gold standard upon which
we shall be judged. The idea is to get a system which delivers
housing in this country.[100]
84. The Government's approach to achieving this aim
is based on the principles of localism. Its intention is to ensure
that local communities are more involved in the planning process,
and it has taken steps to introduce "neighbourhood planning"
and a "community right to build", as well as the "New
Homes Bonus", on which we comment further below.[101]
The Government hopes that local authorities, freed from the imposition
of RSSs and the associated regional targets, will (in partnership
with their communities) be responsive to local needs and provide
more houses in future.
85. However, the tension between local choice and
national need cannot merely be wished away. There is a balance
to be struck between housing targets set at a national or regional
level, which are seen as being imposed against the wishes of local
people, and leaving it to local communities to decide, which can
lead to house building proposals being repeatedly blocked.
86. That tension was nicely summed up in the evidence
of Councillor Jeremy Heron, from Ringwood Town Council. On the
one hand, he was convinced that:
[...] the regional spatial strategy was simply too
far removed from the community. It was covering a vast area, trying
to be all things to everyone and, as such, representation that
was made to the RSS quite often got lost in the noise of everything
else that was going on, and if yours wasn't a big regional issue,
it failed to be identified and noticed.[102]
However, he went on to list numerous examples where
local planning applications met with objections and had no support,
highlighting the dilemma which elected representatives face:
So, if you leave it locally, everyone is very aware
there is a housing need in the area, but they do not want it if
it takes out the field that they've looked over for the past five
years. So, if you leave it to a simple local decision and local
planning, it will end up in a hiatus, because, as elected representatives,
your job is to support them. You know that these people will remove
you if you don't support that view.[103]
87. John Acres, of developers Catesby, suggested
that this tension could only be addressed by making people more
aware of the positive side of new housing development:
I quite understand that people do not want building
close to them if they feel it will be detrimental, but I think
it is important that people should understand the bigger picture.
They should understand the wider planning advantages of housing
and that housing is not necessarily detrimental. It is not about
putting more pressure on schools or services; it is about making
those services work more efficiently so that more children going
into a school means that that school gets more resources, or more
people shopping at the local supermarket or whatever brings more
business to that community, making it a wider and more interactive
community, and allowing people to move from one place to another.[104]
88. Roy Donson, from Barratt Development, made a
similar point, arguing that it is the responsibility of Government
to change the negative public perception of house building:
Clearly, what has to happen to make communities more
in favour of housing is a cultural change, which starts with these
sorts of issues. That cultural change can come only from the Government
essentially; it has to come from that top-down process. It has
to be established that house building is not only necessary for
the benefit of all but is a good thing for the country as a whole
and cohesive for society. We have to establish that as a basic
principle. Having done that, we can then start to turn round the
idea that, for some reason, which completely defeats me, house
building is bad.[105]
TETLOW KING RESEARCH
89. The question to which the Government has assumed
it already has the answer is whether a localised planning system
will be any more successful than regional targets in countering
the negative public perception of house building and increasing
the number of new homes built. So far, the signs are that the
number of new homes coming through the planning system is falling,
and falling significantly. Cameron Watt of the National Housing
Federation (NHF) warned us of "a big fall-off in the delivery
of all homes, including affordable ones", as a result of
the abolition of RSSs. He cited research that the NHF commissioned
from their consultants Tetlow King. Steve Hinsley, senior director
at Tetlow King, told us about the research:
The work we did on behalf of the federation began
shortly after the announcement of Eric Pickles of the intention
to abolish the RSS [
] Our first assessment found 85,000
homes no longer being planned for, rising to 100,000 on 2 September;
early in October, authorities indicated 160,000; and the most
recent assessment we have undertaken is 182,000. I think that
shows not only the scale of the planned losses but also the speed
at which those numbers have fallen away.[106]
90. When the Secretary of State gave evidence, he
rejected the research, saying:
I am sure the Committee doesn't need me to point
out how iffy that evidence was. It was conducted on the basis
of a telephone call in which the person at the other end might
decide on various numbers. No formal decision has been taken by
local authorities. The immensely important thing is that this
was about a theoretical number put together; it was not about
real houses. It was not about real permissions; it was about people
thinking whether they were going to change their numbers. I found
the actual numbers very unconvincing.[107]
91. We invited Tetlow King to respond and it duly
sent in supplementary evidence on 4 January 2011, rebutting the
Secretary of State's claims:
The number of homes no longer being planned since
the Government announced its intention to abolish regional strategies
has now increased to a total of around 201,509. This number has
risen dramatically since our first assessment was carried out
in July 2010; this concluded that 84,530 dwellings were no longer
being planned for.
88% of the estimated 201,509 dwellings derive from
official local authority sources, such as Core Strategy consultation
documents or press releases. Whilst it is true that the remaining
12% do come from unofficial tip offs or estimates, we have been
very cautious in applying such figures. As our research has evolved,
however, it has become evident that some unofficial reductions
from earlier iterations have subsequently been formally confirmed
by local authorities. In every case where this has occurred our
earlier estimates have been proved to be either correct or an
underestimate of the final total reduction. In no instance have
we been shown to have exaggerated the reduction.
The local authorities mentioned in our report have,
for the most part, set out or decided to set out their reduced
housing targets in Core Strategy consultation documents, in preference
to the RSS figures. Despite the lack of any independent testing,
many of the authorities concerned are according these reduced
housing targets full planning policy status and using them as
the basis for calculating current five year land supply requirements.[108]
NATIONAL NEED AND LOCAL DECISION-MAKING
92. Each of the local authorities that has decided
to plan for lower numbers of houses than required under the RSSs
would presumably argue that it is doing so because those lower
numbers will still meet local need. Tetlow King suggests that
in many places that may not be the case. Additionally, however,
decisions made by individual local authorities on housing numbers
for their area may not necessarily add up to the sum total of
housing need across the wider area. The Town and Country Planning
Association explained the consequences as follows:
The removal of [regional spatial strategies] and
the associated abolition of the National Housing Planning Advice
Unit will have a substantial impact on the way housing needs are
forecast and provided for through the planning system. In short,
a nationally organised and regionally and locally expressed housing
regime based on targets has been replaced by exclusively local
consideration of housing needs. 'The Future of Planning Report'
[published by the TCPA in June 2010] concluded that the consequences
of these measures would be a significant 'under provision' of
housing because local housing needs assessments may not adequately
consider international, national and regional housing pressures.[109]
93. The Joseph Rowntree Foundation summarised it
as follows:
There are concerns that housing targets determined
by individual local authorities will not add up to meet the needs
of the country and will not provide the 'right' type of housing
in the 'right' place as the spatial distribution of housing is
crucial.[110]
94. Roger Tym & Partners explain that migration
over local authority boundariesboth urban extensions, where
towns and cities spill over into adjoining districts, and the
so-called "Growth Areas", where demand was being shifted
over longer distances, away from the most congested areas in southern
Englandmakes some form of supra-local planning for housing
need necessary:
[
] in real life very many people do move house
across administrative boundaries or would like to do so. In this
case, extreme localism will not produce the right answer, because
potential migrants into the local area do not have a voice or
a vote in the destination community. Under the old system, regional
planning provided a mechanism (whether effective or not) to represent
the interests of these potential migrants.[111]
95. Star Planning and Development asked the question
that is implicit in the comments of many witnesses on this point:
Without some form of national context or framework
for the provision of new dwellings, how can there be a reasonable
degree of certainty that the housing needs of the country [will]
be met in a co-ordinated manner?[112]
96. The Government's answer to this question is the
same as it is to the other issues of strategic planning which
we considered above: voluntary cooperation between local authorities.[113]
Unfortunately, there is no better evidence that such cooperation
will be effective on the issue of housing than on any other strategic
planning issue: indeed there is, if anything, less. Steve Hinsley
from Tetlow King Planning told us about his pessimistic view of
local authorities working together:
[...]the difficulty is that in the past local authorities
have been expected to work in a loose relationship with each other.
If we look at examples of their coming up with an answer at the
end of the day, it has not worked very well. If we take the example
of Bristol and authorities there, they just do not get on and
there is a hiatus and inertia in going forward. There need to
be some powers.[114]
He went on to discuss the problem of local authorities
looking at the areas beyond their own areas when looking at housing
needs, and taking account of the needs and preferences of adjoining
local authorities:
How do you look at the opportunities in the wider
planning sense and where the housing should go relative to need
and constraints? I think that is the level that needs to be handled
very carefully, because I do not think that to go back to the
old style of district-wide surveys is the answer.[115]
97. As with other areas of strategic planning, witnesses
suggested that binding powers were necessary to ensure effective
cooperation between individual local planning authorities. Cameron
Watt of the National Housing Federation told us:
[
] we think that binding powers are one option
that should be seriously looked at because, obviously, if local
authorities themselves have come together and set out a vision
for the future and made commitments to meet identified housing
needs themselves clearly those commitments must be meaningful.[116]
He went on to emphasise the case for consistency
across local authorities when dealing with housing need, and proposed
that new guidance should be issued centrally "to help local
authorities ensure that they robustly and accurately identify
housing need":
[
] I think that process should be as consistent
as possible across the country so it is right therefore for local
authorities, having identified need on their own patches, to come
together [
] and have a meaningful conversation, and also
for individuals to hold their local authorities to account on
whether they are accurately identifying housing need and planning
to meet it.[117]
These comments were made in the context of Local
Enterprise Partnerships. We have already concluded that LEPs are
not themselves a suitable vehicle for strategic planning, but
that does not diminish the need for local authorities to come
together to undertake this function.
98. Finally, he raised the issue of planning inspectors
having the power to check whether local authorities' housing figures
are accurate:
I think it is vital that when local authorities identify
housing need at a local level, by whatever means, inspectors should
be able to continue to check the new local plans that they have
developed to see whether the needs that those local authorities
have themselves identified are credible and the numbers are adequate;
otherwise, some authorities may abuse their new freedoms and revise
their housing numbers significantly downwards even though there
is significant unmet need at local level.[118]
99. Meanwhile, Kay Boycott from Shelter raised the
issue of democratic accountability if houses are not built and
where responsibility for any shortfall in housing needs rests:
What we look for is the ability to hold people accountable.
What worries us is: is part going to the LEP, is part going to
local authorities, is part going to sit with the national plan?
What about county councils and parish councils? Where is the point
at which we can hold local politicians to account for the delivery
of affordable homes? In a way, it does not matter where it sits
as long as those people collaborate, it is based on housing need
and they come together in a timely way to make the decisions,
but being very clear it does not mean that in five years' time
everybody can point to everybody else about why it went wrong.[119]
100. Debate in the Localism Public Bill Committee
has also raised the question of how local authorities can be held
to account for the housing numbers contained in their local plans.
An amendment to the Bill which would have placed a statutory duty
on local authorities to make "an assessment [of] the level
of housing need and demand in the district of the local planning
authority, together with the authority's proposals for addressing
such need and demand" was rejected by the Government on the
grounds that powers already existed, in primary legislation and
in planning guidance, to achieve the same end. However, in responding
to the arguments for the amendment, the Minister for Planning
gave a welcome commitment to strengthening the requirement for
assessments of housing need to be undertaken and to be met in
the local plan:
I am at one with the right hon. Gentleman [who proposed
the amendment] in requiring an absolutely clear, transparent,
robust numerical assessment of housing need. Powers are available
in planning law to do that. They will be reinforced, and we will
strengthen their importance by making sure that no plan can be
assessed and found sound unless it conforms to a rigorous assessment
[
][120]
The Minister also indicated his intention "to
invite professional bodies to make recommendations for robust
methodologies that can be shared with members of the public, so
that they can be held to account".[121]
101. We welcome the Government's intention to strengthen
the obligations on local authorities to ensure that they undertake
robust assessments of housing need, and that local plans take
adequate account of that need. However, there is no indication
that such obligations will operate other than at the level of
the individual local planning authority. Not all housing needs
can necessarily be met in the local authority area where they
arise, and it is one of the purposes of planning to ensure that
overall housing provision is sufficient whilst respecting the
constraints on and opportunities for new development. As our witnesses
have made clear, housing need operates across local authority
boundaries and there is no guarantee that, even if every local
planning authority meets its own locally defined need, the national
need for new housing will be met. We
recommend, in line with our earlier recommendations about the
framework for 'larger-than-local' planning, that the Government
ensure that a robust mechanism is in place to assess, and ensure
that each local authority plays its part in meeting, wider housing
need.
CONCLUSION
102. We
welcome the Government's recognition of the need for more homes.
We especially welcome its intention of ensuring that more homes
are built in total than were built immediately before the recession,
and of building 150,000 affordable homes over the next four years
(although this is not an exceptional number by historic standards).[122]
However, we question whether either of these aspirations will
be achievable under the Government's current proposals for the
planning system. With the figures for new house building contained
in local authorities' plans already estimated to have reduced
by 200,000 following the announcement of the abolition of RSSs,
we conclude that the Government may well be faced with a stark
choice in deciding whether to compromise either on its intention
to build more homes than the previous Government, or on its desire
to promote localism in decisions of this kind. No evidence was
produced to support the Government's view that local authorities
will achieve comparable rates of house building to those in the
past, let alone an increase. If the evidence of success fails
to materialise very quickly, the Government is going to have to
review its selection of levers of influence. We recommend that
the Government report back to the House in two years' time on
the extent to which the measures it is taking are achieving the
aim of increasing the rates of building of both affordable and
market homes.
New Homes Bonus
103. The New Homes Bonus (NHB) is a new system designed
"directly [to] reward councils for new homes built".[123]
The Government published a consultation paper on the NHB on 12
November 2010,[124]
following which the "final scheme design" was published
on 17 February 2011.[125]
The final scheme design document describes the purpose of the
Bonus:
The New Homes Bonus is designed to create an effective
fiscal incentive to encourage local authorities to facilitate
housing growth. It will ensure the economic benefits of growth
are more visible within the local area, by matching the council
tax raised on increases in effective stock. This will redress
the imbalance in the local government finance system, whereby
resources for growth areas did not keep pace with growth.[126]
104. The document goes on to explain in greater detail
the unit of reward of the NHB:
We will link the level of grant for each additional
dwelling to the national average of the council tax band for the
following six years to incentivise local authorities to build
and bring back into use the types of homes people want and need,
in the places that people want them. We are doing this by measuring
the change in dwellings on council tax valuation lists [
]
This approach recognises:
- increases in housing stock
- the relative value of the properties - larger
family homes require more land and that homes built in areas of
highest need are more expensive and tend to be in a higher council
tax band and
- that local council tax levels have a variety
of historic and local reasons and we do not want to penalise authorities
which have been prudent.
Currently the amount of grant relating to an additional
council tax band D property will be about £1,439 per annum
or £8,634 over six years, and the grant relating to an additional
band E property will be about £1,759 per annum or £10,553
over six years. This will be reviewed if council taxes rise.[127]
105. It also explains how affordable housing will
be additionally incentivised through the Bonus:
To ensure that affordable homes are sufficiently
prioritised within supply, there will be a simple and transparent
enhancement of a flat rate £350 per annum for each additional
affordable home. This is about 25 per cent of the current average
Band D council tax or 36 per cent of the average Band A council
tax, and will be reviewed if council tax rises. Over six years
an affordable home would receive an enhancement of £2,100.[128]
106. The money to fund the bonus scheme will come
partly from the former Housing and Planning Delivery Grant (HPDG),
which was worth around £146 million/year, topped up to £196m
in the first year of the scheme and £250m in each of the
following three years. The remainder will come from redistributing
revenue support grant to local authorities. The money will go
to local authorities and, according to the final scheme design
document, and confirmed by the Secretary of State when he gave
evidence, local authorities can decide how to spending the funding,
in line with local community wishes.[129]
107. The NHB consultation document predicts an increase
of housing supply of between 8 and 13 per cent. from 2016-17 as
a result of the New Homes Bonus, using a 'baseline' of what would
have happened in terms of housing supply in the absence of the
NHB. The baseline is described in the consultation document:
In making the assessments of potential impact, a
baseline for future net additions has been assumed [...] The baseline
takes view of future housing supply (as measured by the net additions
measure of changes in the housing stock) based on past performance
in the market across housing market cycles.[130]
108. The evidence base includes many presumptions
about the behaviours of different local authorities, as illustrated
by the following extract, which explains the predicted figure:
When considering the financial impact of the New
Homes Bonus it is important to focus on the net impact, that is:
both monies taken away from formula grant and received through
incentive payments upon housing delivery [
] Our retrospective
analysis provides us with an estimate of each local authority's
net financial position; this analysis considers the behavioural
impact in terms of housing supply resulting from this net financial
position.[131]
109. The Secretary of State explained to us in oral
evidence how he thought the New Homes Bonus would enable local
authorities to get houses built where regional targets had failed:
They get nothing if they grant planning permission
and do not build the houses. That is the beauty of it. You could
meet your targets by granting planning permission but nothing
much happened. What we are saying is, "Give permission and
build the house and it's only on completion that it happens."
You will be very well aware how difficult it is sometimes for
that completion to go through, so there is a vested interest in
ensuring those houses are built.[132]
110. As our predecessors found in their inquiries
into housing and the credit crunch[133]and
as witnesses pointed out in evidence to us[134]the
ability to build houses has as much to do with the availability
of mortgages as it does with planning permissions; and over that
local authorities have virtually no influence. However, witnesses
raised many more objections to the New Homes Bonus, both of principle
and of practice.
OBJECTIONS TO THE NEW HOMES BONUS
111. Overwhelmingly, written evidence we received
expresses not only considerable scepticism about whether the NHB
will be effective in increasing the number of new homes built,
but also concerns about whether it may encourage house building
of the wrong kind in the wrong place. The most widely-held objection
to the New Home Bonus is that it is inimical to a plan-led system
on which spatial planning in this country is supposed to be based.
Hallam Land Management Ltd. summed up the problem:
What can be the logic of giving more cash to local
authorities simply to grant planning permissions when there may
not be any actual specific requirement for that cash? Can it be
good use of public money to proffer cash to those councils for
giving planning permissions when they should in any event be granting
the permissions without the need for incentives?[135]
112. Fiona Howie, from CPRE, illustrated the potential
effect of the Bonus:
[...] We're concerned that cash-strapped authorities,
if they really are seduced by the incentives, may well feel that
they can grant permission for housing that comes forward outside
the plan-led system, and we're concerned that that then overrides
all the good aspirations of localism and bottom-up and really
engaging communities in discussing where properties should go.[136]
Worse, the NHB could give rise to allegations that
planning permission had been granted not because it was itself
desirable, but because of the financial rewards:
[
] we very much would want to see an incentives
scheme that ensures the implementation of the local plan, which
has come up in consultation with the local communities and neighbourhoods,
so that they see that the local authority are giving permission
in line with the development plan and reaping the rewards, potentially.
I think the big risk will be [
] if a scheme comes forward
that's outside the development plan and the local authority potentially
looks at it favourably for the financial incentives. That could
be where the real problems with their local community start.[137]
113. These fears were echoed by the evidence we heard
from three representatives of local groups. Ron Morton, of Shortwood
Green Belt Campaign, told us what sort of approach would be preferable:
I think a financial incentive is the worst possible
option. I think the biggest incentive would be to involve local
communities in the future of their communities, in the growth
and the development of their communitiesjust that; just
the involvementbecause they are the ones with the expertise.
They know what they can cope with, the sites that are available
and what the need is.[138]
114. The Bonus also risks incentivising development
of the wrong type in the wrong areas. Lawrence Revill, managing
director of planning consultancy David Lock Associates, explains:
It is unclear how the incentive scheme will relate
to housing need - the mechanism announced so far appears to provide
a financial reward for delivering housing, regardless of whether
the amount of housing delivered is sufficient to meet identified
local housing requirements and needs. Thus the mechanism appears
to ignore any national objectives for housing delivery (in relation
to demographic need and household formation rates), and will emphasise
housing as a commodity rather than a fundamental human right.
There is considerable potential for those authorities not in need
of further financial support to simply turn away housing proposals
and for those in need of financial support to find it difficult
to refuse proposals, irrespective of local requirements and needs.
This approach appears to fundamentally distort the principle that
housing supply should respond to assessed housing needs and be
underpinned by rational spatial planning.[139]
115. A plan-led system should ensure that new housing
development is coordinated with the necessary provision of supporting
services and infrastructure. The lack of such supporting infrastructure
is often a significant factor behind local objections, as Catriona
Riddell, from the Planning Officers Society, observed:
[...] My experience with South East England Councils
is that their main concern, reflecting what their communities
told them, was that 100 houses here and 100 houses there had a
knock-on impact on their doctors' surgeries, roads, skills and
everything else.[140]
Although a financial incentive scheme is superficially
attractive as a solution to this problem, the fact that the New
Homes Bonus will be paid to the local authority, not the local
community, and will not be ringfenced, so that it will not have
to be used for any service directly connected with the new development,
raises significant doubt about whether it will be effective. That
is particularly so given that, beyond the £250 million per
year set aside in 2012-13 to 2014-15, further money for the Bonus
will be top-sliced from Revenue Support Grantor to put
it another way, local authorities will need to ensure that a certain
level of house building takes place if they are to retain even
the same level of Government grant they were receiving before.
It is scarcely credible that local authorities will divert such
money to support the infrastructure that new housing development
needs if it is needed to maintain current day-to-day spending.
116. Nor is there any guarantee, even if NHB money
was used for supporting infrastructure, that the building incentivised
will be what the local community needs, as Miles Butler explains:
Who knows? Left to communities, we may end up with
a perfect match between the housing requirements for the local
economy and what a community desires, but there are some real
risks in that approach without the parallel strand of some strategic
thinking about what it is we actually need in this sub-region
to deliver the economic growth we need. The housing must be balanced
with economic development, which in turn must be balanced with
the appropriate infrastructure to make all of that hang together
in a sustainable way.[141]
117. Hugh Ellis of the TCPA summed up the problems
arising from the NHB being paid to local authorities:
Which local authoritytop tier or local tier
in two-tier authorities? How is the money divided up and what's
it spent on? Finally, if the weight of this is the idea that you
can persuade communities to accept more housing because you pay
local authorities, I don't think that politically stands.[142]
118. The level of the Bonus was also criticised.
John Acres, from Catesby Property Group, commented:
My view is that they probably will not be enough.
They will encourage authorities that want to build anyway; they
will not encourage authorities that do not want to build because
those incentives will not be sufficiently strong to promote that
building.[143]
119. The local authority witnesses who gave evidence
to us had a similar view. Councillor Ken Thornber, leader of Hampshire
County Council, told us:
While the bonus is welcomethere will be councils
with deprived areas that want to take advantage of this
there will be affluent areas that are willing to forgo not a very
great amount of money in order not to upset their vociferous populations.[144]
Such areas may, additionally, be those with the greatest
need for new housing, since the Bonus is not weighted to encourage
house building where is it most needed.
120. There was also scepticism about whether the
enhanced flat rate of £2,100 over six years for affordable
housing would be adequate to persuade local authorities to build
affordable housing, when not under any obligation to do so. Cameron
Watt of the National Housing Federation, representing housing
associations, told us:
The additional premium for affordable housing delivery
could perhaps be increased [...] Housing development in many parts
of the country is unpopular, and affordable housing in some areas
even more so. At the moment, there is a proposal for a 125% bonus
for affordable housing. I think a bonus of about 150% might well
be more effective. We do need more for affordable housing and
flexibility so that if the New Homes Bonus generally is not delivering
the amount of housing that is needed the pot can be increased
as soon as possible by top-slicing more formula grant.[145]
121. We discovered therefore, a widespread scepticism
about whether the New Homes Bonus will work. Roy Donson, from
Barratt Development, echoed the views of many witnesses when he
commented:
[
] the Government has set so much store by
the effect of the New Homes Bonus as part of the package. That
is a completely novel approach, and we cannot put our hands on
our hearts and be certain it works. I am absolutely certain in
my own mind that Ministers are sincere about their desire for
more housing and that they believe the New Homes Bonus-type structure
will work, but it is quite a high-risk strategy because nothing
like that has ever been tried before. I think there must be a
plan B, and probably that plan is that if the New Homes Bonus
as currently outlinedwe do not have much detail on it at
the momentdoes not do the trick something must be added
to it to make it work and we must keep at it until it does. I
suppose that in the medium term there is a wee problem about money
and about how that resource is made available.[146]
122. When this point of view was put to him, and
he was asked what he will do if the bonus does not work and the
target number of homes are not built, the Secretary of State replied:
We are very confident that it will work. If you forgive
me, I don't want to undermine the policy by suggesting an alternative.
I think human nature and our consultation with local authorities
suggest that, as part of an overall package, this is a considerable
inducement to build [
] There are limits to what government
can do in terms of the supply side, but we have always tried to
move with the flow of the market. I think these reforms have the
advantage of doing that, whereas the old system merely ignored
the market.[147]
123. Pressed by our Chair on whether the Government
had any evidence to show that the New Homes Bonus scheme would
deliver more homes, the Secretary of State replied simply, "I
hope my charm might have worked its magic on you, Mr Betts."
This answer does nothing to rebut the widespread view that there
is no evidence to show that the NHB will work.
124. In earlier evidence to the Committee, on 13
September 2010, the Housing Minister Grant Shapps MP was asked
what the Government would do if fewer houses were built as a result
of the change. He responded, "Ultimately, if everything else
fails you would increase the incentives until they got built":
a response which raises serious concerns about where the money
would come from for such an increase and what effect it would
have on the distribution of Government grant funding to local
authorities.[148]
125. Miles Butler, from the Association of Directors
of Environment, Economy, Planning and Transport, summed up the
concerns of a scheme that is not based on firm evidence and is
subject to change:
The whole notion of the New Homes Bonus is very much
untested ground and is what Sir Humphrey might call 'a bold experiment,
Minister'.[149]
NEW HOMES BONUS: CONCLUSION
126. Alongside 'neighbourhood planning' and the 'community
right to build', the new housing regime proposed by the Government
rests on the success of the New Homes Bonus. Instead of local
authorities being obliged to provide a number of houses allocated
to them through a regional planning process, they will be incentivised
financially to build them. This is a bold experiment; but not
one which, on the evidence we have before us, we can have any
confidence will be successful.
127. Nevertheless, the Government has, in publishing
its "final scheme design" document, indicated its determination
to proceed with the New Homes Bonus scheme. The final scheme is
not substantially different from that which was being proposed
when we took our evidence. Our witnesses' concerns about the potential
effects of the operation of the scheme therefore remain valid.
If the number of houses built were allowed or even encouraged
to rise substantially above the target in the locally approved
plan, given the uncertainties and difficulties of co-ordinating
with the necessary provision of other services and infrastructure,
this may lead to the creation of unsustainable communities. Further,
we doubt that the Government's objective of reducing conflict
in the planning system and encouraging local communities to welcome
new housing is likely to be achieved as long as there is suspicion
that financial considerations are influencing how much land is
being allocated for housing or whether permission is being granted
for new housing.
128. The final scheme design document, and the Government's
response to the consultation on the New Homes Bonus, give some
important indications that the Government has recognised these
concerns. The final scheme design document states:
The Bonus will sit alongside the existing planning
system. It is intended to help deliver the vision and objectives
of the community and the spatial strategy for the area. In particular,
it will be relevant to the preparation of development plans which
concern housing where it assists with issues such as service provision
and infrastructure delivery. However, it is not intended to encourage
housing development which would otherwise be inappropriate in
planning terms.[150]
129. In response to concern about whether the Bonus
could be a "material consideration" in local authority
decisions on planning, the Government's response to the consultation
on the Bonus expands on this statement:
[
] Local planning authorities will be well
aware that when deciding whether or not to grant planning permission
they cannot take into account immaterial considerations. The New
Homes Bonus cannot change this and nor is it intended to. Local
planning authorities will continue to be bound by their obligations
here.
However, this is not to say that the New Homes Bonus
will always be irrelevant to decisions on planning applications.
In some cases it could lawfully be taken into account as a material
consideration where there is a direct connection between the intended
use of the Bonus and the proposed development - but this will
vary according to the circumstances of the case. An example of
this could be paying for the widening of a road to allow for the
extra traffic the new development would bring or to provide for
substitute open space that is lost as a result of a housing development.[151]
130. It is potentially a matter of some concern that
the Government should suggest that the New Homes Bonus might be
used to pay for road-widening or substitute open space. Under
current planning rules, such matters are dealt with by ensuring
that the developer pays for them, either through section 106 agreements
or as a condition of the grant of planning permission. Without
such agreements or conditions, planning permission should not
be granted, since without the provision of the consequential improvements
the development would be unacceptable and would have to be refused.
If the NHB is intended to replace such obligations on developers,
serious questions arise both about the future of the system of
planning obligations (section 106 agreements) and about the amount
of money being provided by the NHB, which would rapidly be exhausted
were that to be the case.
131. We assume that this cannot be the Government's
intention. That being so, it would appear that the New Homes Bonus
is intended to function as an incentive only at the development
plan preparation stage, and not at the point of considering individual
planning applications. If authorities were to start granting large
numbers of permissions in excess of their planned number, the
implication would be that they had been incentivised by the NHB
to do so, which the Government's response suggests would usually
be unlawful. Local authorities will only receive the Bonus once
houses have actually been built, overcoming one of the problems
with regional spatial strategies, which provided only for targets,
not actual homes. If the Bonus functions as indicated, incentivising
local authorities to provide in their development plans for the
housing which their assessments of housing need indicate are required,
that is very much to be welcomed.[152]
132. However, the Government has not made its intentions
explicit, and has not built them into its proposals in any meaningful
way. We recommend that the
Government ensure that the New Homes Bonus scheme keeps the local
development plan at its heart, where planning decisions are based
on sound evidence and judged against criteria which include issues
of sustainability. It should do so by explicitly linking the Bonus
to homes provided for in the local plan following robust assessments
of housing need. We agree that it should be paid only when those
homes are actually built.
133. Similar principles should apply to the incentivisation
of the building of affordable homes. Just as the Government has
no evidence that the Bonus will actually result in more development,
so it has no evidence that the additional payment to incentivise
an affordable home will encourage the building of one type of
house rather than another. While the evidence suggests that there
are some local authorities that would need a considerably greater
differential incentive to promote affordable housing, there are
also others that are more enthusiastic about affordable homes
rather than private housing, so the structure of the incentive
may even be misjudged. The NHB scheme, being demand-based rather
than needs-based, is particularly likely to fail in the affordable
housing sector, where need rather than demand is the defining
feature. We recommend that
the Government redesign the New Homes Bonus so that it better
rewards the meeting of demonstrable need for affordable housing.
98 Ev 150 Back
99
Ev 150 Back
100
Uncorrected transcript of oral evidence taken on 13 September
2010, The Work of the Department for Communities and Local
Government, HC (2010-11) 453-i, Q39. Back
101
See the Department for Communities and Local Government Business
Plan 2011-2015, November 2010, and the Localism Bill. Back
102
Q 111 Back
103
Q 115 Back
104
Q 194 Back
105
Q 193 Back
106
Q 219 Back
107
Q 304 Back
108
Ev 127 Back
109
Ev 92 Back
110
ARSS 32, Joseph Rowntree Foundation, summary Back
111
Ev 73 Back
112
ARSS 15, Star Planning and Development, para 4 Back
113
Para 61 ff. Back
114
Q 233 Back
115
Q 233 Back
116
Q 236 Back
117
Q 238 Back
118
Q 239 Back
119
Q 232 Back
120
Localism Public Bill Committee, 16th sitting (17 February
2011), col 637 Back
121
Ibid Back
122
Affordable homes newly built in the four years 2006-07 to 2009-10
were 169,510 (CLG Live Table 1009). Back
123
Ev 150 Back
124
New homes bonus: consultation, Department for Communities
and Local Government, November 2010. Back
125
New Homes Bonus: final scheme design, Department for Communities
and Local Government, February 2011. Back
126
Ibid, para 2 Back
127
Ibid, paras 7-8 Back
128
Ibid, para 11 Back
129
Ibid, para 23, and Q316 Back
130
Ibid, p50 Back
131
Ibid, p49 Back
132
Q 324 Back
133
Third Report of the Communities and Local Government Committee,
Session 2008-09 (HC 101), Housing and the Credit Crunch;
Eighth Report of the Communities and Local Government Committee,
Session 2008-09 (HC 568), Housing and the credit crunch: follow
up, Back
134
Qq 170 and 184. Back
135
ARSS 57, Hallam Land Management, section 2 Back
136
Q 156 Back
137
Q 166 Back
138
Q 125 Back
139
ARSS 66, David Lock Associates, para 3.02 Back
140
Q 71 Back
141
Q 61 Back
142
Q 95 Back
143
Q 176 Back
144
Q 249 Back
145
Q 226. As noted above (para 104), the final scheme design is of
a flat rate of £350, on top of the bonus paid according to
the council tax band, for each affordable home built. This is
around 125% for a Band D home, or 136% for a Band A home, but
less than 125% for affordable homes in higher council tax bands. Back
146
Q 176 Back
147
Q 313 Back
148
HC (2010-11) 453-i, Q40. Back
149
Q 61 Back
150
New Homes Bonus: final scheme design,
Department for Communities and Local Government, February 2011,
para 3 Back
151
New Homes Bonus Scheme: Summary of responses to consultation,
Department for Communities and Local Government, February 2011,
p.28. Back
152
See the Minister's response to Q265. See also the Minister's response
to Q324, quoted in paragraph 109 of this Report. Back
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