Abolition of Regional Spatial Strategies: a planning vacuum? - Communities and Local Government Committee Contents

Written evidence from Beryl Metcalfe (ARSS 153)



1.  The proposed incentive is a one off payment between £6,000 and £10,000 per dwelling

2.  Per capital revenue support grant is £1,312 per person for England.

The dwelling incentive would cover 4.5 to 7.5 years for a single person or 2.3 to 3.8 years for a couple. So accepting the incentive would not cover future costs arising from it.

Local authorities have fixed costs but additional population will have higher than average infrastructure costs.

3.  New Dwelling Requirements: Somewhere at the upper end of the range 100,000-270,000 pa.

At 252,000 pa (latest OPCS projection), incentive maximizes at 4% of local authority spend for an increased population of 7%. Logically all local authorities should refuse the incentive. ( If they accept it will make council tax soar.)

4.  Housing Targets and Planning: House of Commons Paper

Local planning systems and incentives in Germany and Switzerland to be copied. But Germany and Switzerland have different history and falling populations whereas we are the population boom country of the EU.

5.  Will all these houses be needed?

Not if the poor still cannot get the dwellings they need. Five reasons why the household projections might be too high. Abolishing cohabiting rules could save money, keep families together and reduce the number of dwellings needed. (This is counter-intuitive but bears study.) Less likely is that more will be needed.

6.  Pricing: contrary to the Barker report pricing is not directly linked to scarcity. For various reasons including the availability of capital and affordability we may not be able to solve lack of housing for the poor by building larger houses for the affluent.

7.  The proposed incentive would not cover subsidy costs for affordable housing in the public sector. To provide this would make council tax soar.

8.  Population imbalance in the country will put severe pressure on water supplies in the south east. Some form of regionalized planning may be essential medium term, perhaps based on water catchment areas. LEPS are unlikely to be able to establish new settlements which may be the most sustainable solution for a higher population.

Here is something about me

Following my MSc in Environmental Planning and Design from Aston University, (1973-75) with special mention), I have given evidence and appeared at four Examinations in Public in the West Midlands, in 1981 and 1991 as the Chairman of the West Midlands Churches Committee (originally the county but later the region), and in 2002 and 2009 as a member of the West Midlands Regional Sustainability Forum but speaking on my own behalf.

I have had a long term interest in housing issues. My MSc thesis compared various community responses to the housing problems of Caldmore, an area of Victorian terraced housing in Walsall which was becoming ethnically diverse. As a result I was invited onto the Board of Caldmore Area Housing Association (1975-99) where I served as Company Secretary for about 20 years and in a number of other roles. While there I ran a Special Temporary Employment Project on Asian Housing Finance with a team drawn from the various local communities and also did research into housing for the Walsall Communities Relations Council and Afro-Caribbean Youth Council. In 1994 my husband and I moved to Stafford where I served on the Board of the Bethany Project for homeless people 1999-2004.

From 1975-98 I was employed by the Church of England Diocese of Lichfield in the field of urban deprivation and was responsible for drawing up deprivation statistics for their parishes and for a number of other Midlands Dioceses, developing z-score based systems for comparing discrete areas. I was involved with several consultations on the construction of the national index of deprivation. My first degree from Cambridge in Mathematic and Fine Arts with Architecture put me in a position to see serious error in the log transformed chi squared statistics which were being used nationally in 1991ff and which formed the basis of deprivation adjustments to the local government and health service apportionments. This background is also useful in assessing the validity of housing projections.

My portfolio career also included 17 years of work for the Open University mostly tutoring courses which included "Man Made Futures". Hence I could claim to be a futurologist.

I will separately send my evidence to the House of Commons West Midlands Regional Committee Planning for the Future where my paper appeared in the Second Report of Session 2009-2010, published 8 April 2010 and deals with some related issues.


1.0  How much is the proposed incentive? The average Band D precept for 2009-10 in England is 1414, the average is 1,175 and highest for Rutland is 1,656.

Realistically speaking the subsidy per house will be only a maximum one off grant of about £10,000. Possibly only £6,000 if police and fire precepts are omitted.


2.1  Broadly speaking local authority revenue grants for 2010-11 for England are £68,249 million for a population of 52 million which is about £1,312 per person. The incentive will therefore cover about 4.5 to 7.5 years of spend for a single extra person or 2.3 to 3.8 years for a couple. But these amounts have to be spent into the indefinite future. It therefore follows that if extra housing is provided for extra population, and councils act logically, no councils will be incentivized by this particular proposal although it might sway them if they are already facing a housing and homeless problem.

2.2  In practice local authorities have many fixed costs and marginal costs per person are lower - but the additional population is likely to be children who will need schools and old people who will require personal care and other services—ie the extra people are likely to need more than the per capita amount so the overall guesstimate is probably of the right order.

2.3  The incentive discounts the long term costs of extra population—rather like not fully funding pensions and finding there will be too little in the pot in the future.


3.1  Looking from another direction: What housing programme is needed to provide an adequacy of housing units and how will that affect the global size of the incentive?

3.2  House completions are running about 100,000 pa meaning a government subsidy to local authorities of £1 billion. Or £2 billion, if the programme picked up to double that at 200,000pa. NHPAU (abolished April) thought we needed about 240,000 pa to match household formation. six years of council tax would then be £2.4 billion. DCLOG and OPCS say there will be 252,000HH pa extra to 2031. The incentive would then maximize at £2.5 billion at about 4% of local authority spend but might well be half that. This is to deal with a projected 7% population increase. Clearly the incentive is insufficient.


Housing Targets and Planning

4.1  This reviewed past history.

Housing Green Paper Jy 2007: two million homes by 2016, three million by 2020. Building 250,000 pa.

NHPAU Nov 2007: 270,000 per year by 2016.

The credit crunch intervened and output plummetted.

4.2  February 2009: Conservative Green Paper proposed replacing regional targets with incentives rising from £250 million in 2010-11 to £1,250 million in 2014-15. This money to be removed from revenue grant support.

4.3  Useful comparisons are made with Germany and Switzerland. It is said that both have larger building programmes than England but retain green land and they achieve this by decentralized planning systems and incentives. They also achieve better space standards in homes. I agree that an incentivized local planning system might work satisfactorily but it important to understand the differences between those countries and ours.

4.4  Germany has always had a larger building programme because they needed much more reconstruction after the 1945 War. It has a larger population than ours at 82 million but this is projected to fall to 70 million by 2060 whereas Britain's population will rise from 61 million to 77 million. The EU population projection report of 2008 says Britian will have much faster population growth than any other EU country. Switzerland has similar projections to Germany with marked declines expected to 2050 as a result of a very birth rate.

4.5  Both Germany and Switzerland have enjoyed relative wealth in the last 50 years enabling new housing to be larger than our new housing. Both countries also have a more egalitarian income structure. In the UK large sections of the population have low long-term income prospects and have had to accept housing of limited size. Another factor may be that construction costs are lower in both countries because of an abundance of local timber.

4.6  The result of all this is that lower incentives would work in Germany and Switzerland than in the UK and that there is far less environmental pressure arising from increased building and population. One important risk in the UK is the availability of water in the south east where population growth pressures are highest.

4.7  It would appear that the unusual growth spurt in the UK is substantial due to net inward migration and the descendants thereof. Family size is falling in the UK and is below replacement level for the white population (as recently as 2000 the UN thought that the UK population would be falling below its present size by 2050). But the ethnic populations from Asia and the Caribbean have been used to much larger families to compensate for high death rates and even though they are having smaller families, they are still above replacement rates.

4.8  This paper demonstrates that incentives would need to be very much higher to incentivize local authorities to attract population for them to offset increased capital and revenue infrastructure costs.


5.1  Here is some of the underlying data from OPCS and DCLOG:

DCLOG and OPCS projections to 2031 published March 2009.

The number of households in England is projected to grow to 27.8 million in 2031, an increase of 6.3 million (29%) over the 2006 estimate, or 252,000 households per year.

Population growth is the main driver of household growth, accounting for nearly three-quarters of the increase in households between 2006 and 2031.

One person households are projected to increase by 163,000 per year, equating to two-thirds of the increase in households.

By 2031, 32% of households will be headed by those aged 65 or over, up from 26% in 2006.

By 2031, 18% of the total population of England is projected to live alone, compared with 13% in 2006.

5.2  At the West Midlands Examination in Public in 2009 I argued that the revised Regional Assembly target of 365,000 by 2026 (well below the increased figures required by Central Government) was about what was needed but since about 50% of these needed to be social and affordable housing, in practice their original figure of 295,000 was realistic given the likely scale of the social housing programme. The additional people would be absorbed by an increased occupancy of dwellings.

5.3  If one's objective is to solve the shortage of housing, there is no point in building housing that those in need of housing cannot afford or access. Trickle down does not have much effect on housing availability for the poor. With the credit crunch, even young graduates are finding it very difficult to become first time buyers because of the new need to have a substantial deposit. In effect there is mortgage rationing and even if a lot more young people managed to save the deposit, the banks might not have the liquidity to lend to them.

5.4  On the bright side the 2031 household projections could be too high for several reasons:

(a)  growing longevity of marriages/partnerships so that more retired people are living as couples as a proportion of all retired people (OPCS have factored for this but not enough).

(b)  the exclusion of students from the count when universities provide accommodation in-house as opposed to students being housed on the open market when they are counted. Most students are single persons. Universities are increasingly competing with private landlords and developers to provide thus increasing the effective provision outside the housing targets.

(c)  The possibility that people who are widowed when renting will not be able to find any accommodation they can afford so that more move in with sons and daughters. (Some risks of overcrowding.)

(d)  The option the government has to remove the cohabiting benefit rules. The issue is that if a person on low income and a person on benefits live together benefits are removed and they have to live on a single income which produces huge extra strains, especially if there are children. There is great financial pressure for low income people to have separate homes.

  There would be benefits costs if the rule were abolished but they would be offset by not having to provide an additional dwelling. There would also be less occasion for benefit fraud and less accusations of cheating. Social gains might be more families staying together.

  To expand on this a bit more: a single person on income support and with no savings gets about £57 a week = £3,000 pa plus rent and council tax. Say a single person dwelling costs £80,000 to build. If you have cash in hand, it would take 27 years to be cheaper to provide the house. But you would have foregone rent and in practice the money to build the house is normally borrowed so that payback times are much higher. If the person stays in a separate one person dwelling, you are perhaps paying a further £60pw rent and £20 council tax. So one would save £80 if they move in with someone else. Benefits calculations are very complex but it is highly likely that abolishing the cohabiting rule would save government money as well as helping some of the poorest people and encouraging families to stay together.

(e)  Potential reductions in immigration as a result of government policy, economic distress in the country, high inflation or less bogus student immigration.

5.4  But equally they could be too low if immigration is not contained and students stay and have families at a fertile period of their lives.


6.1  The Labour Government was persuaded to address housing shortages by adopting the classical economics of the Barker review ie to increase housing supply in order to bring down prices. The real world behaved differently. Spain has a building programme four times that of Britain for a smaller population, and the highest vacancy rate in Europe but house prices had not fallen by the time of the Barker Report in 2006 and have only dropped 18% from their highest point at the end of 2007. Whereas house prices fell in the UK when there was a squeeze on mortgage finance despite far fewer new dwellings being provided than new households being created. Classical economics says the price should rise if there is scarcity but instead it fell.

6.2  One interesting fact is that statutory homelessness fell in the last ten years despite there being fewer new dwellings than households. This merits research but it suggests that there is a good deal of elasticity in the housing in England. This probably arises from falling occupancy and the fact that many more young adults returned to parental homes to save a deposit when they found a) they could not buy a property and b) the supply of social rented houses for young couples had dwindled.

6.3  The conclusion is that prices are not directly linked to affordability. Someone has to put up the capital to build new homes and to provide mortgages.


7.1  Local authorities: If one looks at current Homes and Communities Agency grants for new build they run from £30,000 upwards to £168,000 per property (the high figure in Greenwich). This subsidy is needed to produce an affordable rent.

7.2  Refurbishment costs for smallish two bedroom homes to decent homes standards were stacking up about £60,000 per dwelling when I was last on the Board of a Housing Association over ten years ago and will undoubtedly be higher now. Subsidy of £50,000 per property or so was needed to achieve affordable rents at that time.

7.3  Clearly an incentive of £10,000 per dwelling is not enough to enable any extra affordable housing to stack up so any additional costs would be an extra charge against new private housing which is already carrying the costs of a proportion of affordable housing, service roads etc on all larger sites.

7.4  In addition there are the on-costs. Cambridgeshire website suggests a figure of £800 per liner meter or £4,000 for a five metre frontage of road. Curtilege roads and utilities may be included in the costs of providing the houses but may not cover feeder roads or road engineering to cope with higher flows. £10,000 will hardly pay for an extra set of traffic lights at the entrance to an estate.

7.5  In practice local authorities also have to provide social infrastructure: education, health facilities, public open space, waste plants in proportion to a growing population. They may choose to build or permit more housing but a one off £10,000 per dwelling would be a very minimal incentive which would build up problems in the future.

7.6  In practice the government is proposing to increase the incentive gradually by reducing local authority revenue support grant correspondingly. As the incentive is not enough to meet the extra infrastructure costs to local government even medium term, it follows that there will be a huge upward pressure on Council Tax. One can only hope that there will be commensurate savings from scrapping unnecessary bureaucracy.


8.1  In the past regional strategies put pressure on local authorities jointly to meet higher housing targets. The right level of target is a matter for debate but there was pressure towards the goals of a decent home for everyone. Abolishing regional strategies produces a situation where it is not in anybody's local interest to increase housing supply even with a 4% short-term uplift in resources. This uplift is illusory anyway since it will come off the revenue support grant.

8.2  It also makes it almost impossible to relieve environmental pressures by the creation of new settlements—although the new town model is one that should be revisited in the interests of sustainability in a low oil world.

8.3  If we persist with this strategy, serious housing shortages may develop across the country. This will only be exacerbated by the crackdown on housing benefit costs which will mean more and more people looking for smaller cheaper lets that may not be available.

8.4  Or rather, those lets will not be available since the shakeout from the whole market of those who cannot buy is expected to find accommodation at rents standing at or below the mid point of their sector—so the whole market of would-be low-income renters will be trying to fit into half the market of rentable properties. This is a recipe for massively increased homelessness amongst the poorest people in our land. Sooner or later, the government will find itself having to provide more social housing by one means or another.

8.5  It is also predictable that some portions of the country will fare far worse than others in this upheaval and that the government will eventually have to try to direct population to less pressured areas by some sort of regional policy. For sustainability, and healthy communities this has to be employment led. Government offices in those far flung places not of interest to industry? It is hard to see how less successful LEP's could solve their own difficulties.

September 2010

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