In Memoriam - Planning has become an underwriting facility for banks & a guarantee of profitability for developers,

25 September 2017

Peter Ambrose, good friend of TAP, died in August 2012. Stephen Hill wrote a  tribute to him in the Town & Country Planning Association Journal in December that year. Five years on, he reflects on the wisdom of Peter Ambrose and wonders what he would have made of the nonsensical policy environment of today in which affordable housing isn’t, and the actions of national government and the professions have made it respectable for developers to apply large sums of money and expertise on the avoidance of their public policy obligations to their fellow citizens.

In Memoriam - Common Sense and Housing Policy

The nonsensical policy environment of today in which affordable housing isn’t. 

Stephen Hill MRICS, Director- C2O futureplanners, Churchill Fellow.

Thank goodness the Silly Season is really over…no more silliness in the Brexit ‘negotiations’, or silly dictators firing off missiles just for effect…back to the really serious business of working out if there is a difference between the meaning of ‘reflecting’ and ‘having regard to’.

As you read this, developers, planning consultants and chartered surveyors are rumoured to be hanging on the words of ‘our learned friends’ to see if an iota of difference can be found to distinguish between these two phrases, so that developers may yet again squirm their way out of planning obligations to provide affordable housing.      

‘Reflecting’ and ‘having regard to’ are unassuming words, used in planning policy and formal guidance to surveyors and others undertaking viability appraisals. They are both designed to allow for interpretation of the degree to which developers are obliged to observe democratically approved planning policies, and the degree to which comparable valuation evidence must be relied upon to justify the price paid for land as being the market value.     

They are at the centre of a post-mortem on a recent planning appeal decision, in which the developer initially offered no affordable housing. Under pressure, 0% became 10%, against the London council’s requirement for 50%. The developer had claimed that the price paid for the site meant affordable housing could not be afforded, and produced market evidence that he had paid the going-rate for land. The council claimed that the developer should not have paid so much for the land, knowing what the policy requirement was. At a second appeal, the planning inspector backed the council’s position.

In relation to both comparable market values and policy requirements, ‘our learned friends’ are pondering whether either ‘reflecting’ or ‘having regard to’ introduces sufficient uncertainty about what was expected of the developer to absolve them of their public policy obligations. They wonder if they should take their claim to the High Court and ask a judge to decide. Really?

Is it likely that central or local government policy makers, or the drafters of professional guidance, really had it in mind that a fine distinction between these words would mean that upto 48 households, in this case alone, and those who come after them, should be denied the opportunity to live in good quality affordable housing in a borough with 19,000 households on their waiting list? How would the developer or its professional advisers feel about meeting those 48 families to explain their position face-to-face?

If my friend and colleague Peter Ambrose was still with us, I can imagine him calmly but wickedly asking, ‘Whatever happened to common sense?’ So far, it has cost over £20,000 a month since 2012 to keep the site empty, secure and insured. Two planning applications and two appeals…well over £1m? ‘our learned friends’ undoubtedly modest fees…this feels like a bill of at least £3m that might have gone some way to meeting the social needs that the developer and professional advisers have all worked so hard to avoid. 

Who was Peter Ambrose? TAP supporters will know of his work on minimum incomes and housing costs for Citizens UK, Unite, Defend Council Housing and Zacchaeus 2000 Trust, especially his (in)famous Z2K Memorandum to the Prime Minister on Unaffordable Housing in 2005, outlining the danger signals for the economy and the housing market. Peter was no monarchist, but would have enjoyed the prospect of being present when Her Maj asked economists on a visit to the LSE in 2008 “Why did no one see this coming?”, and to have been able to answer “We did, but no one was listening!”

He was one of that generation of radical geographers, educated in the 1960s, many of whom did their Masters at McGill in that sensible country Canada, who were genuine polymaths, distinguished by their capacity to think holistically about society, the economy and the environment as a single joined-up system… where you can’t do something in one domain without affecting everything else. They made themselves pretty unpopular, (some still do), by asking the difficult questions that no one else was asking and should have been, consistently asking ‘why’ of the continuation of policies and ways of doing things that clearly don’t work. His first major book from 1986 "Whatever happened to planning?" is typical of his straightforward approach. Peter died this time of year 5 years ago, and he is still greatly missed.

A decade on from the start of the financial and housing market crash, and inspired by his positively disruptive approach to the status quo, I thought I would try to imagine the difficult, common sense and annoying questions that he would be now asking about what is (not) happening in housing policy today…

WHY…does government continue to…

  • Pretend that unaffordable housing is affordable without reference to actual incomes prevailing in any local housing market economy?
  • Allow global capital flows from extractive economies in other parts of the world to distort local housing markets and undermine the social and economic stability of our vital centres of wealth creation?
  • Reward so called capitalist housebuilding businesses and landowners with demand and supply side subsidies, guaranteeing profit levels through the planning system, directly enabling them to undermine or ignore public policy requirements for affordable housing?

One of the principal outcomes of not dealing with these questions is the phenomenon that the Joseph Rowntree Foundation has now named as ‘housing cost induced poverty’. In one of the richest countries in the world, whether this is the result of economic intent, incompetence or incomprehension, HCIP is surely an affront to any idea of a just society, and explodes the notion that there are efficient and fair housing markets serving the public interest and contributing to the good of the national economy.

WHEN…will government…

  • Take housing sufficiently seriously, to give it a place at the Cabinet table with an experienced minister with a long term tenure and sufficient powers to achieve specific housebuilding targets, as Churchill did with Macmillan in 1951?
  • Build a cross-party consensus for a comprehensive and coherent housing, land and planning policy with long term investment and implementation horizons, as two weak governments of opposing political colours did in 1974 to rescue failing inner cities?
  • Learn that current policies and practice on the sale of council land and higher value council homes simply normalise and intensify the socially and economically damaging effects of private development, and undermine the Treasury’s own value for money guidance to use council assets so that ‘value is based upon the interests of society as a whole and is not an assessment of value to the public sector alone’?

In 2005, ‘bright young men and women’ in the Treasury told Peter and Paul Nicolson in a meeting that his concerns were unfounded, and that the conditions he was describing in the Z2K Memorandum were not a problem, ‘as long as the market is working’.  Twelve years have now have passed, and at least no one now disputes that the ‘housing market is broken’…well over half of all new homes built every year have some form of public subsidy. But all of those ‘Why’ and ‘When’ questions remain unanswered.

Getting back to ‘normal’ after the last crash has meant steadfastly not addressing the fundamental flaws of a market that has not just been broken in the last few months, but has been dysfunctional since a much earlier financial crisis. In 1976, in response to the    International Monetary Fund’s intervention, an economically illiterate Treasury decided that the cessation of investment in social housing and infrastructure was a good way of saving money.

The ‘bright young man’ from the Treasury, who came to my council in September 1976 to explain this clever new policy, was nonplussed to be told that development usually went quicker and more cheaply if preceded by its infrastructure, and that housing prices were usually more stable and less volatile when there was a sufficient supply of new affordable housing in the market. To this day, the Treasury penny has yet to drop: we are still living with the consequences of those hopeless decisions.

In 2012, the year of Peter’s death, the planning system was ‘reformed’ with the introduction of the viability appraisal process, to ensure a continuing supply of development land and speeding up of housing supply. It has not achieved either objective. Instead, planning has become an underwriting facility for banks and a guarantee of profitability for developers, respectively de-risking lending and supporting shareholder value, as well as enriching lucky landowners. Without any other discernible public interest benefit, the planning system has been castrated. Its capacity to strike an appropriate balance between public and private interests, has been destroyed by the work of professional surveyors and planners acting for their developer and landowner clients.                            

If Peter had lived to write it, his next book would undoubtedly have been ‘Whatever happened to planning? The Sequel’. But it would have been very short, and not at all technical…the difficult question he would put to us now would run something like this: How can we reignite a sense of our common humanity, in both public and private life, by adopting the organising principles of common sense, in single minded pursuit of the common good?

The answer needs to address the breakdown of trust between the state, the citizen and capital, over the use of land, and to rediscover the idea that, as the RICS Royal Charter proclaims, the ‘optimal use of land’ is one that meets ‘social and economic needs’….don’t hold your breath