Again the lesson is you cant really assess comparative merits of sites until you know the level of need.

Place North West

A vow by the leader of Cheshire East Council to oppose speculative housing development on “green gap” land near Crewe has led to questions about his role in the ongoing public consultation into the authority’s local plan.

Cheshire East has still to produce its local plan in line with the requirements of the National Planning Policy Framework, which came into force in March 2012. The local authority is mid-way through a public consultation exercise into residential land supply identified in its draft local plan published in February. Comments for the latest round of consultation must be submitted by Thursday 30 May.

Paul Williams, a director at Mosaic Town Planning, said the situation in Cheshire East is different to that faced by other local authorities still working to meet their local planning requirements as the Conservative council’s leader, Cllr Michael Jones, chose to make his views clear during the consultation process.

Williams added: “Cllr Jones has spoken out during the consultation period, a time when he would be expected to maintain a neutral stance on an issue which will become the subject of an objective and open debate.

“I think this puts the council in a difficult situation.

“It should be asking whether the council leader should be involved in making decisions when he has already expressed his opinion before consultation has concluded.”

Williams, who advises house builders, said developers would have legitimate grounds to appeal against any unfavourable decisions made involving the council’s leader.

The Cheshire East Council leader revealed his opposition to schemes forming part of the local plan development consultation exercise during a parish council meeting in Wistaston, near Crewe.

A number of developers have proposed building houses on greenfield land previously designated as unsuitable for new homes in order to protect the visible borders of villages in the area.

Three developers, Muller Property, Gladman Properties, and Dolphin Land & Development Consultancy, are targeting open land off Church Lane, Middlewich Road and Wistaston Green Road.

Speaking after the parish council meeting, Cllr Jones said: “Wistaston is under siege from several developers, two of whom are even speculating on the same piece of land.

“Naturally, residents are outraged by this. They want their village to remain a village and retain its identity.

“They do not want to lose the green fields that separate them from neighbouring parishes. They want to retain their green gaps.

“I am very concerned that their quality of life has been affected so badly in the last couple of weeks.

“Most fortunately, with so many residents present at the meeting, they were able to hear me offer them my strongest support and I was able to get the message over to them that these speculative plans are unplanned, unsustainable and unwanted.”

Muller and Gladman are understood to be the developers interested in the same plot of land.

Another residential planning consultant, who asked not to be named, said he understands the frustration facing many councils following the March 2012 implementation of the NPPF, which required local authorities to develop local plans including a list of five years’ supply of deliverable housing sites.

He said councils wanted to make their own decisions about the areas they represent but were having their decisions overturned by planning inspectors in the absence of local plans and housing supply provision. He raised concerns about councillors making promises which appear to suggest that decisions are being made in advance of the due consultation and debate.

He said: “My private view is that the council leadership needs to be very careful about making any representation when going through the process of due consultation on a local plan.

“They need to show that they have properly debated them.

“I don’t think it’s very helpful during a robust planning consultation exercise to suddenly go off piste.”

Cheshire East Council’s local plan is expected to be completed by the end of the summer.

Cllr Jones has previously written to residents urging them to campaign against speculative developments forming part of the consultation exercise.

Contacted by Place North West, Cllr Jones insisted that he plays no part in the development of the local plan for East Cheshire beyond his ability to vote at various stages of the process as a ward councillor.

He said that the council has a 7.1 year supply of land for residential purposes.

He said the council would be in a position to fight any challenges from developers suggesting that the council is still to demonstrate a five year land supply.

He said delays in the adoption of a new local plan are a result of the Labour government’s decision to merge three local authorities to form Cheshire East, providing insufficient time for the council to hit the March 2012 deadline set by the NPPF.

He said: “What I am doing is called democracy. I have an opinion and I will tell the whole truth. I work with developers too. This is not about just bashing one industrial sector.

“It’s about the developers who march into an area intent on land banking without a care for the community or the villages that they will destroy. Land banking is immoral.”

 

Following the collapse of the Woolwich Arsenal industries Woolworth had lots of poorer quality but cheap housing for rent, leading to an influx of ethnic communities of any religions.  Whereas Eltham and Welling saw many traditional and mostly white working class move out of inner London, to a mix of owner occupied and social housing. Some of this undoubtedly was ‘white flight’, but only by a minority.  Eltham is notorious for the number of EDL supporters living their as as the place where Stephen Lawrence was murdered, whilst Welling used to house the HQ of the BNP.  But I stress only minorities, far right parties have had little electoral success here.

There is little ethnic or religious tension within Woolwich, its a classic melting pot, but we have a curious tension between extremists from different but adjacent communities, with a major army base between.  This we often see in London, and thankfully it rarely breaks out in violence, we see animated demos between Greek and Turkish Cypriot communities, yet Green Lanes doesnt go up in smoke.  The real lesson from Woolwich is how well London contains and diffuses global and universal conflicts.

The 2013 Budget announced a new scheme, Help To Buy, aimed at boosting activity in the housing market. This measure may temporarily help boost confidence in the housing market, but there is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing. To mitigate this risk and engineer a supply response, the government should consider fiscal  sincentives for holding land without development.

Of course housebuilders have these properties on their books as assets to offset their losses.  if they are forced to sell and house prices fall so do the price of their assets and many volume housebuilders will go to the wall.  Not necessarily a bad thing if the broken industry stricture is fixed.

A CONTROVERSIAL decision to split up a neighbourhood plan has been labelled ‘undemocratic and non-transparent’.

Councillor George Fussey has slammed the decision-making process which culminated last month in the splitting up of the Windsor and Eton Neighbourhood Plan group into three new sections – Central Windsor, West Windsor and Eton and Eton Wick.

A meeting of Central Windsor residents and business representatives made the decision, with some claiming details of the meeting were widely distributed to affected parties while others dubbed it a ‘secret’ meeting.

Cllr Fussey said: “I wasn’t invited to that meeting despite being ward member for Eton and Castle. If the Castle isn’t in Central Windsor, I don’t know what is. I think it’s a logical decision [to split the group] but it has been handled in an undemocratic and non-transparent matter.”

The chair of the Ward Royal Residents’ Association added to the controversy claiming a ‘fait accompli’ was presented at the meeting to split up the plan group. The West Windsor Residents’ Association also slammed the move to split up the plan, which will help determine future planning decisions for the next 10-15-years.

We do not need an alternative speech; we need to look only at Labour in government in Wales. Let us look at Labour’s record on housing there. Labour has failed to boost house-building starts by a mere 1% as compared to 19% in England. 

Labour in Wales hit the housing market with extra red tape, adding £13,000 to the cost of building a new home in comparison with England. Labour has cut the right to buy, abolishing it completely in parts of Wales. Labour has failed to introduce support for new home buyers. Their new-buy scheme will not start until next year.

Whether it be in England or Wales, Labour’s economic policy could be summed up, to paraphrase Ronald Reagan, as “If it moves, tax it; if it keeps moving, regulate it; if it stops moving, subsidise it”.

What is different about policy in Wales.  National policy mandates code 3 as a minimum for all homes, not just social housing.

The HBF claculates the cost of this as £2,900 per typical semi detached lot, without considering any capitalisable benefits from lower energy bills.

There was a consultation that ended in October last year on how to implement zero carbon standards from 2015, a white paper with detailed impact assessment is due this year with draft changes to national policy wales later in the year.

This is exactly the same position as in England as the DECC as recently reconfirmed its committment to some form of zero carbon standard from 2015, though we await with baitred breath its exact form.  Is pickles now saying we should not have any energy standards in new homes at all.

There is a genuine debate in Wales over whether a national enhanced standard will depress housebuilding in more fragile regions, but not policy conclusions have yet been reached.  Where does Pickles get his £13k figure from?

PREDETERMINATION, BIAS AND ADVICE FROM MONITORING OFFICERS
Thank you for your letter seeking my views on an advice notes from Monitoring Officers to
councillors, and how this interacts with the Localism Act. Whilst Ministers cannot give formal
legal advice (on advice), I am happy to provide my informal view.
Under the last Administration, the Standards Board regime undermined freedom of speech in
local government. This was compounded by a further gold-plating of pre-determination rules,
fuelled by misconceptions about the flawed regime, going far beyond what was reasonable or
legally necessary.
The Localism Act 2011 has abolished the Standards Board regime, and has also clarified the
position with regard to pre-determination and bias. Section 25 clarifies that a councillor is not
to be regarded as being unable to act fairly or without bias if they participate in a decision on
a matter simply because they have previously expressed a view or campaigned on it. The
effect is that councillors may campaign and represent their constituents – and then speak
and vote on those issues – without fear of breaking the rules on pre-determination.
In this context, I feel that blanket advice which states that councillors cannot participate in a
meeting purely because there is merely a ‘perception of bias’ or ‘risk of bias’ is potentially
wrong. It will, of course, depend on the individual circumstances, but the flexibilities and
freedoms laid out in Section 25 may apply.
It is worth drawing a distinction between pre- determination and pre-disposition.
Councillors should not have a closed mind when they make a decision, as decisions taken by
those with pre-determined views are vulnerable to successful legal challenge.1
1
Incidentally, where a councillor has a predetermined view because of having a disclosable pecuniary interest
in an item of council business, our guide for councillors makes clear that they may not participate in any
discussion or vote and that they should leave the room if their continued presence is incompatible with their
council’s code of conduct or the Seven Principles of Public Life.

However, before the meeting, councillors may legitimately be publicly pre-disposed to take a
particular stance. This can include, for example, previously stated political views or manifesto
commitments.
At the decision-making meeting, councillors should carefully consider all the evidence that is
put before them and must be prepared to modify or change their initial view in the light of the
arguments and evidence presented. Then they must make their final decision at the meeting
with an open mind based on all the evidence. Such a fair hearing is particularly important on
quasi-judicial matters, like planning or licensing.
More broadly, monitoring officers can offer advice to councillors. But the final decision about
whether it is right to participate in discussion or voting remains one for elected members.
Councillors should take decisions with full consciousness of the consequences of their
actions. I hope the Localism Act has injected some common sense whilst allowing for
genuine debate, freedom of speech and democratic representation.
I hope this is of assistance. Further to your suggestion in your original letter, I am placing this
letter on my department’s website in case it may assist councillors in other local authorities.
BRANDON LEWIS MP

Brandon Lewis MP

This is the first political statement I have seen which stresses the position made by many lawyers.  The localism act did not abolish the predetermination law merely allowing predisposition – which the courts had already allowed.

Where I have underlined should appear in the full council reports on all development plan decisions and should be read out by the leeader when making the motion.  Then they can avoid the hole that some leaders like that of Sheshire East have dug themselves.

When talking about neighbourhood planning in the early days, maybe a fault of the Government was allowing people to believe they could do what they want, when in reality it has always been about how things will be delivered, not what would be delivered. However, I do genuinely believe that in twenty years’ time, people will look back and say this policy was a real game changer for getting people involved in their local area”.

Kregal argues that there are two types of deposit, deposits of currency and coin, and deposits created when loans are made.  If a bank makes bad loans

“it is the failure of the holder of the second type of deposit [loan-created deposits] to redeem its liability that is the major cause of bank failure”

so the first type of depositor (of currency and coin) should not bear the brunt of these bad decisions.

Coppola disagrees with this on a theoretical point via twitter.

deposits physically deposited by customers are receipts of deposits created via someone else’s borrowing.

Here we agree to a point, reserves created by loan are spent in excess of the liquidity preference of the borrower and such ‘excess reserves’ creates reserves in other bank account and further expands the lending power of banks to lend on these reserves. We have modelled in detail this process before, as did many other banking theorists when the endogenous ex nihilo creation of money was taken for granted in banking textbooks.

But only to a point because there can be two sources of deposits (setting aside for a moment any debt free state created money) as Kregal correctly points out – Crusoe like savings from balances in excess of liquidity preference – and the endogenous creation of moneys through loans.

This must be true as balances immediately spent are not available as idle balances to be leveraged as lending. Also imagine a bank starting up, it cannot start up without equity, similarly a bank cannot expand beyond its capital ratios without raising additional equity.

This arises from the fundamental equation of accounting applied to the business model of banking, Assets=liabilities+owners equity. When a new bank, or a bank extending its capital base, creates a new loan it creates a liability now and an asset redeemable only in the future, to ensure positive balances the bank must raise equity, or its own liability through borrowing from another body, the two sides of the equation must balance. If it borrows the bank reduces its profits, hence why banks borrow short. This in no way implies a loanable funds view of money, rather future profits have two sources, saved existing money and loans, invested. It is the anticipation of the future stock of such money, not the present stock, which constrains lending decisions.

So even with the ex nihilo creation of deposits for loans, which create deposits for loans etc. etc. their is always a residue both of the original equity and the created money. In banks with high reserve requirements it will be higher but there will even be a residue in regimes with no reserve requirements.

This argument is formally the same to that of Bose (1980) in discussing the classical concept of ‘originary factors’ – and the ‘dated reduction’ of originary factors. Every commodity is composed of another commodity (a resource) and an input of labour. Going back through time we find natural resources and labour. This means that no commodity can be ever reduced to ‘pure labour’ or ‘pure commodities’ there is always a residue of one or the other. (Mathematically it is a Taylor series where ratios between the two are invariant over time). Here we have not referred to ‘capital’ rather purely the physical economy. However the circuit for the physical economy is paralleled by the reverse circuit of money. For the classicals ‘capital’ was simply money advanced for profit, including money advanced for wages and interest (quite correctly), and this money also has two sources, savings and loans. This leads to a rather interesting flow identity for a specific investment, prices, at effectual demand,  equal:

commodities + labour = change in saving + change in debt

It does not matter if the change in saving is from retained profits (self funding) or change in savings to create bank equity and further capital for lending.

Update:  I should have stressed here the LHS is the full cost price of production and the RHS is what the later classical economists (such as Tausseg) called the ‘pool of funding’ both measured as flow variables over (Wicksell’s term modifying Bohm -Bawerck) the ‘Period of investment’.  Also we are talking about the change in savings and debt that is spent not retained in idle balences, so both are multiplied by the Davidson k factor (the proensity to hold income in balances).

But the value of labour here is simply the labour share (α ) times velocity ( α .v )which is the same as (1-r).v (r=the profits share, v = the velocity of money).

So we have a flow equation

Commodity price =(Δequity+ Δdebt)/ (α .v)

You can of course rearrange this equation to make endogenously created bank debt the dependent variable, but you cannot ever eliminate saving on the RHS, there is always a residue. These equations should come as no surprise, they can be derived from Kalecki’s stock identities modeled in a flow input, flow output system.

Two other interesting things about this identity. Declining labour share is inherently deflationary, indeed during the great moderation we saw deflation and declining labour share, and incomes and profits can only remain even with increasing debt, increasing savings for equity is also deflationary.

So what happens when labour share falls towards zero in an ‘android’ economy. I will explore this in a future post (it isn’t pretty).

(Note: At no point do I assume the such dated quantities can be ‘added up’ to equate values, Sraffa demonstrates the problems in this. Rather I assume that all such inputs are valued at current prices).

Further Reading

Marx on Exploitation and Inequality: An Essay in Marxian Analytical Economics

1980

Bose, Arun

The Transmission of Lending Power between Banks in Endogenous Monetary Theory Lainton

Correctly Modelling Reserves, Cost of Funding and Collateral in Monetary Circuit Theory Lainton

Production of Commodities by Means of Commodities Sraffa

The Economics of Enterprise (HJ Davenport) 1813

Collected Works, Kalecki