Why the ‘Waterbed Effect’ means Labour’s new policies will have zero effect on reducing House Prices

Lucy Powell is to introduce some wise changes to Labour Housing policy, such as reforming cpo existing use values and capping social rents – but restricting who can buy a home – demand side restrictions – never work and never can work. It is effectively casting around for any excuse not to reform planning and increase supply – the one approach where there is evidence that it works.


Labour plans to slash affordable rents and give first-time buyers exclusive rights to purchase new-build homes for six months, it will announce this weekend, as it bids to steal the Conservatives’ claim to be “the party of homeownership”.

Lucy Powell, shadow housing secretary, will say a government led by Keir Starmer will restrict to 50% the number of properties in a development that can be sold to overseas buyers, which in some city locations has created “ghost towers” as investors leave homes empty. 

The problem is what is known as the ‘waterbed effect’ – if you restrict someone who wants to buy a service in one sub-market for that service they will switch to the second best – and likely more affordable – sub market pricing poorer buyers from that market – which creates huge ripple effects because it blocks the ‘filtering effect’ . Richer buyers buying new homes never blocks filtering. So the effect is actually counterproductive as the ‘waterbed spreads’ as buyers spill out into making previously affordable non new stock unaffordable and gunking up the filtering which drives affordability througout the whole housing market, especially low income first time buyers. Where it has been tried, such as British Columbia the results have been disappointing, they kept cranking up restrictions on foreign buyers ever more strictly to no effect. The only changes occur where contraction in China forced repatriation of capital.

[it is what} Vancouver Mayor Gregor Robertson – who, after 10 years in office, announced that he won’t seek reelection – calls the “waterbed effect of capital flooding wherever taxes are lowest and regulation is weak.” When one area tries to tamp down on the influx of foreign money, the flow simply goes somewhere else.

Business Insider

The effect is well studied in climate economics. If you introduce carbon trading in one market and not every market it has no impact on emmissions because of the waterbed effect. Capital always flows to the margin of greatest return.

Frankly the policy is dumb and totally counterproductive. Lucy Powell, any study of any housing market anywhere in the world where it has reduced house prices? Like the Sadiq Khan rent control challenge – its a challenge that cant be won, its virtue signalling gesture politics designed to deflect from the necessary pain of increasing supply and reforming regulation of unblock resistence to increasing supply i.e. planning reform.

Street Votes Via Neighbourhood Development Orders – A tactically stupid combination that takes Planning Reform Backwards @ChrisPincher


Neighbours will be given a vote on the design of housing developments on their road, in an olive branch to Tory rebels who oppose the Government’s planning reforms, The Telegraph has learnt.

Ministers are rewriting the Planning Bill after about 100 Conservative MPs suggested they would vote against it, arguing that its attempts to increase housebuilding would shut out the voice of local residents….However, in a major concession to the rebels, The Telegraph understands that Mr Jenrick will also add a new section to the Bill that will allow local people to vote on plans for development near them.

The idea, first proposed in a paper by the Policy Exchange think tank, would involve residents of a street voting on the design of new homes around them, or modification to existing buildings.

It is hoped that giving local people a say on the developments on their streets will encourage “Nimbys” to accept building works, and Tory MPs to vote for the planning reforms

The Ministry of Housing, Communities & Local Government is planning to use “neighbourhood development orders”, an obscure planning tool, to enshrine the street-level groups in law.

It is thought that groups of residents will be allowed to band together and suggest a building development for their road, such as extension of one storey to every home.

The idea is supported by many of the Bill’s critics in Parliament. This week, a group of Tory MPs formally proposed edits to the Planning Bill to include street votes.

A government source said: “We want communities to help set the rules for how their own streets should develop so that development reflects local views. The Planning Bill will reflect this, and we are exploring the idea of neighbourhood development orders being adopted at street level.

Nothing against street votes – but this is tactically stupid.. Widening a narrow and obscure rule is not major reform. Ministers have two choices, a universal legal tool of ‘as of right’ development (planning schemes) of which street orders are just one use of a flexible tool, or an obscure use of an obscure rule which will rarely be used. In teh former case they can say to back bencers, if you want your cake you must swallow the broccoli, in the latter its ‘cakism’ they can gorge and swallow nothing and never get healthy. It results in no tactical leverage on Nimby MPS. It achieves nothing and simplifys and consolidate planning law not one jet. Like everything from the Planning Exchange and Planning its not planning, lurching from one pamphlet in consistent to the last and completely half baked.

With backbench Nimbys yuo have to lead them to reforms not give them isolated one clause morsels they can vte for whilst voting down the ones they dont like. That why tactically street votes have to be part of far wider clause that include planning schemes (growth sites) and as of right development in general. If you want you cake you must eat your broccoli.

A Surprising Update on the Ox-Cam Arc

Infrastructure and Major Projects Authority – Transforming Infrastructure

Alignment and integration – HMT’s
review of the Green Book for evaluating
investment decisions using a wider
selection of benefits, implementation
of the Public Value Framework to align
decisions to priority outcomes, and
updating IPA Assurance criteria to
reflect wider priorities to support more
integrated design at the start of projects,
such as the Oxford-Cambridge Arc and in
the Thames Estuary. The government has
endorsed the National Infrastructure
Commission’s design principles for
national infrastructure and committed
to embedding them in infrastructure
projects going forward…

Example: Oxford-Cambridge Arc
Spatial Framework Data
Observatory Pilot
In February 2021, the government
set out how it intends to develop
a long-term Spatial Framework
for the Oxford-Cambridge Arc.
In line with the commitment
made at the launch of the Spatial
Framework process, we are
planning to undertake wide
public engagement and
consultation this summer to
shape a vision for the area, also
seeking views on our approach
to using data and evidence to
support the Spatial Framework.
The intention is to build a robust
evidence base to inform
development of the Framework,
but at present data across local
planning authorities, government
agencies and infrastructure
providers is in different formats,
often inaccessible, and regularly
held in documents rather than
stored as data. In line with wider
proposals in last year’s Planning
for the Future white paper, the
government wants to use this
opportunity to support better
use of data and digital tools in
local planning and development
of the Framework. The OxCam
Unit in MHCLG recently
completed a discovery into
users and needs of the people
who will use or benefit from
creating a shared, open source
digital evidence base across the
Arc, acting as an exemplar
nationally. Having built a strong
understanding of the user needs
in the discovery phase, we are
now planning to build prototypes
this summer, through the alpha
phase of the project, focusing on
solving the end-to-end service
journey for the production of
the evidence base. This digital
platform will provide the basis
for much more effective local
and joint planning and
investment, through a common,
cross-boundary, standardised
and accessible evidence base –
and thereby encourage
greater collaboration between
local authorities.

Local Natural Capital Pilot
The LNCP project is the first
project delivering under the Arc
Environment pillar. It is a Defra
Group-led project (cross-Defra,
Natural England, Forestry
Commission and Environment
Agency), with a team hosted by
the Environment Agency. It was
conceived to develop a local
natural capital plan (LNCP)
for the OxCam Arc in order
to support the delivery of
environmental protection and
enhancement as part of the
planned growth and investment
within the Arc. Within the
25 Year Environment Plan,
the government committed
to LNCPs, with the aim of
embedding natural capital
thinking into growth plans.
A secondary aim of the OxCam
LNCP project is to provide
a scalable and replicable
framework for local natural
capital plans elsewhere.

Looks like “pragmatic’ zoning for growth sites will still go ahead – FT

It was difficult to read the runes of the Times story over the weekend. Ministers had already signalled in parliament an end to the rip it up and start again approach, signalling pragmatism. As long advocated here even to the extent of publishing s draft planning act to show how it could be done.

There was a contradiction though between the headline suggesting scrapping of whole reform agenda, and text which only suggested scrapping of idea of a comprehensive zoning system replacing everything. Which was never needed as nowhere in Europe has such a system and the last thing you want to do is ape the legal basis of America n zoning. The times story however was unclear. Would growth sites have ‘as of right’ permission in principle or just another presumption, which would be meaningless. How many presumptions do we need for housing 4 5 10? The FT story today gives more clues. Its all about making Bob Seeley and the housing hosting nimby what’s app group think they have won. When in fact they have been cleverly outflanked.


Jenrick also signalled that the government had heeded criticisms of its reforms to the planning system, which seeks to liberalise laws and make it easier to build. The changes are opposed by a significant number of Conservative MPs representing seats in the south of England.

“We’ve spent the best part of a year listening to members of parliament, councils, members of the public and I think we will bring forward a set of proposals which are sensible, pragmatic improvements to the current planning system, which all reasonable people will be able to get behind.”

On Saturday, the Times reported that plans to rip up the planning application process and replace them with a zonal system would be dropped. One MCHLG insider said: “We’ve had a huge period of engagement and we do understand people have concerns” but declined to comment on whether “growth sites” for development with automatic planning permission would be introduced.

The NI vote has shown that there is unlikely to be a major rebellion. And as an EVEL would require pretty much every whats app Nimby MP to rebel – unthinkable. Prgamtic planning reform is going ahead. The real test though is hether it makes sensible proposals for simplification of planning law and strategic planning.

Times Reports Wholesale Zoning to be Dropped – But Growth Sites will remain


The biggest shake-up of planning laws for 70 years is set to be abandoned after a backlash from voters and Tory MPs in southern England.Reforms designed to help ministers hit a target of 300,000 new homes annually by the middle of the decade will be watered down, The Times understands.

The government had intended to rip up the planning application process and replace it with a zonal system, stripping homeowners of their rights to object to new houses. It said that councils would also be given mandatory housebuilding targets.Robert Jenrick, the housing secretary, will announce a more limited set of changes.

Tory MPs blamed the planning overhaul for their party’s shock defeat by the Liberal Democrats at the Chesham & Amersham by-election in June.The need for wholesale reform has been questioned after developers set records for housebuilding. Almost 244,000 homes were built in 2019-20, the highest number since the late 1980s, and developers appear to have coped well with the pandemic. In the first three months of this year construction began on 46,010 dwellings, an increase of a third on the same period last year and the highest number of quarterly starts for 14 years. There are more than 1.1 million homes with planning permission waiting to be built, analysis by the Local Government Association has found.

Ministers are expected to abandon their intention to make housebuilding targets mandatory. The zonal system proposed last year is also likely to be dropped — although councils could be asked to designate “growth sites” where there is a presumption in favour of development and planning applications will be fast-tracked.

..”The backbenchers are likely to seek more concessions. Bob Seely, a leading rebel, said: “Communities . . . have a right to demand to be listened to without being shouted down by the Westminster elite as so-called nimbys.”The Ministry of Housing, Communities and Local Government said: “We will not comment on speculation. Our response to the consultation will be released in due course.”

We have long argued that wholesale and universal zoning is not needed, and indeed applies nowhere in Europe, and was only really most strongly needed to enable large growth sites- so it seems that this is the path they are going down. What is worrying is SPDS spinning the need for large scale housing growth has gone away – what completions are likley to collapse in 21-23 because of labour abd supply chain problems. The litmus test will be whether any ‘as of right’ development proposals remain. If they dont it will be yet more unproductive tinkering and not reform.

Some Notes on the Pomponi Study on Optimal Sustainable Density

A study by Francesco-Pomponi (professor at Napier) and colleagues is gaining at lot of attention.

Decoupling density from tallness in analysing the life cycle greenhouse gas emissions of cities in Urban Sustinability (part of the Nature family).

Achieving optimal use of space and maximal efficiency in buildings is therefore fundamental for sustainable urbanisation. There is a growing belief that building taller and denser is better. However, urban environmental design often neglects life cycle GHG emissions. Here we offer a method that decouples density and tallness in urban environments and allows each to be analysed individually. We test this method on case studies of real neighbourhoods and show that taller urban environments significantly increase life cycle GHG emissions (+154%) and low-density urban environments significantly increase land use (+142%). However, increasing urban density without increasing urban height reduces life cycle GHG emissions while maximising the population capacity. These results contend the claim that building taller is the most efficient way to meet growing demand for urban space and instead show that denser urban environments do not significantly increase life cycle GHG emissions and require less land.

A frequent criticism of the mantra that denser is more sustainable is that denser is more energy efficient is that when you add in lifecycle costs of buildings taller is not necessarily more sustainable. The study is right to add in lifecycle costs and does so by a novel method of decomposing FAR from a single scalar value into a vector of height and land coverage components.

The study is also novel in using parametric methods of 5,000 sample 1 km grids. The result though does not look appealing in terms of open space access or daylight and sunlight, neither of which were analysed, though they often are using parametric methods.

The fault in the study lies in it looking at the 1 sq km grids in isolation and not considering transport costs or land values. You need to analyze an urban system and not just isolated grid square (and probably use hex bins to reduce axial spatial distortion). The study tell us about building energy use but not about optimal urban planning strategies and whether slightly or even a lot taller in some areas is an optimal urban planning strategy if it minimises city energy use

Did Crichel Down Rules led to Rutland Scrapping its Local Plan and Turning Away HIF Funding?


Officers advise Midlands council to withdraw local plan after it refused £29.4m infrastructure funding

IN march this year the Council refused to accept the HIF funding necessary to make the St Georges Barracks scheme viable and the local plan sound. After a meeting closed to press and the public. All that was said aftwrwards that it was too risky for RCC to be the accountable body

Why should it do such a seemingly dumb thing? An FOI request from St Georges the developer shows why.


Can you advise the legal advice on the applicability of the Crichel Down rules for disposal of Government Land obtained under Compulsory Purchase provided to the CEO of RCC regarding the proposed development of St Georges Barracks


Rutland County Council has not received any legal advice on the applicability of the Crichel Down rules for disposal of Government Land obtained under Compulsory Purchase regarding the proposed development of St Georges Barracks.
Please be advised that for information regarding Crichel Down rules, please contact the Ministry of Defence (MOD).

However the Crichel Down rules may apply. Whatever the reason the minnows of Rutland seemed unable to bear any risk on 29.4 million. Which shows the idea of tiny districts locally leading and being accountable for massive developments in a non starter. Developments have to be backed by Homes England or the government including the government setting up ‘accountable bodies’ where necessary.

Also as the DCHLG select committee has suggested the Crichel Down rules are archaic and are holding back massive sites on former military brownfield sites. Even so mystery remains, does not the risk on Crichel Down rest with the owner the DIO?

Gatwick Announces Plans for Second Runway


Gatwick bosses today unveiled £500 million plans for a second runway that would boost the airport’s capacity to 75 million passengers.

Chief executive Stewart Wingate said a 12-week public consultation on the proposal would begin on September 9.

The scheme would involve upgrading Gatwick’s Northern Runway and repositioning it by 12 metres in time for an opening in summer 2029.

It is only currently used as a taxiway and as a standby for the main runway during maintenance and emergencies.

The would be used for takeoff only by smaller European shorthaul aircraft with the main runway still being used for all landings.

The bill for the airstrip itself is estimated to be around £500 million with extra terminal capacity and other work pushing the total cost up to the high hundreds of millions.

Mr Wingate said that despite the current depressed level of international travel the expected passenger numbers to recover to pre-pandemic levels by 2025 or 2026 with London’s capacity being exceeded by demand once again soon after that.

With Heathrow’s planned expansion increasing its capacity to 120 million passengers, the two schemes would increase London’s overall capacity to well over 250 million by the 2030s including Stansted, Luton and Southend.

Mr Wingate said the project would create 18,400 extra jobs for the area by 2038.

The plans would be considered a Nationally Significant Infrastructure Project requiring the airport to apply for a Development Consent Order. It hopes to have planning consent by 2024.

Gatwick has operated as a single runway airport since it opened in 1958 and was banned from building a second runway by a council planning constraint that expired in 2019.

Mr Wingate said: “While we are currently experiencing low passenger and air traffic volumes due to the global pandemic, we are confident that Gatwick will not only fully recover to previous passenger levels, but has the potential to continue to grow back into one of Europe’s premier airports.

“Our plans to bring our existing Northern Runway into routine use will not only help to secure that growth but will also ensure many thousands of additional jobs and a vital boost to the economy for our local region.

But opposition group, Communities Against Gatwick Noise and Emissions, condemned the plans, which they said were motivated by “greed”.

A spokesperson said: “This move can be for one reason only; shareholders seek to sell Gatwick with 2 runways.

“Whilst the children are off school and elected members holiday, Gatwick Airport choose a time when the skies are quiet to announce a public consultation that flies in the face of the climate emergency, we are all facing”

“It is despicable for a company to ignore the emissions that planes in and out of Gatwick produce that is causing grave danger for future generations that will have to pay the price for today’s greed of this leisure airport.”

Land Use as a System and Net Zero Planning

Land use planning needs to undergo a systemic revolution in its tools and methods to achieve net zero.

This needs to include but go well beyond plot by plot design.

Take for example a tree. As it grows it absorbs CO2. When it dies it rots and releases it, the carbon cyle.

If that tree is used as a building material it becomes ‘stock’ of carbon and release is delayed, so long as it is used, reused or recycled. If the wood or disused building materials is burned it releases it – it becomes a flow and increases atmospheric CO2. If you replant in forests trees more quickly they become a new carbon sink, at least temporarily. Though there is no enough land on the planet for this to be an effective geo-engineering strategy.

Take energy recovery. A few years ago this was seen as unproblematic renewal energy. Now it is a net carbon release problem. The two energy recovery plants approved in the last years in the UK each have conditions requiring best in class carbon capture technology to be used over their lifetimes, even if that technology hasn’t been invented yet. Yes I’m skeptical of that, I think we have to shift to anaerobic methods of energy recovery (even if the technology is still flaky) which produces biochar as ‘waste product’ which can be fed back to soils and is carbon negative. Yet this is an example of planning hesitantly and pragmatically creating solutions for net zero and understanding that solutions will evolve rapidly.

Recently I got into a twitter discussion about the possibility of zero carbon construction where I suggested using softwood. I was criticised because the person said cutting down trees released carbon and you could never replant trees fast enough. I suspect they had read an article on the carbon effects of deforestation effects for charcoal and confused it with commercial forestry. What this does illustrate though is the need to understand the lifecycle carbon costs of building materials and the opportunity costs of building (i.e. what alternatives the site could be put to). These issues are complex and require a systems level understanding of land use and land use economics, rate of change of inputs and rate of change of outputs – wasn’t it always thus.

A systems level understanding is essential because across a spatial plane it is quite possible to have intensification of agriculture on one part, urbanisation with improved biodiversity on another, more forestry on another part, and rewilding on what remains – and not starve and not die.

There is a cohort of those who, failing to take a systems view, looking at each site individually, believe there is no solution and so we must stop building all together. What this paleolithic brand of Nimbyism take out of the equation is people. If humanity died off the planet would be better off so no need to build houses or improve human welfare as development and ‘growth’ is bad. This kind of misanthropic Nimbysim cannot be bought off with better design and more participative planning, though other brands can be. This brand – the Advocado Nimbys (Pretending to be green but espousing brown policies identical to fascism once you scratch the surface) must be defeated not placated, because if they are not defeated people die because of a defeatist attitude to global warming and extinction to which the poorest and unhoused suffer first. Worst of all they have no plan to go carbon negative, and throw global warming into reverse, because they see it as a technological fix and some kind of evil conspiratorial plot by profit seekers.

Planning thinking has nowhere near enough understanding of the global systems of land use to be able to see, definitively, what zero carbon planning is. However we have to learn, and the best way to learn is to do. Its like broccoli – its time to stop pushing it around on the plate and start eating some.

Bob Seely Mps Ridiculous Myth of Declining Northern Towns Able to Mop up the 5 Million Houses Needed in South


Whilst better design is part of the issue, frankly numbers, density and providing homes for local people is just as important. It is not rocket science to understand that when a community has seen 50 or 100 percent population increase – when northern cities have gone through active depopulation over the past 50 years – people get fed up

There are currently no large northern cities declining in population. The only places declining according from 2010 to 2020 population estimates are:

Barrow-in-Furness: 69,429; 66,726; down 3.9%

Copeland: 70,629; 68,041; down 3.7%

Blackpool: 142,753, 138,381; down 3.1%

Scarborough: 109,014; 108,737; down 0.3%

Isles of Scilly 2,228; 2,226; down 0.1%

All but one of these are seaside towns, three have narrow coastal strips on edges of national parks.

Go to any Northern Town bar perhaps Liverpool and you will find they simply don’t have enough land in their boundaries to meet all their needs, and often even more constrained, national parks, AONB, moorland etc. ITs simply a myth that you can solve the isle of wights problems in areas with declining populations – like errr the Scilly Isles.