New Research – Home Ownership Crowds Out Entreprenuership

From Brake, Hilber and Silver at the LSE – an official SERC funded piece of research.

Our fixed-effects estimates show that purchasing a house reduces the likelihood of starting a business by 20-25%. This result is driven by
homeowners with mortgages and persists for several years after entering homeownership.

The negative link can be rationalized by portfolio considerations: leveraged housing investments crowd out entrepreneurial investments. Alternative explanations based on credit constraints find little support in our data.

The effect is larger and more significantly estimated when focussing on entrepreneurs who employ dependent workers or on those who hold managerial and professional positions. This

indicates that homeownership is negatively linked to „genuine entrepreneurship‟ – and thereby to firm creation, innovation and ultimately economic growth– and not to „self-employment out of necessity‟ or as a „last resort option‟ …

We argue that this finding can be rationalized by the fact that homeowners typically have to overinvest in housing…and therefore cannot adequately diversify their portfolio. As a consequence, individuals choose not to start-up their own business venture at the same time as becoming homeowners since this would imply taking on significant additional risk  Stated differently; investments in homeownership crowd out entrepreneurial engagement.

Entrepreneurship is not only a labour market decision: starting an entrepreneurial venture could be conceptualized as an investment choice and analyzed in the context of portfolio decisions. From this perspective, housing plays a very prominent – although distorting – role…

In a nutshell, purchasing a house concentrates an individual‟s wealth into one single asset and this makes it difficult for individuals to adequately diversify investment risk. This effect is particularly significant for highly leveraged homeowners. As a result, individuals choose not to start-up their own business venture since this would imply taking on additional risk.


PAS formalises its advice on #NPPF Transition Arrangements and Extant Guidance


Things we think you should know about the NPPF

We have collated a list of key points and explanations from the National Planning Policy Framework to clarify its impact on your current policies and plans.

Transitional arrangements and plans

The transitional arrangements for plans and the National Planning Policy Framework (NPPF) are in Annex A, implementation, paragraphs 208 – 219. These tell you about the status of your adopted or emerging plan policies in relation to the NPPF.

Paragraph 214 applies to adopted development plan documents(DPDs). These policies are not out of date just because they were adopted before the national policy was published. The policies have full weight for 12 months (until 26 March 2013), even where there is limited conflict with the NPPF. From 26 March 2013 the weight given to the policies which are in conflict with the NPPF will depend on how [sic] they are to the NPPF; the closer they are, the more weight they will have.

What does this mean for me?
You need to know which policies are in conflict, to a greater or lesser degree, understand your risks (how much development activity around this policy area do you anticipate) and decide what to do about them – single issue review? Full review?

Paragraph 216: emerging development plan documents – if you are still working on your DPD(s) (now commonly referred to as a Local Plan). Or indeed if you are revising an existing adopted DPD. As you progress the review or preparation of your plans, the policies within them will gain weight. If you can show that there are policies with no unresolved objections, and which are consistent with the NPPF, these will have more weight than those which still have objections raised against them.

What does this mean for me? 
The more advanced through the process you are, and the more your policies meet the bullet points in para 216 (stage, degree of unresolved objections, consistency with NPPF), the more useful, and useable, your policies will be. So keep focused, keep going, and the sooner you can get your compliant plan adopted, the better.

Paragraph 215: ‘saved policies’ – the phrase ‘in other cases’ refers to policies which are either saved, or were adopted in ‘old style’ local plans or Unitary Development Plans (and so are not DPD policies). These policies are still material considerations but will be ‘trumped’ by the NPPF where they are in conflict with national policy.

What does this mean for me? 
These policies are at risk. You’ll need to work out how compliant they are with the NPPF and how to get appropriate new policies adopted as soon as possible. Policies that are compliant with the NPPF will carry weight.

PAS has produced an NPPF checklist which sets out new, or significantly different, policies in the NPPF so that you can assess how your plans stack up against them. This will help you determine the scale of change you may need to make to your plans and policies, whether adopted or under preparation.

Status of Government documents

Annex 3 of the NPPF lists documents it has replaced. If it is on the list, it is a defunct piece of government advice/policy/guidance. But many PPS and PPG had ‘companion guides’ or other forms of guidance notes produced alongside the policy document. If not listed in NPPF Annex 3, (and not previously deleted), these other documents are still extant. So, for example, the Plan Making Manual, or Annex E to PPG7, still remain.

Although, if a paragraph or section of the companion guide/annex refers you to a PPS or PPG which has been replaced, then that part can’t be considered relevant. The NPPF will always ‘trump’ other guidance notes where there is conflict However, most of the NPPF is not concerned with the ‘how’ question. Companion guides can contain useful information on how to deliver certain policies or carry out certain pieces of work.

In response to this, the Department of Communities and Local Government will be reviewing what guidance remains necessary, and in what form it should be produced and maintained. Some of this may be produced by other parts of the sector, for example. Once this review has taken place, it will be made clear which other guidance notes or parts of them remain, and which are deleted.

The opnly point disputed here is that underlined as that is not what the NPPF says and the argument meaning that ‘adopted under…2004…’ includes the schedule 8 transitional provisions i.e. oild style plans adopted after 28th Sept 2004.  I havent seen any legal opinion on this point.  The reference to Annex E to PPG7 is correct – see the discussion on Martin Goodall’s blog

Double Dip Dave

All sing along after (with changed lyrics) after the GDP figures out today.  It seems the ruse of bringing petrol purchases forward a couple of weeks didnt work then George.

The collapse in contruction expenditure is the key.  The Bank of England is surprised by this, perhaps they should get out of London more and see the dire state of the UK housebuilding and construction outside of London and hotspot areas of southern England.

Head in the clouds, and a mouthful of pie
Head in a blouse, nobody loves him
I see why

Double Dip Dave, Double Dip Dave
Oh, Double Dip Dave
Double Dip Dave, Double Dip Dave
Oh, Double Dip Dave

“I love George, I love Chipping Norton” on the windowscreen
With never the need to fight or to question a single thing

Double Dip Dave, Double Dip Dave
Oh, Double Dip Dave
Double Dip Dave, Double Dip Dave
Double Dip Dave

He’d love to touch, he’s afraid that he might self-combust
I could say more, but you get the general idea

Double Dip Dave, Double Dip Dave
Double Dip Dave, Double Dip Dave
Chipping Norton,  Chipping Norton
Double DipDave, Double Dip Dave
Double Dip Dave, Double Dip Dave
Double Dip, Double Dip Dave
Double DipDave, Double Dip Dave
Oh, Dave, oh, Double Dip, Double Dip
Double DipDave
Double Dip Dave, Double DipDave
Oh, Dave, oh, Dave, oh, Dave
Oh, Dave

Apologies to Morrissey

and the Stranglers  Double Dip Dave

Dave was from out of town
Chipping Norton likely too
Hadn’t read De Sade to Marx
Less read than me and you
PR pays good bread
It pays for drugs and kicks
Dave only had one love – himself
Had no real need for chicks
Dave was so far ahead – in the polls
But now he’s dead

I’m not going to cry
I bet he hit that omnishables high

I guess he lost control
And welcomed in the night
It was too much for him
What were his thoughts that night?
The River Thames is cold
It keeps on flowing on
But it left Dave alone
It just kept flowing on

There’s city sickness here
But now he’s dead

Late night a 10 Downing Street in the west of the city
There was a place there where he lost himself
Strange feelings did he feel there
Strange people did he meet there
Angry sounds did he hear there
Like the howling of bulls

First post #NPPF Legal challenge for decision bypassing it in Brum

Last year Sainsbury’s submitted a planning application(2011/08251/PA) for a store at Sutton Road in Erdington Birmingham on an out of town centre site.

The proposal included a supermarket with  store, with a sales area of 4,658 sq m.

Now the decision came before the Planning Committee just after the NPPF was finalised with the committee report and of course the application supporting documents written.

The retail analysis went to 2019, not the 10 years as required by the NPPF as of course it was submitted prior to the finalisation of the NPPF.  However at committee, where the recommendation was for approval despite a 10% + hit on on Erdington Town Centre stores and objections from owners of a precinct there theat they proposed redevelopment.

The Chamberlain Files

New River Retail Ltd, owners of the Central Square shopping centre, insist that they are on the verge of bringing forward a redevelopment proposal to build a 4,600 sq m foodstore on the Central Square site.

Allan Lockhart, a New River Retail director, said a report drawn up by city council planning officers recommending approval for the Sainsbury’s scheme was “defective in a number of respects”.

Mr Lockhart added: “New River is one of the UK’s leading real estate companies and we have a £275 million portfolio. We have a deep commitment to town centres and Erdington is very much part of the programme.”

Claims by the council that the Central Square shopping centre was not viable were incorrect. Mr Lockhart said his company had a “full development team” in place and was ready to submit a planning application for a new foodstore.

He added: “We have no desire to pursue this matter in the High Court, but we are ready to go down that route if necessary.”

A key issue was whether the scheme complies with the NPPF.

City planning officer Tracy Humphreys said she was confident that the council had followed all of the procedures laid down in the NPPF. She accepted that the new Sainsbury’s store would be close to three other superstores – Asda at Minworth, Tesco at New Oscott and Sainsbury at Castle Vale – but all of the stores would retain a “healthy customer base”, she insisted.

However, planning committee member Coun Barry Henley (Lab Brandwood) said: “We have to take the threat of a judicial review very seriously. We are going to shift things away from the town centre, it’s going to be a major development, and there has to be a 10-year assessment.

“If we don’t do this, we will be overturned when it comes to court.”

Committee members voted that they were minded to give Sainsbury’s approval, as long as the store could produce a 10-year impact assessment and agree financial contributions under a Section 106 agreement.

Err producing evidence required to make a decision after the decision is made, or has a decision been made?  One thought on that Batty, Batty, Bat caselaw – such conditions are illegal.  Wooley V Cheshire anyone.

The rational response would have been to postpone the agenda item until a 10 year impact assessment was produced and then re-consult, and in the absence of that refuse on sole grounds of insufficient information as required by national policy.  That would have avoided a costly appeal on all grounds, and indeed the LPA could have threatened to claim costs.

As the NPPF says

the impact of the proposal on town centre vitality and viability, including local consumer choice and trade in the town centre and wider area, up to five years from the time the application is made. For major schemes where the full impact will not be realised in five years, the impact should also be assessed up to ten years from the time the application is made.

So what if this shows a ‘full impact’ how can members decide without the full evidence?.  The key word here is ‘minded’ it seems that, without seeing the final minutes, the resolution mashed together a standard S106 resolution with one where members take a preliminary view prior to a final one.  If that is the case it will be reported back and im sure the lawyers will creatively amend the minutes to say what say what politicians meant to say rather than what they said (which after all is the official doctrine used by cabinet secretaries).


The Very Late HOC Debate #NPPF (part one) and Greg Clarke’s ‘localist’ message to Inspectorate #planorak

The promised HoC debate on the NPPF started but did not finish yesterday – it was at the end of the Agenda and did not start until 9.35, leaving only 25 minutes before adjournment motions and only time for the Ministers much interrupted opening speech, it will conclude on another day.

Here is the Hansard Record

The only things of note are firstly s definition localism that will be much repeated because it verges on self parody.

 the essence of localism is that local decisions are taken locally in accordance with a plan that reflects all the views of local people.

Errr all the views, however incompatible,  Fantasy world.  Of course when decisions are taken by a planning inspector and the issue is that local views are in conflict with a national framework it is no longer a ‘local decision’, even less so when an appeal is recovered or called-in.

Which begs a question for several MPs – shouldnt inspectors be reigned in, two examples of this at last nights debate:

Chris Heaton-Harris (Daventry) (Con): I am completely with my right hon. Friend on the consistent application of the plans, on the local plans themselves and on local people being involved, but what then of the final piece of the jigsaw, the reform of the Planning Inspectorate, which in many rulings completely contradicts all local input?

Greg Clark: Part of the problem with the Planning Inspectorate is that, in the regime to date, it has been required to interpret voluminous national planning regulations—many times in a state of inconsistency—and to apply regional spatial strategies. The conflict between those things, caused by successive Governments and, in particular, by the previous Government’s imposition of regional strategies, often leads in the planning system to a real tension and often antagonism, which is a disaster for the future prosperity of our country.

By putting power into the hands of local people so they see that decisions are going to be taken locally and respected locally, part of the purpose of our reforms is to move away from the situation in which decisions taken locally are overturned by the Planning Inspectorate. I have made that very clear to the inspectorate. I went to speak to the inspectorate the morning after we published the NPPF, and I made it very clear that the framework is a localist document which it is to respect.


Martin Horwood (Cheltenham) (LD): I congratulate the Minister on all his congratulations, which are well deserved. When it comes to local democracy, the framework compares very favourably with the regional spatial strategies, which wasted tens of millions of pounds and generated tens of thousands of objections. Does he accept that there is a slight risk that when local plans come to be examined in public, we will again see the influence of the Planning Inspectorate and elements of the local plans may be overturned? Does he agree that when it comes to local plans, the default answer from the Planning Inspectorate ought to be yes?

Greg Clark: I met the Planning Inspectorate and almost all the planning inspectors who were in conference in Bristol the day after the NPPF was launched. I made it crystal clear that it provided for a localist approach and provided a framework for local decisions, and that I expected decisions to be taken in that vein. I will also expect to see a sample of the decisions that are being taken, including after the examination of plans, to ensure that that is happening. On the basis of my direct discussions with the Planning Inspectorate, I am very confident that that is understood.

Note how the answers appear to support the MPs but did not at all.  The NPPF may be a localist document, in that it promotes neighbourhood plans and has much less national policy etc.  But it still is a statement of national policy.  In a 100% localist world it would not exist.  It contains national policy which very clearly it states that local authorities should follow and this national policy is required to be considered by inspectors.

In law there is no doctrine that because a decision is locally supported that it automatically should be supported in the final decision – of course if this were so we would have no appeals system which parliament has specifically mandated in the 1990 Act.  Nor in law in their any principal that the views of  local people carry any greater weight than any other material planning consideration, if that is those views are material planning considerations.  Indeed The Planning System General Principles  is still extant and states in line with planning law at para 27.

local opposition or support for a proposal is not in itself a ground for refusing or granting planning permission, unless it is founded upon valid planning reasons.

Indeed planning lawyers will always tell you that one good planning argument will outweigh thousends, indeed any number of non-planning or weak planning arguments.

What then does ‘localist document which [the planning inspectorate] is to respect’ mean?   First decision making [I refuse to use the mandarin old fashioned form decision taking] .  If a planning appeal is made then occasionally it may be an unwinnable appeal as it is contrary to an adopted local plan.  In line with the law that appeal has since 2001 and under the NPPF that appeal will stand little success – no change.  In that sense that principal of localism is retained and is not changed by the localism act.  If the decision made locally but the appellenat belives it breaches national policy and or other material planning considerations they can appeal.  The Inspector cannot then overside a clear conflict with the Ministers own policy without giving good reason.  Greag Clark did not and could not without nullifying the NPPF inststruct inspectors to ignore or give little weight to the NPPF.  Indeed if this was the intent either a change in the law is required, and no changes were made in the Localism Act, or on the face of the NPPF.

There then is no principal of a localist bias on appeal decisions.  Indeed that very day Grant Shapps at an HBF lunch said that the effect of the NPPF would be to force LPAs to allocate and approve more land for housing.  This underlines an important point, once you strip away those areas national policy doesn’t cover and those policies in the NPPF that say the final decision is a local one on all other issues a statement of national policy is a centralist document.  There is no getting around this. Indeed it is logically impossible to talk of localism without also talking of all those other areas where centralism remains, otherwise parliament would have voted to abolish itself.  As far as I can the NPPF has not been published by those Clapham High Street stalwarts the Socialist Party of Great Britain.

On the Cheltenham Question.  Of course when the 2004 Act was debated then ministers stated in parliament in answer to similar questions that the act did introduce a presumption in favour that a plan was sound on entering the examination process.  It did not take 5 minutes for planning lawyers to argue that was nowhere on the face of the bill and would make a nonsense of national policy.  Indeed at the Ashford Core Strategy the promoters of the Chimington Green Urban Extension – not favoured by the LPA but included in a previous local plan, produced a great fat counsels opinion on this point which was accepted by the Inspector and subsequently as a precedent (sadly the examination webpage is no longer online).   The argument was that the plan had to be supported by evidence, and here it was not.  Indeed it was found by the inspector that the LPA had distorted the traffic evidence.  The Inspector found in favour of Chilmington Green because it was needed to meet housing targets and because the promoters has met the legal tests of having SEAd the scheme and conducted public consultation.  Indeed if any inspector disregarded national policy – on key matters such as meeting objectively identified need, their would be JR and further delay in the system, particularly for housebuilding.

Indeed I can’t think of a case where a planning inspector acting in the ‘quasi judicial’ sense that the DCMS seems to have forgotten has been remiss in overriding local opinion on a plan – some I might have disagreed with but one of the reassuring aspects is that the quality of local plan inspectors with very few exceptions is very good and all such decisions have been justified by national policy, sometimes perhaps a little too much by the book.    There is general agreement in the planning world, apart from CLLRS and MPs running on nimby manifestos, that binding inspectors report are the aspect of the 2004 Act that works most well.  That principle remains the Localism Act (with procedural variation – the changes must be agreed by LPAs but if not a plan could be found unsound).