The Benchmarks Formally Known as Housing Targets #NPPF

John Rentoul in the Independent looks at the working of the Cabinet Office Implmentation Unit – the successor to Sir Micheal Barber famous Delivery Unit (‘Deliverology’), after the Prime Minister said ‘all he did all day’ was attend meetings

where I just go through the programmes we’ve set out … making sure that the Government is delivering on things we said we would do.

Rentoul says

Those “top-down targets” that the Conservative derided in opposition: many of them, and many new ones, are now called benchmarks. You cannot sensibly run modern government without them.

The DCLG itself does not publish any ‘benchmarks’ at all just ‘indicators’  The indicators are just just 7 in number and are attached to the DCLG Business Plan.  

It includes net additions to the housing stock (annual) by ‘local housing authority and regional levels‘  So no regional targets just eeerrrr regional indicators.  But the fact that a target is going up or down does not indicate things are getting better.  You need to have a target or benchmark, call it what you, will for that.  That could be whether household formation based levels are met, performance against the annual level of the last government (a very bad benchmark as household formation levels have changed) whatever but you need some kind of ‘benchmark’ to make sense of it.

Now the Implementation Unit does not publish any list of ‘benchmarks’ just a structural reform plan indicating what policies should be delivered by which department.  These are then set down in departmental business plans.

So does David Cameron get to see any list of ‘benchmarks’  which measure if policies are working, take for example housing.  There are three possibilities.

1) There is a secret list of benchmarks designed to avoid the accusation that the government is target driven (FOI requests at the ready);

2) Grant Shapps is such a golden boy that he is exempt from having benchmarks measuring housing completions

3) The Government is so incompetent that the Prime Minister doesn’t actually access DCLG and Ministerial delivery on home-building by having no benchmark whatsoever.

So what do you think it is?

Know if you were a government based on evidence and not ideology you would in the arena of deficit reduction set down benchmarks based on your economic theory that  the act of reducing government borrowing will lead to increased business formation – that for example if business investment had increased (because it is supposed to be no longer ‘crowded out’) or new business formed (genuine new start ups not the unemployed doing the same job as contractors – they are not entrepreneurs) – so are there any such benchmarks?  Can any civil servant take a volume of benchmarks and go to a minister and say – sorry minister but on the evidence of the last two years we can clearly tell this ‘plan a’  programme is not working or is proving counterproductive?  Of course not.  Indeed in the housing field you might for example measure how many new housing sites cam about through neighbour planning as opposed to local plans.  That isnt measured at all.  Indeed the two sites mentioned in the commons as examples of this – Dawlish and Thame – were already proposed in core strategies.  So the theory that abolish regional plans and replacing delivery of allocations bottom up has no evidence gathering or research programme to test if it is working at all.  Indeed the government wont even be able to tell if the NPPF results in any more up to date plans but it no longer keeps a local plans database.  Indeed from the many requests I receive it seems I am seen as the person now fulfilling this function!

Sadly this shows that if a politician claimed this was the most incompetent government of modern times neither ministers or civil servants would have the evidence to hand to show otherwise.  It is a bit like John Redwoods time as Welsh Secretary.  We cannot tell if he improved housebuilding or not as he stopped measuring it as an anti-‘red tape’ measure.

Why George Osborne Wont be Able to Repeat Geoffrey Howe’s Post 82 Recovery

Tory support heading down towards 25%.  Economists writing to newspapers describing how cuts will drive down aggregate demand and feed a spiral of decline.  Grumbles and splits in cabinet about the need for a plan B.

Not just today but the situation Geoffrey Howe experienced in 1981.

George Osborne’s prescription and ideology has always been to repeat the ‘supply side revolution’ of 1982-1987, where growth at one point hit 3.5%.

Although critics will immediately note that this recovery was largely job free as unemployment continued to increase until the late 1980s.

Note that the big bang didn’t occur until 1986 it was irrelevant to this period of growth.  What was important though was a rise in north sea oil revenues and a fall in the value of the £ to more competitive levels against the dollar.

North Sea Oil Revenue

There was a major difference though between then and now.  The deregulation of buildings societies led to a private sector credit boom which offset to a large extent the falls in public sector borrowing.  This led to a a house price boom and house building boom – egged along by Nicholas Ridley imposing national housing building targets at the regional level.  82-86 saw house prices increase at bubble like nominal  levels of over 10%/annum.

This nominal rise – fuelled by a high capacity to increase lending by the equity value of building societies – was increase by finally getting inflation under control during this period.  So housing became an increasing store of value.  In 1982 Q2 the real average house price was £65,217 having fallen for four straight years.  By 1987 Q2 it has risen to £90,858 a rise of 39%.  Housebuilding rose from around 190,000/annum in 1982 (which incredibly by today’s low numbers was a the lowest number of completion’s since the 1920s) to around 240,000 annum by 1986.  Indeed the growth in private bank/building society credit during this growth was such that by 1985 the Treasury had given up the ghost on monetarism and attempting to control the money supply by controlling state money.

Osborne benefits neither from oil exports or housebuilding booms.  There is no dramatic fall in cost push inflation, no major productivity increase in labour (though in the 80s the evidence was this was due to layoffs), no major growth in self employment (though again in the 1980s the evidence is that this was due to layed off people becoming self employed as demand recovered rather than a rise in self employment).  The evidence from the 80s was that other supply side measures such as Enterprise Zones had almost no net effect on output simply diverting employment growth and reducing tax receipts.   Privatised industries grew but because of higher monopoly prices and the prior recovery  in demand.

Osborne is trapped because far from an increase in private sector credit to offset public sector deleveraging we have simultaneously public and private sector deleveraging.   No economy can grow if both sectors are deleveraging at the same time – a double balance sheet recession.

Growth in the private sector requires investment.  As Schumpeter wrote investment can come from two sources – Robinson Crusoe type savings – money stashed away to one day spend on investment, or through bank credit extended on the basis of future profits.  Today we have the private sector piling up its balance sheets yes but with no signs of profitable investments to spend it on.  Lowering interest rates does not increase this type of investment as it does not come from borrowing but savings, indeed if interest rates are low these kind of savings become forced as alternative relatively risk free assets are hard to come by.

Indeed the Austrian story of growth through investment funded by savings, which Osbourne and his friends abide by,  has a fatal flaw.  As theory it only works if the investments and savings are overlapping as if everyone saves at once, as most private firms with positive balance sheets are doing, then aggregate demand falls.  If saving is done in an overalpping way the saving by one firm reducing demand is offset by the result of an investment of another leading to higher output (through higher productivity) and net growth to the economy.

As ever Osborne’s world view is that of the household or firm spending and borrowing not the effects of all households and firms collectively.

Net Gainers and Net Losers – Balance, Sustainability and the #NPPF

Just a short note on to what extent you can trade off social, environmental and economic in the NPPF.

Para. 152 of the NPPF

Local planning authorities should seek opportunities to achieve each of the economic, social and environmental dimensions of sustainable development, and net gains across all three. Significant adverse impacts on any of these dimensions should be avoided and, wherever possible, alternative options which reduce or eliminate such impacts should be pursued.

But this only applies to plan making not decision taking.  However para.8 says

to achieve sustainable development, economic, social and environmental gains should be sought jointly and simultaneously through the planning system.

But what if a scheme seeks net gain across all three areas in a decision taking case and is not achieved.  The wording is ‘sought’ and not ‘required’.

Para.  9 and para. 109 of the NPPF say we should be moving from net losses to biodiversity to net gains, 109 adding the rider ‘net losses’.  As Simon Marsh of the RSPB points out this is new compared to previous pre NPPF policy and is highly welcome.

Whilst at numerous times in the NPPF it talks of the need to net gains for the economy – growth.  Such as in the core principles where ‘every effort’ should be applied to acheive it.

What about the social side of sustainable development then.  It is not until section 8 that social issues are considered again outside the introduction.  Providing a scheme doesn’t harm the social facilities needed and provides new ones needed – e.g. schools, open space etc.  There is no equivalent of the other two arms of  sustainable development that there has to be a net gain in decision taking matters when not required by a plan.  So we are still back in the old fashioned world of trade off where economic aspects are given greater priority these social aspects.  Biodiversity gains but society may lose.

This is perhaps nowhere clearer in the NPPF than on the issue of affordable housing and the trade off with viability.

The implication being that if local communities wish to avoid this economy –  society trade off they should find a way in their local plans to do so – providing they can supass the viability testing of course.

A thought but there is a quite straightforward way under the 1990 that LPAs can do that.  If a housebuilder with an option on land claims that affordable housing at say 35% would be unviable in a development plan then put a clause in the local plan that it will be acquired under section 226 of the act (note section 10 of the New Towns Act 1981 still on the Statute book also allows CPO. other development corporations under other acts also have CPO powers).  Section 226 says:

(1) A local authority to whom this section applies shall, on being authorised to do so by the Secretary of State, have power to acquire compulsorily any land in their area if the authority think that the acquisition will facilitate the carrying out of development, re-development or improvement on or in relation to the land, which] is required for a purpose which it is necessary to achieve in the interests of the proper planning of an area in which the land is situated.

(1A)But a local authority must not exercise the power under paragraph (a) of subsection (1) unless they think that the development, re-development or improvement is likely to contribute to the achievement of any one or more of the following objects

(a) the promotion or improvement of the economic well-being of their area;

(b) the promotion or improvement of the social well-being of their area;

(c) the promotion or improvement of the environmental well-being of their area.

Subject to the CPO being ‘back to backed’ by a development partner so there is no cost to the LPA.  Such CPOs of course are at existing land use value and the CPO inquiry can be concurrent with the EIP and by the same inspector. (see circular 06/2004).  Under the 1981 Aquisition of Land Act the ‘relevent date’ for CPO valuation is the date of the lands tribunal decision of the date value are agreed, or the date vested if that procedure is used.  (see para 23 of DCLG 2010 guidance).  So all a local plan need do is state in a phasing policy that the allocation of the land shall not take place until after the land has been acquired by the LPA.   This is pretty much the process used by former New Town Development Corporations to avoid penal compensation under the 1961 Land Compensation Act.  Acquire land for some future use and then once acquired modify the master-plan to allocate it for some specific date.