Amber Valley Inspector on Need – Cautions Against Projecting Forward Recessionary Trends

Key Para from initial questions.  Yet another finding against assumption of continued low headship rates.

Recent independent advice on the assessment of housing needs is contained in the Planning Advisory Service paper ‘Ten key principles for owning your housing number – finding your objectively assessed need’. This in turn refers to the interactive web tool ‘What homes where’ which provides a ready source for any local planning authority to derive household projections for its area and compare trends with nearby areas. ‘What homes where’ advises that caution should be adopted in using alternative assumptions from those in the toolkit and strongly advises reading the Cambridge Centre for Housing and Planning Research report CCHPR report ‘Choice of Assumptions in Forecasting Housing Requirements’ before doing so. In particular the web tool advises applying caution if the trends experienced in the past 5 years reflect a period of particular economic decline or buoyancy. It indicates that projecting forward recessionary trends may lead to concealed households not being catered for and a consequent underestimate of the true level of household change. Town and Country Planning ‘Tomorrow Series Paper 16 (‘New estimates of housing demand and need in England, 2011 to 2031’) by Alan Holmans also assesses the possible implications of underestimating need on the basis of the 2011 census.

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High Court Case on meaning of Deliverability

Outlaw

The High Court will this week hear arguments about the meaning of ‘deliverability’ in planning policy in a case involving a challenge to an outline planning permission for a 300-home development at Barrow on Soar.

The case will hinge on the meaning of that term in the National Planning Policy Framework (NPPF) and whether the presumption in favour of sustainable development in the NPPF depends upon any realistic prospect of the development being delivered within a five year period.

A Parish Council has sought to have the planning permission for the development, which was previously granted to Jelson Homes quashed on the basis that the Inspector should have placed the burden on the developer to show that the scheme was deliverable.

Estates Gazette has reported that the Parish Council has claimed that “the inspector misdirected himself or acted unreasonably in his assessment of the deliverability of the scheme, as the main sewer in the area is already almost at capacity and could not support the development”.

It was reported that the Secretary of State argued that “the effect that the presumption in favour of sustainable development in the NPPF does not apply if it is not completely deliverable within five years, was based on a false premise, with no authority to support it”.

To What Area Does ‘Persistent Under-delivery’ apply to? – Why Cheshire East have got it Wrong

The case of Cheshire East today is an interesting one as they claim they should only have a 5% buffer not 20% as tow of its constituent authorities had a housing monirotium imposed by the RSS and so they cannot be blamed.  Two problems:

1) Appeals have consistently held that the 20% provision is not designed to be punitive, that is because of the wording in NPPF para. 47  that it is to ‘to provide a realistic prospect of achieving the planned supply’ i.e. to make dmaned sure you return to trajectory when below it.  Blame is not a material consideration here.

2) It is within para. 47 of the NPPF which makes clear the measurement of ‘needs for market and affordable housing in the housing market area’ so if there is persistent underdelivery across the HMA as a whole then the 20% rule applies to all applications in that HMA, a view reinforced by 1) it is not about blame but about delivery.  There is nothing in para. 47 that implies measurement fo need and delivery occur across different geographic areas, that would be crazy.

Architect of #NPPF calls ‘Duty to Cooperate’ ‘Duty to Cave in’

John Howells MP here

Many developers have seen the NPPF as having 5 years to bed in. If so, it is already doing well. But to do this fully, more needs to be made of the duty to co-operate without it becoming a duty to cave–in.

Does this mean. Like Eric Pickles calling the application of the duty, ‘terrorism’, they are having second thoughts? Of course the duty is not a duty to agree and providing an LPA can agree a framework with the overspilling LPA on how to choose the most sustinable sites it need not mean automatcially taking overpill need.

He also said

Rather than become a millstone round the necks of local planners, the NPPF has been embraced as the framework it was always intended to be.

Embraced in the sense of losing appeals and losing teh funding for your job ues, embraced with enthusiasm no.  After all plan production has slowed and plan adoption almnost to a halt.  John Howells is delusional the planning system is far more confrontational with far more central intervention than it ever was.

The Really Bad Arguments used Against Garden Cities

I want to go through a few as we see the same rather discredited arguments used again and again, for example in this weeks Architects Journal and Chris Igloos Article in Planning.

They will be unlikely to deliver significant numbers of homes within the next ten years.

Quite true, though with determined central government action, as in many countries abroad they could deliver significant housing in 5.  The problems with this argument is twofold.  Firstly we stopped building New Towns in the mid 1970s, they eventually delivered over 500,000 homes.  Now 35  years later, together with the ceasing of council house building, we are 1 million houses short.  You do the math.  The failure to build Garden Cities is one of the main reasons we have a housing shortage.  It is only part of the solution but no-one has proposed a sustainable and deliverable solution to our full scale of housing crisis without Garden Cities.  Garden Cities are a long term solition but we have a long term problem.

We cannot soliely solve our housing crisis by small scale bits and peices added on.  Eventually somke of these sites becaome so big they need large scale new infrastructure, like new roads and schools, brownfield sites are not innume from this especially at very high densities, and building only small scale sites sees what we have been seing under the NPPF, the countryside and villages smapped by development small scale nationally but overwhelming locally.

There is huge potential in London that can deliver faster than a Green Belt New Town. Croydon, Thames Gateway, Old Oak Common all have significant housing capacity and infrastructure already in place or planned.

Chris and those repeating the same sites in AJ they are all in the new London SHLAA and London Plan, a plan between half a million and 1 million homes short over 20 years.  Those opposing Garden Cities to have credibility need to cite a site not already in plans and enough of them to meet the millions of homes and million backlog we have over the next 20 years.  My definition of a Nimby is someone who opposes a Garden City but who cannot cite alternative locations of sufficient number not already in SHLAAS to avoid them.

For a new settlement to be sustainable, location is critical. It needs to be on a network node (ie not just a radial route into London), so that people don’t need to use cars, and to allow higher density and much more effective place making. Very few such locations exist so it is likely that substantial public transport investment would be required to make the non radial connections.

So where such locations exist or are can be created we should not make optimal use of their accessibility? The argument is illogical.  Actually the number of stations in the UK where serving only a few hudred houses run into several hundred.  We have more such locations, and poential locations than any other country in the world.

People today want to move to London, not the next Basildon, because London is where the jobs are and where the attractions are.

Garden Cities were a solution of Victorian overcrowding, but now jobs have dispersed throughout the country.

These arguments are mutually contradictory.  The issue is not whether we build exactly the same as Letchworth today in the same location but how we meet the housing and employment needs of both London and the wider nation in the most accessible locations alongside not instead of urban regneration.  It is not a zero sum game.  Where we not to build Garden Cities all housing in London would have to be at Singapore densities, then you would see a flood of people moving out of London.

Any New Town built in the coming decades is much more likely to be like the sustainable developments in Vauban in Freiberg in Germany than Letchworth because today they are driven by completely different economics, sustainability and technologies.

Isnt this just what the TCPA and others have been advocating for a new wave of Garden Cities?  Isn’t this this just the principle on which dozens of new settlements are being planned on internationally.

 

General Equilibrium and People Production Factories

This post began as an examination of the weak definition of General Equilibrium in Wikipedia but has evolved into a examining the foundational assumptions of what ‘General Equilibrium’ is in particular in terms of dominant DGSE models. The purpose is not to attack ‘Equilibrium’ theory itself but to think carefully about under what circumstances it can approach generality if ever.

The Wikipedia definition

a set of prices exists that will result in an overall equilibrium, hence general equilibrium

Wikipedia General Equilibrium Entry

Bu what is ‘equilibrium’ we have to rely on the entry for Economic Equilibrium

a state where economic forces such as supply and demand are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change.
Wikipedia Economic Equilibrium Entry

This begs a question what do we mean by ‘supply equals demand’. A more pithy definition you will often find relates to market clearing.

General equilibrium is the situation where all markets clear.
Politique Francias Lecture Notes 2012

But all market can clear through short side rule selling even when at disequilibrium. Agents may be forced to sell at less than equilibrium prices because of binding budget constraints, such as the need to pay debts, pay rents etc. The fact that this occurs in some markets does not imply that this is balanced by other markets not clearing. The only constraint is that excess supplies = excess demands and short side selling might occur in all such markets.

A better definition I think is that All good and asset markets clear at the cost price and rate of profit anticipated by economic agents.

This is more helpful I think in that it directly links the classical notion of real cost with the principal of rational expectations of prices as first set out in Chapter 7 of Gerard Debreu’s Theory of Value. I do not assume for a moment that this is an optimal, stable or unique condition or that prices are not moving at equilibrium. Nor do I make any assumption about the competitive nature of an economy or make any prior assumption of non-existence of profits. Rather and simply that this is a point of attraction for prices. As Walras himself said.

Such is the continuous market, which is perpetually tending towards equilibrium without ever actually attaining it, because the market has no other way of approaching equilibrium except by groping, and, before the goal is reached, it has to renew its efforts and start over again, all the basic data of the problem, e.g. the initial quantities possessed, the utilities of goods and services, the technical coefficients, the excess of income over consumption, the working capital requirements, etc., having changed in the meantime. (Walras 1954: 380–381).

Here we can see the connection between the classical notion of the ‘long run’ and the attempt by thinkers such as Marshall and Walras to formalise this ‘equilibrium’ condition.

However the reason I underline good and asset markets is that the labour market is different – people are not produced. As a result unemployment exists and is not simply a result of the unemployed having higher utility than the employed.

The core ‘long run’ mechanism in classical economics of course was the tendency for equilibration of rates of profit across investments. I do not believe that supposed other equilibriating mechanisms (Says Law, interest rates clearing loanable funds) exist, rather they are misunderstandings of how the equilibration mechanism operates when money itself is a produced commodity. Understood in this way general equilibrium operates when all there is no more profitable investment of factors of production that can be undertaken by capitalists with their existing information and knowledge. Even if this purely hypothetical state were reached there may be disequilibrium trading of goods already produced and in existing inventories before these are run down. Here I think is the core common point of agreement between Ricardo, Marx even, Marshall and Walras.

The problem is labour is not produced by a capitalist process. Of course it could be. Pregnant women could be owned by companies. The education could be run by the company based on the anticipated demand for labour and various skills years ahead. When there was a surplus of any particular type of skilled or unskilled labour the company could pay for them to be transported or simply culled. When there was a shortage of anticipated labour young women of childbearing age could be kidnapped and forcibly impregnated. Of course labour is not produced in this manner. But crucially because it is not, we do not have people production factories, we do not have a complete market for labour as a commodity.

The existence of a ‘complete’ market is crucial for the existence of a single pareto optimal equilibrium under the Arrow-Debrau proof (understanding of course that the pareto optimal; condition was invented to justify the inequality of wealth under fascism). A complete market treats each differentiable good as a separate commodity, such as skill on a lathe or cooking. Indeed it is not meaningful to talk of unemployment overall only as an aggregate of segmented markets of different levels of skill and experience. As the labour market is not ‘complete’ there can be multiple non optimum equilibriums including equilibriums with high levels of unemployment.

One of Ricardo’s great advances over Adam Smith was to treat labour as a commodity. The adjustment process however was not the transfer of equity investments but the Malthusian reproduction process. Labour was at its costs price, the price of reproduction. If there was a shortage of labour people would reproduce, a surplus they would starve. Where he disagreed with Malthus was in seeing that the price of food was not a given but depended on factor inputs. Labour would be in shortage when the rate of increase of capital formation was greater than the rate of increase of the working age population, in suplus when the opposite was the case. However it might take many many years for this equilibriation forces to operate. Because labour in shortage or surplus is not (in the large part) subject to complete markets to rectify it can be treated as medium term fixed in quantity and subject to the laws of rent. When labour in in shortage it can effectively charge an absolute rent as there is no rent free margin. This rent comes straight off profits and increase housing rents. It is in capitals interest to minimise this loss of surplus to landowners hence the need to maintain a ‘standing army’ of the unemployed to minimise loss of profits.

We now come to Keynes notion of a unemployment equilibrium. Of course ‘in the long run we are all dead’ was his pithy view of the population/wage equilibration process. In the forward of the general theory he posits that his theory is general whilst the classical theory is a special case limited only to ‘a limiting point of the possible points of equilibria’. I don’t hold to the ‘disequilibria’ interpretation of Keynes that unemployment is only possible due to price friction/stickiness. This is sloppy thinking confusing price stickiness with non-completeness of markets. I read Keynes as describing a non-complete market with multiple non pareto optimal points of equilibrium which include high unemployment equilibrium.

Modern DGSE theory rather dodges the non-completeness of the labour market by subsuming it within the preferences of a single representative agent. Hence we have the perversity of a theory which proposes that unemployment is primarily a matter of choice. Search theory is bolted on to try to explain unemployment through frictions. There are many useful insights in search theory, which seems to get ever more complex, but it is built on foundations of sand, the problem is not one of frictions (the absence of which might simply speed a business cycle into a high unemployment position) but market completeness.  Sympotomatic of the confusion this sows is the thought often posted on Neo-classical and Austrian blogs is why the unemployed don’t work for nothing.  The answer of course is they would lose the time spent searching for better paid work, applying for paying jobs, growing food, helping with low margin family businesses, even where there is no welfare begging or stealing, and where there is losing welfare necessary to eat.  Work time is survival time and the opportunity cost of working for nothing means starving.  Indeed in most of the world most of the unemployed are for most of the time gainfully occupied in these activities.

The absence of a complete labour market in a form which might be acceptable in a non-slave society is the reason the state intervenes, providing welfare, education etc. In the past and in more authoritarian settings it did undertake transportation, culling and forcible pregnancies as we know. This is not a non-grounded extreme example for effect.

Finally I would agree with Roger Farmer

The problem with classical models is not the equilibrium assumption; it is the optimality implication. The idea that the current state of affairs is socially optimal is so obviously at odds with the existence of mass unemployment that it has given equilibrium theory a bad name. In very simple models, equilibrium and optimality are the same thing. But that conclusion is a very special implication of some equilibrium models. It does not hold in general. That idea is key to reconciling Keynesian economics with equilibrium theory…. To understand the persistence of high unemployment, we do not need to assume that prices are sticky or that markets are in disequilibrium. Mass unemployment does not occur because markets are in disequilibrium: Mass unemployment occurs because the market equilibrium is not socially optimal.

I would only partially agree with the final part however as unemployment has multiple causes. Disequilibrium and disproportionality can be a cause of employment, but high mass unemployment is caused by non complete labour and money markets leading to none-optimality.

Cameron to Announce Review of Environmental and Housing Standards – (more like a dustbin)

Guardian

David Cameron will on Monday boast of tearing up 80,000 pages of environmental protections and building guidelines as part of a new push to build more houses and cut costs for businesses.

In a speech to small firms, the prime minister will claim that he is leading the first government in decades to have slashed more needless regulation than it introduced.

Among the regulations to be watered down will be protections for hedgerows and rules about how businesses dispose of waste, despiteCameron’s claims to lead the greenest government ever.

Addressing the Federation of Small Businesses conference, Cameron will argue that the new rules will make it “vastly cheaper” for businesses to comply with their environmental obligations.

The government also plans to scrap many building standards relating to things such as the size of windows and demands for renewable energy sources, saving builders about £500 for each new home.

“We have trawled through thousands of pieces of regulation, from the serious to the ridiculous, and we will be scrapping or amending over 3,000 regulations – saving business well over £850m every single year. That’s half a million pounds which will be saved for businesses every single day of the year,” Cameron will claim.

No 10 sources insisted that the new rules would not necessarily mean the environment suffers, as they claim many of the regulations are obsolete.

However, the move comes after the coalition was criticised for overhauling planning guidance to make way for new homes, relaxing restrictions on how developers can build on green spaces.

Amid a severe housing shortage, particularly in the south-east, the coalition is desperate for builders to start work on new homes.

Cameron’s pitch to small businesses appears to be the first stage of a fightback against Labour’s attempts to depict itself as the champion of small businesses.

Sevenoaks (adopted 2011) the Latest Zombie Plan – loses 4 appeals on housing supply

The infection is spreading almost nowhere is safe.  Thanks to @GregoryJonesQC for tweeting.

Here is one at Broom Hill. 

 

The key issue was as Sevonoaks was severely contrained by Green Belt the SEP allocated it a housing number well below need.

the need for housing as assessed will not nearly be met by the adopted housing supply targets arrived at in the CS, which is greatly reduced from the need actually identified because of the constraint represented by the district’s Green Belt. The substantial difference between that assessed and that included in the CS will not be made up in other nearby areas and there has been no attempt as yet to cooperate with neighbouring authorities….gets from when the CS targets were decided and now with The Framework. Previous advice in Planning Policy Statement 3 [PPS3] required provision of a sufficient quantity of housing taking into account need and demand. The Framework indicates that local planning authorities should use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area. The emphasis has changed in The Framework and, in my view, this is an important material consideration.

Independent on Institutional Investment in New Towns/Garden Cities

Indy

the debate on the development of new towns seemed all but dead until comments this week by Legal & General’s chief executive Nigel Wilson, who said: “If we can bring communities with us and agree planning, we’d like to help build several new towns across the country. We’re already developing towns within cities, in partnership with enlightened local authorities and boroughs.”

L&G, which manages £440bn in assets, has already agreed to pump millions into the English Cities Fund, to kickstart regeneration, and has pledged to commit £25bn to UK infrastructure along with peers including Aviva and Prudential.

However, the difference between wanting to build new towns and actually doing it remains huge. Roger Hepher, head of planning and regeneration at property consultant Savills, claims the problem with getting new towns off the drawing board is a lack of structure – particularly since regional development agencies were scrapped by the Coalition – as well as political will.

“In my view you can only do it if central government seizes the initiative and sets up development corporations, and then gives them the resources to make new towns happen,” he said. “There is no government structure capable of picking it up and making it happen, because they are too timid to do so.

“You have to assemble the land, which if you are very lucky is in few hands, and do compulsory purchase orders. Then there are so many objectors – and that is why you need an authority like a development corporation, which is going to tough it out when the flak starts flying. Eco-towns just ran out steam, developers found there were too many hurdles.

“The fact is that there have been very few new towns not because developers haven’t been willing to build them, but because the system hasn’t been willing to receive them,” Mr Hepher concluded.

If ministers do decide on a change of direction, then insurers such as L&G, Aviva and Prudential certainly have the capital to back large scale developments, because of their billions of pounds worth of assets.

Julian Brown, a director at advisory JLT Employee Benefits, says the appetite exists within the investment community – including pension funds – to back more infrastructure projects, including roads and railways. He said: “The long term, predictable and – crucially – index-linked cashflows of infrastructure investments are a perfect match to a pension fund’s pension payments. We are certainly seeing a great deal of interest from pension funds…  on the various aspects of infrastructure investments.”

For now, what we are likely to see is more investment through schemes such as the English Cities Fund, which recently announced an investment in Salford. This will result in 1,000 new homes being built, as well as new council offices and commercial property.

Mr Brown added: “The notion of pension funds building entire towns, to quote Ian Fleming, ‘goes wildly beyond the probable, but not, I think, beyond the possible’. For a pension fund to develop and build a sustainable new town, complete with commercial employment, would require an unprecedented level of partnership with a multitude of stakeholders – and be an ambitious undertaking. It would also be a significant foray into the volatile residential housing market, which isn’t typically the preserve of pension funds.”

We all knew it was coming – Neighbourhood Plan fails SEA Directive

No surprises, the planning world knew this day would come.

whilst the Neighbourhood Plan recognises the need for  new housing development, the target it sets for the Plan period is not based on  sufficiently robust evidence. This in turn has resulted in three site allocations for residential development which fall within the High Weald Area of Outstanding
Natural Beauty that are not necessarily deliverable and have not been sufficiently justified given the great weight the National Planning Policy Framework attaches to the protection of landscape and scenic beauty. Given the District Plan context and as much of the Parish falls within the AONB, a robust assessment of need and of suitable and available sites was required to ensure that the policies and proposals in the Plan would contribute to the achievement of sustainable development, have regard to national policy and guidance and generally conform to the strategic policies of the development plan….

Although it is not necessary for a Sustainability Appraisal to be carried out, a neighbourhood plan might well require a strategic environment assessment (SEA)….

the State of the Parish report does not have elements of a typical stage A and does not equate to a SEA scoping report and has not, as far as I can tell, been subject to the necessary consultation. As a result I cannot be sure that the SEA is legally compliant….

The next stages of preparing a SEA (sometimes referred to as Stages B and C) would then include consideration of reasonable alternatives. Given that the plan allocates sites, this forms an important part of the plan. There is little information to demonstrate how reasonable alternatives were identified, how they were assessed and compared or
why the chosen sites were selected….

The preparation of the Environmental Report (Stage C) must identify, describe and evaluate the likely significant effects on the environment of implementing the policies in the neighbourhood plan and of the reasonable alternatives taking into account the objectives and geographical scope of the plan. It should show how those requirements
have been met. The SEA submitted does not do this adequately.

Finally, each Environmental Report requires a non-technical summary.
There is no such summary….

Given the majority of the neighbourhood area falls within an AONB, a sensitive landscape given the highest protection by national policy, it is important that the characteristics of the area were identified and an adequate explanation of those likely to be significantly affected was given.

Planning

 

An examiner has concluded that the Slaugham Parish Neighbourhood Plan in Mid Sussex should not be subject to a local referendum, which would normally follow a successful examination.

 

Examiner Ann Skippers said she is not happy with the strategic environment assessment (SEA) submitted as part of the document.

 

She also expressed concerns about the evidence provided in the plan, drawn up by Slaugham Parish Council, to support its housing targets.

 

At the same time, Skippers announced that two Community Right to Build (CRB) Orders submitted by the parish council that were being examined alongside the neighbourhood plan, should be refused.

 

The two CRB Orders were the first in England to reach examination, Skippers said in her report.

 

Introduced under the Localism Act like neighbourhood planning, CRB orders allow communities to grant planning permission for new buildings, sidestepping the normal planning application process.

 

The draft plan sets out development in the parish up to 2031, allocating three sites for a maximum of 130 homes.

 

In her report, Skippers wrote: “It is with regret that I have reached the view that the neighbourhood plan is not compatible with the requirements of European Union obligations insofar that a strategic environment assessment is required and the one submitted […] is not satisfactory in a number of respects.

 

“Given that this is a legal requirement and one that I cannot recommend modifications to, I have concluded the Slaugham Parish Neighbourhood Plan should not proceed to a referendum.”

 

Skippers notes that planning authority Mid Sussex District Council and government agency Natural England were both happy with the plan’s SEA.

 

But she described the failure to comply with EU SEA requirements as a “fundamental and unfortunately fatal issue”.

 

The examiner also found that the plan’s housing target was “not based on sufficiently robust evidence”.

She said that three site allocations for residential development within the High Weald Area of Outstanding Natural Beauty were “not necessarily deliverable and have not been sufficiently justified given the great weight the National Planning Policy Framework attaches to the protection of landscape and scenic beauty”.

 

Skippers wrote: “I appreciate that Slaugham Parish Council and others involved in the production of  the neighbourhood plan will be disappointed by this. It is often the case that those pioneering a new power such as the development of a neighbourhood plan can run into the buffers.

 

“Whilst it might be of little initial comfort, I am convinced that the work carried out by the parish council  and the community will not be wasted as a result of this set back.”

 

She praised the parish council for “taking on the challenge” of neighbourhood planning and said the document was in many respects a good example of positive planning”.

 

On the CRB orders, Skippers ruled that neither should proceed to a local referendum, as required before they are adopted.

 

The parish council’s first order was to build 76 new homes in the village of Handcross and the second for a new community centre and bowling green, also in Handcross.

 

For both orders, Skippers wrote, consideration should have been given as to whether an EU environmental impact assessment was needed to allow her to judge whether Brussels requirements had been met.

 

On the first order for the new homes, Skippers also said: “Uncertainty about the effects of the development and whether it can be satisfactorily delivered means that I cannot be sure that the order has had sufficient regard to national policies and guidance or will contribute to the achievement of sustainable development.”

 

And, regarding the second order for the community centre, she added that a site-specific flood risk assessment should have been carried out.

 

In a statement, the district council said the examiner’s “very clear advice” about what needs to be done “will enable the parish to move forward with confidence that the plan will be successfully examined once these issues have been addressed”.

 

Norman Webster, the cabinet member for planning, said: “Slaugham Parish Council is to be commended for grasping the opportunities offered by localism with both hands, and the district council will give its full support to the parish council in overcoming the procedural matters identified by the examiner.”

 

More details on the examination can be found here.