The Friedman Deflation Rule Implies a State that Ultimately Vanishes

Is deflation good or bad, a hard enough theoretical question at the best of times but made harder when you have nations, without their own currencies, with a low oil price good deflation (not an oil exporter) boosting GDP (possibly by +2% according to estimates in Spain) on top of a bad debt deflation, and at close to the zero lower bound.

In monetary theory we have a real conflict between Central Banks, who favour price stability, and the theoretical approach derived from Friedman (1969) (who borrowed from Bailey (1956), Keynes interestingly, and the Cambridge cash balance approach.)  This states that deflation is a good thing and should exactly equal the rate of growth in the economy – so the two should cancel out so the rate of interest is zero.  Interestingly then Friedman’s conclusion was the same as Keyne’s – welfare is maximised with a zero interest rate.  We should not be surprised as Friedman was operating very much within Keynesian parameters but implying different policy conclusions.

Friedman/Bailey argued that their was a real welfare loss to society from agents holding too much of their portfolios outside cash as this could not be used to spend.  Their is a welfare cost to society from inflation as agents shift their portfolios to less liquid assets.   The argument is that to maximise consumer surplus the marginal benefit to society of holding money should equal the marginal cost to society of producing money. With the simplifying assumption that the cost to society of producing money is zero, the optimal nominal interest rate is then zero – the Friedman rule.

Although Keyne’s wished to euthenise rentiers, the effect also would be to euthenise the state.

Thinking about the issue from a monetary circuit perspective if you wish to achieve deflation then you must destroy outside money (the unit of account) at a faster rate (taxation)  than you create outside money (state spending). If you do this then you have a primary surplus year in year.  If this happens and you manage to continue this policy successfully forever then eventually the national debt is wiped out, and so it the state as it shrinks in size to the limit, infinitely small.

So we can see that the Friedman rule and the political philosophy of George Osborne are perfect compliments, a small state (though I prefer the higher level generalization public spending), indeed an infinitely small state (public spending).

So far economic arguments have either automatically assumed that deflation is bad (the Krugman position I think), or counteracted, with Friedman Rule based arguments that deflation is good.  We can see this in the the wide apart positions on the issue taken by prominent economists on the issue back at a Minn Fed Workshop in 2003 (papers here) – with the likes of Lucas and Bernanke taking diametrically opposed positions.  The Swedish Riksbank is holding a similar workshop this June given the renewed global concerns on the issue.

The debates reflects I think gaps in monetary theory.  The Friedman rule assumes a single currency and general equilibrium.  Many thinkers have claimed that the optimum policy rule is none zero  in real world multiple currency conditions. (Bernake’s view, and the view I suspect of all none German or Scandinavian Central Bankers).

I think the issue though is more fundamental.  There is a failure to properly tease out the differences between the stock and flow effects of the transactional demand for money, and more fundamentally between its increase for reasons that cause increased budget constraints (i.e. increased debt costs) and those that reduce them (growth of incomes).

I also think Friedman may have been ‘off by one derivative’ to use the phrase he used of Hume, as the changes of demand for money are more important than its static state.  Growth matters, there is no point is arguing about what shape of the aggregate demand curve maximises consumer surplus if the scale of that curve in real wage units produces low incomes and low growth.  If Keynes had been around to argue with Friedman in 1969 i’m sure he would have argued from that position.  What matters is the discounted NPV of all future consumer surpluses in real wage units.

Monetary thinkers really need  to start properly addressing this position as it is critical to determining current public policy issues about what is the optimum level of public spending/taxation.  I’m wondering if their are any parallels here with the theory of optimum city size in the new economic geography (which students at one university recently complained was too tough to answer a question on) as this is already a framework which is growth centric and is focused on the benefits of Samuelson public goods.

Further Reading

Bailey, Martin J. “The Welfare Cost of Inflationary Finance,” Journal of Political Economy, vol. 64 (April 1956), pp. 93–110.

Friedman, Milton. “The Optimum Quantity of Money,” in The Optimum Quantity of Money, and Other Essays. Chicago: Aldine Publishing Company, 1969.

Wolman, Alexander L.  Zero Inflation and the Friedman Rule: A Welfare Comparison  Federal Reserve Bank of Richmond Economic Quarterly Volume 83/4 Fall 1997

Vacant Buildings Credit Backfires

Shows how gullible Brandon Lewis is

Estates Gazette

A government policy designed to help boost house building could wipe more than £1bn a year off Westminster city council’s affordable housing fund.

At the end of 2014, recently installed housing minister Brandon Lewis introduced a “vacant building credit” in a bid to help smaller developers build more homes across the UK.

However, the move has given large developers an unexpected windfall, enabling them to sidestep affordable housing payments.

At a planning meeting earlier this month, the Abu Dhabi Investment Council and Finchatton saw a potential payment of £17.6m shrink to just £8.6m on the conversion of the former US Navy HQ at 20 Grosvenor Square, W1, to 36 luxury flats as a result of the change.

The new credit allows for buildings that are vacant when planning is secured for residential conversion to only pay an affordable contribution on any new space. Prior to its introduction, the provision was levied on the full size of the building.

John Walker, director of planning at Westminster council, said: “This is going to be a dramatic amount of money for any council to lose in its affordable housing pool, but if we look at Westminster and the amount of high-value projects going through planning, we could be losing affordable housing payments upwards of £1bn every year.

“The policy is a gift to large developers, which will see a significant positive impact on their profits, but a big blow for councils struggling to achieve affordable housing targets.”

Robert Davis, deputy leader of Westminster city council, added: “This has serious implications, as it threatens our capability to deliver much-needed housing in central London. We therefore intend to open immediate discussions with the Department for Communities and Local Government to emphasis to them the consequences of these changes – as we believe that many London boroughs as well as other cities across the country, will face a similar impact as that which will be experienced in Westminster.”

London boroughs Camden, Islington, Southwark and Kensington & Chelsea will also be hit by the new credit, said experts.

London mayor Boris Johnson, who set a target of building 55,000 new affordable homes in the capital between 2011 and 2015, declined to comment.

Lewis denied that the introduction of the credit had backfired.

He said: “It’s crazy to tax empty buildings being brought into productive use. Such tariffs hinder regeneration and lead to the blight of empty, boarded properties.”

Simon Grundy, regional director in Indigo Planning’s Leeds office, said the credit would help areas outside London where house price inflation has been minimal.

“This easing of affordable housing obligations will encourage developers to more readily commit to residential conversion projects,” he said. “At the same time, it will help councils to meet their new home delivery targets.”

Daniel Farrand, joint head of planning and environment at law firm Mishcon de Reya, warned that some councils may contest the guidelines.

“Councils are taking advice on the credit,” he said. “Given the potential sums involved for large developments, it is only a matter of time before it is worth someone’s while to test that approach on appeal or in the courts.”

Cameron Misrepresents His Own Planning Policy in Constituency Flyer #NPPF

His West Oxfordshre annual Report

“I know there is great strength of feeling amongst local residents in West Oxfordshire regarding proposed development and I can completely understand why.

“We all realise that we need more homes, and the Government’s planning reforms are about doing this as sensitively as possible and in a way that local communities feel involved and empowered.The faster a council can demonstrate it has a reasonable forward land supply for new housing and a new local plan in place, the more they will be able to say “no” to inappropriate developments.

West Oxfordshire is doing well in this regard and has a good record of balancing new housing numbers needed without causing unnecessary harm to our market towns and picturesque villages”

Where in the NPPF does it say that new housing in villages should be done ‘as sensitively as possible’  Where is the requirement not to do unnecessary harm o rural settlements?

Darlington Proves why you should never plan for the Minimum of a Range of Housing Options

In 2015 a Darlington Council Site Allocations Report stated

the draft housing allocations published and consulted upon was considered to be the minimum required to meet the housing growth identified in the Core Strategy. Accordingly, as it stands the Council lacks flexibility and “if any of the arguments advanced by others for higher housing numbers find favour with the Local Plan Inspector at Public examination in due course, or the sites identified do not come forward for new housing at all, or as quickly as envisaged.”

This Month Darlington lost an appeal to Gladman’s -who else, for an application increasing the numbr of houses in the village of Middleton St George by about 25%.

The Northern Echo

THE leader of a council that saw its housing policy overturned by a government inspector has defended planning officers, arguing that the system is skewed in favour of developers.

Councillor Bill Dixon, leader of Darlington Borough Council, said lawyers had “exploited a weakness” in the authority’s housing development plans and admitted it was possible that other developers would do the same.

The authority saw its five-year housing supply figures and housing policy dismissed by a planning inspector as ‘out of date’ at an inquiry brought by Gladman Development as it won an appeal to build 250 houses on a greenfield site in Middleton St George.

Cllr Dixon said Gladman won 97 per cent of its appeals because it had the money to spend on lawyers while local authorities did not and said central government policy was stacked in favour of development…

“The housing figures and the data involved are very subjective. Gladman put some figures before the inspector and ignored others and it was only when the appeal began that officers knew what they were going to act on.”

Asked about the possibility of other developers exploiting the situation, he said: “It is always possible that further applications will come in.

“I’ve asked the officers to resolve the availability issue as a matter of priority.”

Cllr Heather Scott, leader of the Conservative group, attended a meeting with council planning officers and Cllr Doris Jones and Cllr Steve York, ward members for Middleton St George, to hear how the authority had got its figures so wrong.

She said: “There is a catalogue of things that have gone wrong.

“It is all to do with the Darlington Local Plan, which the inspector has said it not up to date.

“The officers told us that there were legal changes and that they had not really got the details of the changes ahead of the appeal and that is what Gladman exploited.

“Surely, if you know something is in the offing, you should find out about it?”

Cllr Jones, who revealed last week that she had begged the council to check its figures before going to the inquiry – which was refused – added: “To us, it looks as though it has been totally messed up.

“They were so sure that the figures they had were right and someone has come in and torn it to shreds. I think they were overconfident in themselves.”

Outlaw

A planning inspector has an allowed an appeal that will permit the construction of up to 250 homes in the open countryside in county Durham, after deciding that a council’s failure to make an objective assessment of its housing needs meant policies in its development plan were out-of-date.

Developer Gladman Developments submitted an application to Darlington Borough Council in 2013, seeking outline permission to build up to 250 homes on a field on the outskirts of the village of Middleton St George. The Council refused the application in March and the developer appealed to the secretary of state for communities and local government.

In a letter dated 12 January (22-page / 195 KB PDF), planning inspector M Middleton noted that the housing requirement in the Council’s 2011 core strategy was derived from the revoked North East regional plan. The figures used in the regional plan were “never an objective assessment of the need of the area”, said Middleton, and the Council had not made an objective assessment since. Consequently, the Council was unable to demonstrate a five year supply of deliverable housing sites “regardless of the amount and quality of the data on the supply side”, the inspector said.

The appeal site was technically in open countryside outside the development limits set by saved policies from the 1997 Darlington local plan. However, the inspector noted that the limits had been intended to direct development only up to 2006 and said policies directing development towards urban areas should be considered out of date “in as much as they prevent development adjacent to the existing settlements”.

Middleton found support for the proposal in a core strategy policy which allowed for “windfall housing” adjacent to large villages should the delivery of housing stock fall to 80% or less of that required, and insufficient sites be deliverable within existing settlements. The inspector said that this policy support and the fact that the site was sustainable, being close to the shops and facilities of Middleton St George and well connected by public transport, attracted “significant weight in favour of the appeal proposal”.

Middleton concluded that the benefits of the scheme, including the provision of affordable and market housing in an area of “urgent” housing need and proposed funding towards education, sports and transport, were not outweighed by the adverse impacts including harm to the character, appearance and openness of the countryside.

Court Rules Website Only Consultation Insufficient to Meet SEA Directive

Outlaw

[consultation on a] sustainability appraisal, had breached a European Union directive that sought to ensure the members of the public were aware of the likely environmental effects of developments. In these consultations, the Council had contacted certain members of the public directly, but had only advertised the consultation to the general public on its own website.

Mr Justice Lindblom said that, in relying on its website alone “as the sole means by which it invited the general public to comment on the draft plan and its sustainability appraisal but also as the sole means by which it made known to them that this is what it was doing”, the Council had failed effectively to notify the public in accordance with the directive.

The judge decided, however, that it would not be “reasonable or proportionate” to make an order quashing policies in the SAP or remitting them to the Council and directing further consultation.

Mr Justice Lindblom said that, while the Council had consulted the public “in a less than wholly effective way” in relation to the sustainability appraisal, it had produced a legally valid environmental report “in a timely manner” and had acted “in good faith”.,,

To strike down an adopted plan, whether in whole or in part, is always a draconian step for the court to take,” concluded Mr Justice Lindblom. “To do that here would be disproportionate and wrong.”

Guess which Buildings in this Picture Are Threatened with Demolition

No – the oldest ones-see here

Thanks to the Georgian Group.

Using LDOs to Boost Brownfield Sites is Using a Loaf of Bread to Drive in a Nail

Im a fan of LDOs, indeed they were my idea, having strongly lobbied for them in 2003 before the 2004 act.  But they are the wrong tool for the job – they are like trying to hammer in a nail with a loaf of bread, much wasted cost and damage for little effect.

The consultation published today. Building More Homes on Brownfield Land threatens to place LPAs in special measures unless they have them in place.  I.E. applications will be made to PINs.

The chancellors objective announced at his July 2014 Mansion House speech was for an Urban Planing Revolution – the  Government’s objective of having local development orders in place on more than 90% of suitable brownfield land by 2020 is reconfirmed in today’s consultation, which only took six months to draft and by the look of it could easily have been cobbled up in a couple of days.

It has a bizarre set of criteria similar but different to the familiar and longstanding deliverable, available, viable tests for allocating land.  For example it excludes sites in use, which would remove all temporary uses and all sites which are majorly unoccupied.  One wonders why?

An exceptionally low target is set of 5 or more units.

There is an even more bizarre ‘plan b’

A second option would be to amend the National Planning Policy Framework. The policy change would mean that local planning authorities that had failed to make sufficient progress against the brownfield objective would be unable to claim the existence of an up-to-date five year housing land supply when considering applications for brownfield development, and therefore the presumption in favour of sustainable development would apply.

This would mean more greenfield development – have they really thought this one through?

The document shows all the signs of a war between the head in the sky juveniles in the Treasury and the DCLG officials stating this just wont work.  So DCLG puts out something that just wont work to prove the Treasury wrong.  In the meantime with the Chancellor’s attention distracted Pickles has been promoting a presumption against development for developments against which he holds a personal prejudice.

The fact is LDOs have not been widely used. Certainly not for the last Osborne initiative which was where they were supposed to be Enterprize Zones.

LDOs have a place.  They were modeled on what internationally is known as a DCP (Development Control Plan) indeed several  of my staff do nothing but prepare these across several countries every day of the week.  These set out the regulations for building height, build to, acceptable uses etc.  They are design codes put in law.  They are especially useful where jurisdictions have few if any DM staff. The onus is on developers to draw them up, following an approved schematic masterplan and then a zoning and subdivision plan and get them approved under what is the equivalent of a PUD (planned urban development) clause on the local zoning code.

This proposal seems to have been cobbled together without any research, evidence or international precedent. There is no regulatory impact assessment, always a sign of a train wreck policy.

LDOs only work well after a site has a masterplan, has been zoned and subdivided in international parlance.  They also need to be funded and use specialist expertise which the British Planning System has disgracefully spent all it efforts not teaching for two generations.

What this proposal misses out is the intermediate step – the masterplanning.  The bit that Osborne in his Mansion House speech wrongly referred  to as ‘red tape’ and ‘planning regulations’ when it is masterplanning that makes great cities even when there are no regulations.

LDOs are not a good tool for this. A single stage system for approving the principle of development is a good idea.  That will enable investors to get finance for development.  This can then be combined with a LDO like system for gaining detailed design approval without endless small applications, or not as suits.  It is the principle of the height, volume and mass that matters to investors as this is what sets GFA and value.  The focus on LDOs then is missing the point.

I have previously suggested a system which would act more like a hammer and not a load of bread, the Irish Special Development Zones Regime which is well tested.

The suggested punitive regime  will simply grind Development Management and housing delivery in pressure cities like London to a halt.  The few remaining planning staff will be diverted from fee earning income to none fee earning income (indeed requiring a treasury grant).  Developers will give up masterplanning and writing codes leaving it to LPAs now threatened with special measures.  the LDOs will be knocked out cheaply and quickly, especially given the ridiculous 5 units threshold, with nothing brave done re heights or layout to avoid controversy.  This will in the medium term depress delivery, developers might simply ignore them  and apply anyway for more defeating the object.  Perverse incentives leading to bad tools.

The tragedy is for this policy botch, which I think is even more of a botch than the NPPF, is that it was easily avoided.  Their clearly has been a shift in England towards a zoning and subdivision system. Our unique discretional planning system being matched by its unique failure to deliver enough implementable zoning for new homes.   By looking at research, other jurisdictions, and tapping into the expertise of professional at home and abroad who know about how single consent systems and masterplan type consents work we could have had a decent set of easily implemented reforms that would have seen a proper share of risk and costs between local planning authorities and applicants.

Instead we will have a furious response to the consultation, it either being driven through and failing or more likely being abandoned with the DCLG being blamed, and being used as a pretext after the election for Osborne to privitise this function, given the DCLG’s ‘failure’

Safe Deposit Box Housing – A Simple Legal Solution

A question is a dwellinghouse never lived in bought by an investor with no intention of living in it really C3.

All of the sub categories of C3 refer to people actually ‘living’ there.

The question is pertinent because of the blight of what Peter Rees memorably calls ‘safe deposit box’ housing.   Such units are effectively removed from the housing stock, and unable to meet need. People must cram into the remaining dwelling stock.  It is the same as  if it didnt exist.  How then can it meet a supply and how then can the presumption on favour of housing apply?

Unfortunately the law is not on the side of such simple verbal logic.  The courts have held in Moore v. SSCLG [2012] that

there is no requirement that before a building can be described as a dwellinghouse it must be occupied as a permanent home.

This begs the question – can a condition precedent be used?

This has difficulties as these normally state cannot commence until or cannot be occupied until.

But guidance is very clear.

Such conditions should only be used where the local planning authority is satisfied that the requirements of the condition (including the timing of compliance) are so fundamental to the development permitted that it would have been otherwise necessary to refuse the whole permission.

And here it would be to ensure it is lived in to meet the need for places to live, not for empty safety deposit boxes, which are collectibles and serve no need.

I suggest a simple condition precedent.

The development shall not commence or continue in a state of non permanent occupancy for a continuous period of six calender months or greater.  In which case this consent will not commence or will cease (as appropriate).  A state of non-permanent occupancy is defined as a condition where no-one is living at the property as their main place of residence.  This condition shall not apply during a period of mortagee in possession until the property is then sold on or let by a mortgagee in possession.

Reason:  To ensure the property is lived in to meet the need for places to live as set out in the development plan, the London Plan and National Planning Policy.

This avoids I think the very complicated S106 based approach of Islington – Lawyers?

Note Boris’s defense that this is needed for regeneration is preposterous as all it does is push land prices up to bubble levels which will wreck regeneration.

Safe Deposit Box Housing in London Running at 14x demand – Money Week

Dominic Frisby in Money Week

I read a stat in the FT yesterday that absolutely blew my mind.

There are now 54,000 homes planned or under construction “in the priciest areas of the capital”. Most will cost “close to or above the £1m mark” and most are two-bed flats.

Here’s the mind-blowing bit: in the same areas last year, just 3,900 homes were sold for more than £1m.

That would put potential supply at almost 14 times annual demand.

Welcome to the train crash about to happen that is high-end, new-build property in London…

 Who’s going to buy these flats?

I should say, not all of the 54,000 properties planned will necessarily be built, and not all will come to market in 2015. (The statistic comes from data company Lonres, researchers Dataloft and buying agents PropertyVision, by the way.)

But there is still a surfeit of supply. What’s more, many of the 3,900 places that sold in 2014 for £1m or more were houses or had more than three bedrooms. What’s coming to market are two-bed flats.

I’ve been wrong on London property before. In 2007, I thought it would take a much bigger hit than it did. So I’m cautious when it comes to making bearish pronouncements.

But as I said in my New Year predictions piece, “high-end, new-build flats in London” – and I stress new builds, I’m not talking period properties – “have got bubble and pop written all over them.”

In fact, I can see so many things going wrong here that keeping my thoughts organised made this Money Morning one of the most difficult I’ve ever had to write.

Who is going to buy these properties, and who is going to live in them?

Families don’t want two-bed flats. ‘Normal’ people can’t afford £1m-plus properties. Even buy-to-let won’t work – factoring in service charges, you’d have to be taking in £40,000 a year in rent to make a £1m property worthwhile. That’s a lot for a two-bedder.

So you’re left with very successful, upwardly mobile young people in their 20s or 30s. But will that sort of person want to buy some bland new build that feels like living in a hotel? Of course not. He or she will want somewhere groovy in Shoreditch.

And like most British people, Londoners prefer period properties. They’ll buy new builds if the price is right. But it isn’t. In many areas, new builds are at least as expensive as period homes per square foot – and they come with higher service charges.

There’s only so much naive ‘foreign’ money to be had

So who’s buying? Well, as Charlie Ellingworth of Property Vision puts it, many new builds are marketed at “unsophisticated” foreign investors.

We all know how estate agents might describe a house as “spacious” (if you happen to be a mouse), or “conveniently located for the area’s boutique eateries” (above a kebab shop).

So it is with ‘prime central London’ (PCL). What those familiar with the capital see as PCL and what an agent marketing a flat to Asian buyers, who’ve never been to the UK, sells as PCL, are two very different things.

We’re talking about places like Old Oak Common on the Acton-Willesden borders, Vauxhall-Nine Elms and Stratford. These areas may have a lot going for them – but they are not PCL. Vauxhall is a convenient area – for getting to somewhere else. There are some groovy nightclubs under the railway arches, but it is not a place you go to – it is a place you go through.

Yet flats are being marketed (and, in some cases, sold) there for millions and millions of pounds.

Sorry if I’ve seemed a bit London-centric, but this is really no different to the pre-2008 buy-to-let bubbles we saw in Manchester, Birmingham and Leeds. For the most part, those ‘trendy’ city centre tower block flats weren’t bought by locals, but from investors elsewhere in the UK.

The same happened in Dubai, Spain and even parts of the US. Locals weren’t buying, foreign investors were. They didn’t have the ‘sophisticated’ knowledge that locals do – so they bought the BS. And when the crash came, they paid the price.

Forget ‘Occupy’ – this is ‘Unoccupied’

I’ve lived in London most of my life. I can remember Arabs in the 1970s buying huge swathes of South Kensington, Bayswater and Paddington. In the 1980s the Japanese came, in the 1990s the Americans. In the 2000s it was the Russians and then the Chinese.

I don’t know who’ll be next, but someone will come along. There are a lot of people in the world.

But in most cases, they actually lived in the houses they bought! That’s the big disconnect we have today. And it can’t last.

Take the recently completed Vauxhall Tower by Vauxhall Bridge. It is Britain’s tallest residential building – 50 storeys high – and it holds 223 flats. But drive past at night and there are absolutely no lights on.

This is becoming a big social problem. London property is already unaffordable for most locals. The average wage in London is just above £40,000. The average London house price is £580,000. Anger about this is mounting every day – and it only increases when people see so many flats sitting there unoccupied.

So the idea that 54,000 new-build flats are going to be flogged off to foreigners, then allowed to sit empty is just absurd.

Whoever wins the next election will have to find new ways of increasing the tax take. Some kind of property tax looks inevitable. Mansion tax or no, an easy and politically expedient target will be to tax homes that are left vacant – Islington council is already talking about it.

I’m not suggesting foreign buyers in London will disappear. They won’t. And the overseas market is affected by all sorts of factors beyond anyone’s control – the currency markets (think of the rouble), capital controls, capital flight, capital repatriation and so on.

But markets ebb and flow. The equivalent new-build-for-foreigners market in Manhattan is already seeing a marked slowdown. And the main problem is that even by the standards of London property, these flats are hugely overpriced.

The mis-selling scandals, the eventual revelations about poor build quality, the outrage at high service charges and the ‘who’s carrying the can?’ moments are all coming.

As Monty Python used to say, “Run away!”

As for the knock-on impact – new-build was something of a canary in the coalmine, anticipating the wider property crash in 2008. I’m not saying we’ll see something similar happen this time. But it can hardly be positive for pricing power or sentiment if thousands of unwanted flats end up hitting the market.

Two Herts Mps Claim its Time to Build a Garden City

Herts Mercury

A search should be launched for a new garden city in Hertfordshire, according to two Tory MPs.

Both Sir Oliver Heald and Peter Lilley believe it is the best way to protect the countryside, after Conservative-led North Herts District Council (NHDC) put forth plans for more than 14,000 homes until 2031 – mostly in the green belt.

In his response to NHDC’s local plan, Sir Oliver proposes building around 3,450 homes, up until 2021, on “brownfield, non-contentious and mainly non-green belt” land.

As permission has been granted for 2,600 homes, this would free up 2021-2031 to establish a “garden city-style development” of 6,000 homes to meet the government’s 12,100 housing target for NHDC’s needs.

The remaining 2,100 homes are for nearby Luton.

The North East Hertfordshire MP wrote: “Some argue that north Herts district should simply give up on growth, but this would be against the interests of my constituents and the strong businesses which have developed in north Hertfordshire over recent years.

“I therefore hope it will be possible to change the plan to deal with the first ten years and then try to find a suitable site for a garden city-style development to take up most of the remaining numbers.”

His Conservative colleague Peter Lilley, who represents Hitchin and Harpenden in Westminster, backs the hunt for a new settlement that follows Ebenezer Howard’s ideals.

He told the Mercury that senior Government figures are aware of the suggestion.

“I’m very interested in this, I raised it when we had a joint meeting with Eric Pickles,” he said.

“I have also raised it with north Hertfordshire district, and no one seems to be against it.

“The only problem is the timing and whether we can get a proposal up in time to get it through into consultation for inspection.

“Oliver’s approach to break it is a way to get round it.”

When quizzed if he had a preferred location for the development, Mr Lilley said: “That would be the task for the council to identify and then consult.”

The Mercury also understands Stevenage MP Stephen McPartland backs the idea, but he was unavailable for comment at the time of going to press.

NHDC’s elected planning chief, Councillor David Levett, revealed the new garden city idea has been mooted but was found to not be viable in the next 20 years.

“Longer term the idea should be pursued, but the problem is finding suitable locations for a full new settlement in North Hertfordshire so it would mean working with others to find the land, and that could be a lengthy process,” he said.

“There is also no guarantee that the site would be popular with local residents.”

He did, however, say larger developments should follow a “garden village” approach.