Government Confirms Developers Overpaying for Land is not Material


The government has confirmed that developers cannot use site purchase price to argue that local affordability requirements would make a housing scheme unviable.

Responding to a London borough’s move to seek a judicial review of a planning inspector’s decision to accept a reduced affordable housing contribution, a letter from the Government Legal Department says it is the Secretary of State’s ‘unambiguous policy position’ that ‘land or site value… should reflect policy requirements’.

In other words, developers should have regard to local affordable housing requirements when agreeing a site purchase price and cannot then turn around and use viability arguments to challenge existing local policy.

The government’s statement was sent to Islington Council after a recent planning appeal decision on the Parkhurst Road ‘Territorial Army’ site.

The inspector had refused planning permission on amenity grounds, but had accepted the developer’s argument that only 14% affordable housing was viable because of factors including the price paid for the land, even though the developer could not demonstrate that it had taken Islington’s affordable housing policies into account when bidding for the site.

Unhappy with the inspector’s decision and the signal it sent on viability negotiations, Islington set out on the first step towards a judicial review by issuing a ‘letter before claim’ to the Secretary of State.

Islington said it received support for its stance from Brent, Hackney, Merton, Southwark and Tower Hamlets as well as a public statement of support from London Mayor Boris Johnson.

In the event, the government said it was not appropriate for Islington to pursue a judicial review in the light of the inspector’s refusal, directing it instead to argue its government-confirmed position on viability in future applications.

“Londoners desperately need more affordable housing, and we need to make sure developers are making a fair contribution. However we, and many other councils across London, are concerned that developers are using the viability process to argue they can’t afford to provide much or any affordable housing because they paid too much for land,” says James Murray, Islington’s executive member for housing.

“We are therefore pleased to have a clear confirmation from the Government’s legal department that the value of land should reflect policy requirements, which of course includes affordable housing.”

Islington says it is making copies of its legal advice, the appeal decision, its letter before claim and the government’s response available.

If Green Belt is to meet a Policy Purpose there can be such a thing as Too Much of it

The typical riposte to claims that much of Green Belt is poor quality land with no public access is that it doesn’t matter.  Green Belt is not an environmental designation – there are others for that.  Rather it is a policy designation designed to prevent urban sprawl.

Its a great argument.  However if the purpose is to prevent sprawl whilst allowing for sufficient housing rather than preventing housing per se then there can be too much of it.  The optimum amount of Green Belt is that which maintains housing output whilst preventing sprawl and excessive trips by car.  That can mean there is too much of it if there is a shortage of suitable land outside the Green Belt, and if you do release it you do it in the least ‘sprawly’ manner possible.

The problem we now have is that there is no policy stating the appropriate level of Green Belt.  With the demise of Strategic Planning the extent of Green Belt nationally is fixed unless an individual LPA is brave enough to challenge it.

The problem for anyone however suggesting their is too much is as Colin Miles says in the Guardian.

Suggest that just a small fraction of green belt land could meet our long-term housing needs and they accuse you of wanting to concrete over the whole of it.

So nmif you defending bthe current extent of Green Belt you need to suggest an alternative policy.  Where greater density within the Green Belt can be achieved.  If you think there is too much suggest where and what density it should be developed.

Green Belt is a means to an end not an end in itself and a grown up debate is needed on these matters.

Chancellor to Remove ‘Openness Test’ for Green Belt Brownfield Sites

The Autumn Statement

Underlined are changes to policy page 41

Accelerate housing supply and get more homes built by:

• bringing forward further reforms to the planning system, including establishing a new delivery test on local authorities, to ensure delivery against the number of homes set out in Local Plans

• supporting the availability of appropriate land for housing, including by releasing public sector land with capacity for 160,000 homes representing a more than 50% increase on the government’s record in the last parliament

• ensuring the release of unused and previously undeveloped commercial, retail, and industrial land for Starter Homes, and supporting the regeneration of previously developed brownfield sites in the green belt by allowing them to be developed in the same way as other brownfield land, providing it contributes to Starter Homes, and subject to local consultation

• backing SME house builders, including by amending planning policy to support small sites, extending the £1 billion Builders’ Finance Fund to 2020-21, and halving the length of the planning guarantee for minor developments

On Green Belt this is what the NPPF says under definition of appropriate development

● limited infilling or the partial or complete redevelopment of previously developed sites (brownfield land), whether redundant or in continuing use (excluding temporary buildings), which would not have a greater impact on the openness of the Green Belt and the purpose of including land within it than the existing development.

The underlined is what is the additional test for Green Belt over other PDL.  Necessary because many PDL sites in Green Belt only on a small part.  The chancellor must mean this underlined text is to be deleted.


The Definition of Capitalism – Need for an Accurate Account

Today Ben Chu got slightly annoyed with Paul Mason and so produces a slightly annoying article in the independent

if you don’t first clarify definitions, all else is liable to break down. Clear language is the foundation of clear thinking and coherent action…. But what is this capitalism? What does the word stand for? It’s not a question that is asked enough. The journalist Paul Mason has published a book with the title “Post-capitalism” which, rather irritatingly, lacks any substantive discussion of what capitalism actually is…. During the first phase of the industrial revolution, when people spoke of “capital” they were generally talking about physical assets such as textile factories, water mills, steel foundries and railway lines. The owners of these “means of production” were the capitalist class. But the relative economic importance of physical assets has collapsed as the economies of the rich world have become more sophisticated…. “Capitalism” doesn’t really exist. There are various modes of market-based economic, social and legal organisation in rich countries, some of which work well in some respects, and some of which don’t.

Yes, clear language is necessary and capitalism has evolved, but that doesn’t mean it has evolved out of existence or will disappear through simple semiotic slight of hand. Ben assumes the definition of capitalism is associated with the ownership of fixed capital.   However that was never an essential component in its definition. Capitalism’ was a word was not used by either Adam Smith or Ricardo, or even the youthful Marx.  Capitalism was a late 19th-century term. The Oxford English Dictionary (Vol II, p 863) locates its first usage in English in 1854 by William Makepeace Thackeray in his novel, The Newcomes.

The shares were at a premium, and gave a good dividend. The Prince de Moncontour took his place with great gravity at the Paris board, whither Barnes made frequent flying visits. The sense of capitalism sobered and dignified Paul de Florac

Of course in the 1860s the term was greatly popularised by Marx.  The sense in which Thackery used it – and for the classical economists in their use of the term ‘capital’ was ownership as a monetary relation in a system of production.  The distinction between ‘fixed’ capital and variable, and between different forms of ownership in terms of financial assets were secondary. Definitions are essential but defining capitalism as a system of production, without being defining the essential as opposed to the contingent components of that system has not helped social theory in general or economics in particular.  Each generation defines capitalism by its own obsessions and when it transforms somehow magically we are in a post-industrial/modern/capitalist Nirvana, yet the structures of rentier unearned income are untouched. Perhaps the best definition of Capitalism was given by Walter Sombert (Sombart W. Der moderne Kapitalismus. Munchen, Leipzig: Duncker and Humbolt, 1916)

“It could be said that before double entry bookkeeping, the concept of capital was inexistent, and that without DEB it would not have come into being. We could even go so far as to define capital as the capacity for accumulation as assessed through double entry bookkeeping” (p. 24). The same applies to “the concepts of fixed and circulating capital”, “rotating capital”, “production cost”, etc. (p. 25). “The conceptual artillery of the private economy and the political economy being applied to the capitalistic economy is largely (and people are often unaware of this) derived from the arsenal of DEB. (…) To the extent DEB engenders the notion of capital, it simultaneously engenders the notion of the capitalist enterprise as an organisation designed to increase the value of a given capital. This reveals the creative contribution of DEB to the arrival of the capitalist enterprise.” (p. 25).

Double entry book keeping allows for a proper accounting of credits and debits and a separation of production and ownership, as well as of course depreciation of fixed capital so its profitability can be calculated.  Such are not factors which lead tp an evolution beyond capitalism but the logical and inevitable extension of a system of accounting of ownership which gives the appearance of money being used to create more money. Indeed as I have written about on this blog their are hints in the classical record of DEB existing in Rome and perhaps earlier in Athens so that Banking and proto capitalism arose together – before being lost in the fall of Rome and arriving back through Venice from Byzantine and the Arab World.

Tying accounting into economic and social theory is not just however a historical empirical exercise, it helps to excise bad economic theory.

For example Henry George was critical of definitions of ‘capital’ that included financial assets – stocks, bonds, mortgages, promissory notes, or other certificates for transferring wealth is not really capital, because

“Their economic value merely represents the power of one class to appropriate the earnings of another.” and “their increase or decrease does not affect the sum of wealth in the community”.

Hence a form of ownership does not dictate the creation of wealth – its is contingent on the structure of ownership.

Also as financial assets are not created by labour – their value is not subject to Says Law – it can be subject to speculative fluctuations and be subject to excess demand.  An insight of Gessell picked up by Keynes and forming his precuationary demand for money.

Indeed the neglect of clear definitions and theory based on double entry is central to almost every mistake in neo-classical economists, such as assuming that debts=credits so they cancel out and debt doesn’t matter, without fully understanding the implications of the debt creation and credit repayment occuring at different points in time.

I have argued here before that we should not let past any economic theory which is not rigorously defined in terms of the accounting constraint of capitalism i.e. assets = liabilities + owners equity (capital).  Known as the fundamental equation of accounting.

We can easily rearrange to the Fundamental Equation of Capitalism.


Its not difficult.  The capital of a firm can grow with sharebuy backs, but that is simply shareholders speculating on the rising future capital value of shares, its not steeping outside the rules of the capitalism game.

Similarly the rise of intangible value – brand value – holds not secret to an accounting based approach.  Brand value is simply the capitalisation of the profits a firm makes from it being a firm – including the markup from degree of monopoly from its own innovations and brand value.  In a perfect free market there would be no profits at all.

‘How can it be that we are wealthier today than people were 100 years ago?. . . This question is puzzling because, if you add up all the things we own, it is clear that the underlying quantity of raw materials has not changed over time,. … There’s only one explanation for this increase in wealth. We took this raw material that was available to us and rearranged it in ways that made it more valuable. We took stuff that was not very valuable and made it much more valuable. … What lies underneath this process of rearrangement are instructions, formulas, recipes, methods of doing things – the things accountants classify as intangible assets if they recognize them at all. They tell us how to take something that is not very valuable and rearrange it into a new configuration that is more valuable.’ (Evans 1998)

Sadly Ben Chu’s article only deals with the level of appearances on not in terms of economic value, power relations and distribution.  Capitalism is defined away by virtue of changing ephenomenon.  The nature of how wealth is made and who benefits and who loses out is lost.

Central Beds Drops DTC JR as it acknowledges Local Plan is out of Date

From a commentator

Their Executive Committee has recommended (6th October) withdrawal of their Development Strategy and Allocations Local Plan and a cessation of legal proceedings. This recommendation will be reported at Full Council, 19 November. The reason given for this was “The local planning situation had changed following a report from the Office for National Statistics which had published new population projections. This had led to the Development Strategy and the subsequent Allocations Local Plan being out of date”. Link here:

Central Beds Argues Hey Our Local Plan is Unsound Not Illeagal

Local Government Lawyer

The Court of Appeal has granted Central Bedfordshire Council permission to appeal against a judge’s decision to refuse permission for judicial review after a planning inspector found that the authority had failed to comply with duty to cooperate when preparing its local plan.

Mrs Justice Patterson had refused Central Bedfordshire permission in the case of R (Central Bedfordshire Council) v Secretary of State for Communities and Local Government [2015] EWHC 2167.

According to barristers’ chambers Francis Taylor Building, the appeal is being brought on two grounds.

The first is that in finding that Central Bedfordshire had failed to comply with the duty to cooperate when preparing its local plan, the inspector had wrongly conflated the test for the duty to cooperate with the test of soundness.

It will be argued that this resulted in setting the standard of cooperation higher than that envisaged by the Act.

The council will also submit that conflating the test for soundness with the duty to cooperate in circumstances where the inspector had held a preliminary hearing session to consider the duty to cooperate was procedurally unfair since evidence regarding the plan’s soundness had not yet been heard.

FTB said the second ground concerned the margin of appreciation to be given by inspectors when determining whether a local authority has complied with the duty to cooperate.

Central Bedfordshire will argue that in light of the decision of Sales J (as he then was) inZurich Assurance Ltd. v Winchester CC [2014] EWHC 758 (Admin) the inspector failed to give local authorities the wide margin of appreciation required when determining whether they had complied with the duty.

Lord Justice Laws held that both grounds were arguable and that the duty to cooperate needed to be looked at by the Court of Appeal.

Saira Kabir Sheikh QC and Charles Streeten of FTB are acting for Central Bedfordshire Council, instructed by Sharpe Pritchard.


How to Secure Infrastructure with the Housing and Planning Bill

There seems to be something of a myth going around that the zoning like ‘permission in principle’ system to be introduced in the Housing and PLanning Bill prevents securing of infrastructure and other requirements.  Nothing could be further from the truth.

Permission in principle is nothing more than zoning land for a use and then at the same time gaining outline permission with all matters reserved for the same uses.  Does this prevent infrastructure being secured?  There are loose ends in the system but they can easily be tied up at report stage.

Here’s how you do it.

1. Zone for the Uses and Infrastructure  More Precisely.

On a large site that might before have been zoned for housing units you instead state something like ‘Minimum 1,500 housing units. x sqm A1 space, two primary schools…’ etc.  This will then prompt the drawing up of a masterplan to secure such.  Such sites will typically be zero CIL rated.

2.  Introduce a Certification System to Ensure that the Requirements of the Zoning are Met

A techncial details consent is forthcoming on matters such as layout in a masterplan.  As well as approving the details the LPA is defacto certifying the details are compliant with the permission in principle, otherwise the consent would be ultra vires.

3.  Apply the Power to Approve Subject to Conditions

Lets say a masterplan is for ‘phase 1’ of a development and that requires a junction improvement and a primary school – outside the control of the applicant but within the zoning scope.  The H&P Bill section 104 allows PiP be given subject to conditions.  This can include negative conditions that development cannot go ahead until infrastructure agreements are in place.  Developers for their part can submit unilateral undertakings as part of technical details consents.  The UK equivalent of the US ‘contractual zoning’.

4.  For Small Sites and none specific Infrastructure apply CIL

None of this applies to small sites, but CIL still applies, as it will for large sites for infrastructure that is not site specific

Austrailian PM Gives Smart Cities Speech – Try and imagine any Uk Minister Giving it

Selected extracts – sadly in thrall to ‘market urbanists’  the type that believe that places are poor because poor people choose to live their and open space is a waste of space, but at least hes read something.

…Members of Parliament, Mayors and Councillors receive a lot of complaints from the public about ‘over-development’.  But at their core, most of those complaints are really about the congestion and diminished urban amenity which result if planning fails to keep up with population growth.
The truth is that if we want our cities to be healthier, more productive, more creative they need to be more like humans and less like cars. Density is the solution, not the problem. But it must be density coupled with amenity.
We humans are social animals – we like being with each other, we like looking at each other, talking with each other, talking about each other, learning from each other. ..
he healthiest people by and large live in places where there is plenty of useful walking, where they don’t need to drive to do just about anything or go just about anywhere. The fittest, greenest, least energy intensive Americans live in New York.
Historically cities have been scaled to conform to our chosen mode of transport. The oldest cities and towns were walking cities with a density and scale to match.  Many of our early twentieth century suburbs were built around railway stations.  And from the 1920s onward the motor car enabled us to spread out extravagantly.
But a typical family is no longer one where dad goes off in the morning and comes back in the evening leaving mum to mind the home during the day. These days both parents probably work, and most households don’t have kids at home. Part time and flexible work and consequently proximity to services and amenities, to the centre of a city, are more important than ever.
As properties close to an urban centre with its concentration of employment, services and public transport – be it Parramatta, Chatswood or especially the CBD of Sydney – gain in value, as Matt Wade reminds us in the SMH today and as a consequence households with lower incomes are inevitably pushed towards the urban fringes.  Public transport is more distant, less frequent and more expensive if it exists at all, and transport costs take up more and more of the household budget. Gains from lower rents or cheaper property prices can be swallowed up by the costs of lengthy commutes and diminished employment opportunities.
Technology and connectivity were meant to alleviate these problems.  The car’s ability to disperse us would be remedied, we were told, by technology. We wouldn’t need to battle our way across the metropolis to a distant office – everyone would be able to work from home, and if we wanted home could be relocated from suburbia to exurbia, even further out.  Density would fall further and cities become even more decentralised.
But rather than the Internet benefiting the periphery at the expense of the centre, as so many expected in the 1990s, it had the reverse effect.  The cost of transporting physical goods and commodities has declined, and supply chains have become more elaborate and global. There is no longer any particular need for businesses to be close to one factor of production or another.
Ideas have never been more powerful or the pace of innovation more dynamic – and both thrive in cities.  The great neo-classical economist Alfred Marshall wrote that in cities, “the mysteries of the trade become no mystery but are, as it were, in the air.”
But how can we assure those mysteries and the people who unravel them are in the air of our city?
Urban economists like Enrico Moretti and Ed Glaeser and, closer to home, thought leaders on urban issues such as the Committee for Sydney (ably chaired by my wife Lucy) and the Grattan Institute are as one in emphasising the importance of urban agglomeration and the benefits of large scale mass transit.
A paper issued by the Committee for Sydney last year argues the best way to deepen the employment market in Sydney and improve the city’s amenity was to:
●     Increase the supply and diversity of dwellings (and implicitly, the density of population) in established areas; and
●     Improve the transport system’s capacity to connect people and jobs – this requires better roads, better public transport and better integration of the two….
But as Ed Glaeser regularly reminds us, those cities where technology and electronic communication are used most intensively are also those with the most intense opportunities for physical engagement, enabled by proximity and density….
But as the top urban economists remind us, there is no substitute for physical proximity to other humans with kindred skills, interests and work. Cities succeed when they are places that people find desirable to work and reside. Technology gives us greater freedom than ever to choose the city where we want to build our careers and lives and to invest.
In other words, a smart city needs more than smart technology, it needs smart people. And to create the environment that will attract them, you need technological imagination and above all smart planning. I can see Lord Mayor that Parramatta has both in abundance.


Scaremongering over ‘Permission in Principle’ on Greenfield Sites


Tens of thousands of new homes in greenfield areas in England will be given automatic planning permission amid fears that communities will have inappropriate developments forced on them.

Ministers have quietly given developers the right to be granted “planning in principle” in areas that are earmarked for new housing schemes.

Rural campaigners said the new powers will restrict the rights of council planning officers to ensure that the design, density, size and location of homes is in keeping with local areas.

Shaun Spiers, chief executive of the Campaign to protect Rural England, said: ““The country needs more house building, but the way to achieve this is through well-planned developments that win public consent. Imposing development without local democratic oversight is a recipe for discord.


“Poor quality, unplanned development may boost the profits of the big builders, but it will do very little to address the housing crisis.”

Ministers have quietly expanded the scope of this “planning in principle” power in recent weeks from brownfield sites to areas earmarked for development in local plans.

Just three weeks ago David Cameron, the Prime Minister, said that the new “planning in principle” changes would apply to brownfield sites like former car parks and industrial areas.

However Government documents said the new power will apply to “housing identified in local plans and neighbourhood plans” which include greenfield areas.

They said that ‘planning in principle’ will give “upfront certainty” for developers on the location, use and size of the new development.

Councils will be able to vet unspecified “technical” details on developments, but will be denied the outright ability to block housing schemes they consider inappropriate.

One document states: “The Government proposes to legislate to enable the Secretary of State to grant ‘permission in principle’ via a development order to land that is allocated for development in locally produced plans and registers.”

Whitehall forecasts say the new plans could be used to give approvals to homes on 7,000 building sites a year.

Whitehall documents published alongside the Bill say: “The total number of developments annually that could benefit from permission in principle will grow as plans and registers come on stream and make site allocations.”

Countryside campaigners attacked the reforms, saying the Government was wrong not to try to see if they worked in a green paper first and blaming developers for not building enough homes.

Mr Spiers said: “The Government seems obsessed with the idea that the planning system is holding back house building. It is not.

“The number of planning permissions has increased massively, developers hold huge and growing land banks, yet fewer houses are being built.

“Permission in principle for greenfield development will not cause more houses to be built, but there is a serious risk that it will result in poor quality, low density developments that will increase public antagonism to house building.

“It also risks undermining the Government’s excellent focus on brownfield development and neighbourhood planning.”

John Healey, the shadow Housing minister, said: “The Government is badly failing to hit its housebuilding targets, and the sweeping new powers in this Bill should ring alarm bells about Ministers getting ready to override local communities and give developers a free hand.”

Brandon Lewis, the Housing Minister, said: “Our planning reforms have put an end to the top-down system of the past that pitted neighbours against developers, and instead put power back in the hands of local people.

“The Housing Bill means permission would be granted in principle where land has been identified for housebuilding in local and neighbourhood plans and on brownfield land – but developers will still need to submit details of what they plan to build and how it will look for approval before they can put spades in the ground.

“And with over 80 per cent of councils having published a local plan, and over 100 communities having developed neighbourhood plans, it means millions of people will have a direct say over how their area is developed.”

Sadly I think so.  A local plan will need to set down the mix and number oif units, exactly like a SHMA does, and can set design parameters.  Techncial details should be exactly like outline permission, so whats the difference?   Its just cutting out an unnecessary step o establish the principle of development already established in an adopted dplan.

The real risk is not in the bill but in the secondary legislation.  Masterplanning is an essential stage in ensuring quality, if the government sees this as a bureaucratic tick box stage, which it has hinted it does, then the reform towards a zoning and subdivision system will fail.

The CPRE is dead right though that such a fundamental reform needs to be thrashed out in a green paper first.