The Equivalence of Fiscal and Exchange Rate Monetary Targetting

There have been a number of favorable posts recently from market monetarists in favour of swiss style exchange rate targeting as a means of escaping the ZLB.

How different is this from fiscal policy?  In one sense it is the same.

From a circuitist perspective if the central bank purchases financial assets denominated in another currency to deflate the exchange rate then the real value of the government debt will also deflate by the same amount.

If however the central bank purchased bonds on the secondary market of the same amount and there was no expectation of there repayment then the value of the government debt is deflated by the same amount.

in both cases the price neutral fiscal ceiling of the state is raised and government spending- at the ZLB – can expand; reflating the economy.

So at the ZLB -with expectations that the monetary injection is permanent and the asset is no redeemed (destroying the money created) they are fully equivalent.

So why argue about the relative merits of fiscal and monetary policy?


The Historic ‘Life on Mars’ Pub Gary Neville and Ryan Giggs want to Knock Down

Manchester Evening News

It is understood Historic England, which used to be English Heritage, is not impressed by the scale of the skyscrapers.

But Mr Neville said the only way to fit everything wanted by the council onto the site – while also opening it up and including considerable public space – was to build upwards.

He said for him the two plazas, to be known as St Michael’s Gardens and St Michael’s Square, were the stand-out part of the development.

“A large part of the site is usable to the public. That’s something that was driving us from day one and that’s what pushed us,” he added.

The most controversial aspect of the development is likely to be the demolition of the historic Sir Ralph Abercromby, said to have been the inspiration for the pub in TV cop show Life on Mars.

The site lies entirely in the St Peters/Deansgate Conservation Area.  The pub is the gem, few tears will be shed for the ugly synagogue of replaced, the front block of the police station (council owned) though is well mannered and could be converted.The site is aching for a place centered treatment retaining the pub and building up on the site of the Synagogue.  The problem is that the strategic regeneration framework for the site is an overlong laundry list and is confusing on which historic assets to retain, triumph of conflicting interests over good urban design.  By not being ‘prescriptive’ it abrogates the first statutory duties of the City towards heritage conservation. Indeed the document was prepared by Make rather than independently by the council.

Indeed it shows why Ken Shuttleworth is our worst architect.  The description of úrban grain’ entirely neglects indeed wipes out teh existing buildings on site, and rather than repeating and connecting that grain simply proposing two monolithic pavilion blocks in New York Style plazas entirely alien to Manchester, and obliterating the setting of the Grade 1 listed Town Hall.  a monster.





Alex Morton Admits “presumption in favour of development’ has failed

Some admission from sacked Alex Half Baked Morton one of the key architects of  the NPPF

Con Home

The sanction of the Presumption in Favour of Sustainable Development is simply inadequate to get them [housebuilders] to increase output and is largely a way for developers to capture large greenfield sites (it also basically repeats a 1980s failure termed ‘planning by appeal’).

Despite the debates around Right to Buy, Starter Homes, and sale of high value assets, the most important reforms underway since 2015 were a low-key battle to reform the system so that:

  • Councils were assessed against a delivery test. Each council would be required to deliver enough homes to meet housing need.
  • Up to date local plans would move from 500 pages of verbiage and policies on everything from climate change to an ageing society, and instead focus on delivery of homes – with infrastructure, design and political engagement prioritised.
  • Central Government would “put plans in place in consultation with local people” in areas without an up to date local plan that failed to deliver. It was hoped in Number 10/the Treasury this could be rolled out if we were able to find a way to do this in a politically acceptable fashion.

There were moves around ‘direct commissioning’ (opposed by parts of the Treasury) so that councils could control the land market themselves and, without taking on balance sheet risk directly, allocate land to developers in return for agreement to build at a set rate.

These reforms were not particularly supported by the sector or within DCLG, despite help from some good officials and ministers, (particularly Brandon Lewis). DCLG was far too focused on mayors (despite clear evidence that London’s mayor, who has extensive housing powers, had not stopped London seeing the biggest housing failure of all). Against all the headwinds and vested interests the agenda set out above barely moved – much like housing numbers.

Green Belts/Urban Growth limits Increase Construction (for a Time)

Kip Jackson at LSE

[Studying in California] Taken as a whole, regulation reduces residential development. However, the degree to which individual regulations affect development varies, and some “anti-growth” policies actually increase development (at least in the short run). …

While commonly touted as an effective remedy to urban sprawl, I find that urban growth boundaries (also known as “green belts”) actually increase the construction of single-family homes. Urban growth boundarieshave been shown to increase the value of new homes, so it is not surprising that development would accelerate until abutting on the established boundary.

It is easy to forget the policy intent of Green Belt was never primarily to protect the countryside – rather it was to prevent urban sprawl by shaping urban growth.  Indeed Green Belt was promoted in periods when there was widespread consensus about the need to dramatically increase housebuilding.

Consider Circular 1/55 where the purpose was to ‘[check] the unrestricted sprawl of the built up area and of safeguarding the surrounding countryside against further encroachment’

The purpose was not to prevent all growth but ‘unrestricted growth’ and the surrounding area was that surrounding the inner limits of Green Belt where growth was permitted to grow to.

This double purpose of Green Belt was implicit rather than explicit in the poorly worded 1/55.  The pioneers of Green Belt such as Unwin and Abercrombie were clearer on its purpose – as a long term land bank shaping urban form and providing recreational opportunities.

For example in Unwins 1929 Gre4ater London Plan

Regional Planning consists primarily in the laying down of an appropriate design for urban growth. The plan or pattern of development should be laid out on a field or background of open land. The difficulty hitherto has been that no such background is in fact available. All land is assumed to be potential building land; and the reservation of any tracts from use for building development may be sufficient to constitute such land in the words of the Town Planning Acts “property injuriously affected” and to establish claims for compensation. The result is that Town Planners have been constrained to design rather meager patterns of open space on a background of potential building land.

If the contrary method were adopted, and the areas adequate to meet any extent of urban or suburban growth which can be foreseen were planned on a secure background of open land, a true proportion between the two could be maintained. Open space for public enjoyment by the growing population could then be secured upon the free land as and when required. This wider aspect of the matter, and the possibility that additional powers may render the correct method of planning practicable, will be discussed in a. later section. In the meantime it must be recognized that, with the existing powers, the only possible way of restraining sporadic developments from ruining the remaining tracts of land which have special suitability for playing fields or other kinds of open space, is to acquire or preserve those areas in adequate quantity for present and probable future needs. (Illustrations 13 to 16 & 42).

The problem now being that this positive purpose – the regional planning purpose has gone – Green Belt became a purely negative concept.

So I dont suggest that Green Belt is abolished or weakened, rather that is original dual purpose is rediscovered, that it becomes a container of land banks and is redrawn where necessary to allow for New Towns/Garden Cities and Sustinable extensions/Garden Suburbs, with the Green ‘background’ used as publicly accessible open sapce where prcticable.

Why has it taken 23 Years to get a proper Strategy for the Thames Gateway

DCLG Thames Estuary Growth Commission

The Thames Estuary 2050 Growth Commission (“the Commission”) was announced by the Chancellor of the Exchequer in March 2016. The members of the Commission are:

o Rt Hon Lord Heseltine CH (Chair), Government Advisor on Local Growth o Lord Adonis, Chairman, National Infrastructure Commission

o Sir John Armitt, President, Institute of Civil Engineers

o Rt Hon Greg Clark MP, Secretary of State for Communities and Local Government

o Lord Foster, Chairman and Founder, Foster + Partners

o Rt Hon Mark Francois MP, Minister for the Thames Gateway o Prof. Alice Gast, President, Imperial College

o Gregory Hodkinson, Chairman, Arup Group

o Sir George Iacobescu, Chairman and Chief Executive, Canary Wharf Group o Prof. Dr Uwe Krueger, Chief Executive, Atkins

o Sir Stuart Lipton, Partner, Lipton Rogers Developments LLP o Sir Edward Lister, Chairman, Homes and Communities Agency

o Sadie Morgan, Director, drmm Architects o Lord O’Neill, Commercial Secretary to the Treasury

o Tony Pidgley, Group Chairman, Berkeley Group o Nicola Shaw, Executive Director UK, National Grid

o Geoffrey Spence, Global Head of Infrastructure, Resources and Energy, Lloyds Bank

2. Budget 2016 announced that the Commission would “develop an ambitious vision and delivery plan for North Kent, South Essex and East London up to 2050. This will focus on supporting the development of high productivity clusters in specific locations. It will examine how the area can develop, attract and retain skilled workers. It will also look at how to make the most of opportunities from planned infrastructure such as the Lower Thames Crossing.” 3. The Commission will, by March 2017, produce an interim report setting out its vision for the region. It will then report back to the Chancellor by Autumn Statement 2017 with a clear and affordable delivery plan for achieving its vision.

The Thames Gateway concept was first launched by Micheal Hesiltine in 1993.  PRG9a The Thames Gateway Planning Framework was launched in 1995. This was merged into the South East plan in 2009 which was then abolished in the localism act.  There was a Thames Gateway Delivery Plan in 2007 but it wasn’t a strategy, just a collation of existing sectoral projects.

There is therefore a considerable sense of deja vu about this relaunch.  About the failure over 23 years to properly align infrastructure plans with public spending.  The DCLG seems to be following its latest mean trick, expecting consultants to give their ideas and expertise for free on a board and have a call for ideas without actually dipping into pocked to commission technical work on updating existing plans.

Brexit will Lead to More Household Formation and More Demand for Housing

We all already hearing calls from some campaign groups to slow preparation of some local plans to reassess their estimations of OAN.   The assumption being less immigration.

However there is n certainty that there will be less immigration and the Brexit campaign was very careful not to set down any numbers.  Some like Danieal Hannah state that there will be no impact.  Why?

Replacement of the current system by an Australian style points system will lead to a shift in the type of labour – towards the high skilled labour required by export oriented industries.  Therefore there will be less demand for shared accommodation for low skilled immigrants – a type of housing increasing predominant in London, and increased demand for housing suitable for these high skilled immigrants – such as furnished serviced apartments.  Indeed trading cities and rapidly growing cities such as Dubai have large amounts of such accommodation to cater for this demographic.  The key issue being you can share existing accommodation but serviced apartments require new development to provide for as by definition they will be new households.

What Brandon Lewis’s Removal Means for Housing and Planning

It is clear from Brandon Lewis’s Twitter feed that he has been removed as housing and Planning minister – though much later it was announced he was moving to the Home Office.

No news at the moment on his replacement.

A sign of Teresa May’s ruthless focus on results.

It marks a new phase in the Tory approach to planning

The first ‘enemies of enterprise’ phase saw a weakening of planning and the NPPF, as well as the localism Act.  There was an uplift in housebuilding but nowhere near enough.

The second phase with the Housing and Planning Act was effectively an acceptance of low numbers with a repriorisation of those affordable houses that existed and were being built towards client groups.  There would have been no political need to do that if enugh houses were being built.

We now enter a third phase with less restrictions on government spending and intervention.  In this phase ministers will need to guarantee house building – Macmillan style.  Expect more intervention and more social housebuilding, as well as less ideological opposition to strategic planning.  The appraoch will me much more akin to the Major government.

China Overurbanising with City Plans for 2 1/2 times population

China Daily

According to a recent report from Beijing News, even as some large cities like Beijing and Shanghai are taking measures to limit their populations, certain middle-sized and small cities are eager to accelerate their development by increasing the population. Some even hope to double their populations by 2020 or 2030.

Data from the State Council shows that, as of May 2016, more than 3,500 new urban areas are slated to be built, with a total capacity of 3.4 billion people. However, many people are asking: Who will live in these new urban areas that can hold nearly half the world’s population?

In 2015, China’s urbanization rate was 56.1 percent. The 13th Five-Year Plan proposes that by 2020, China’s long-term residence urbanization rate will reach 60 percent, and the household urbanization rate will reach 45 percent.

Li Zuojun, a researcher with the State Council Development Research Center, said, “At present, China’s household urbanization rate is 39.9 percent. In the near future this number will need to increase by five percentage points, which is equivalent to the urbanization of 100 million people. The task is arduous.”

“A population of 3.4 billion is equivalent to about 2.5 times the size of China’s current population, and one half of the world’s population. The local governments’ plan is clearly unrealistic,” said Hu Gang, president of the South China Association of City Planning.

Wang Yukai, a professor at the National School of Administration, said the China’s baby boom is very clearly in the country’s past. Even with the liberalization of the one-child policy, the population growth rate will not rise very sharply. What’s more, Wang believes that population growth in cities will come mainly from emptying rural areas. Considering the desire of many rural dwellers to settle down in cities, a population of 3.4 billion seems highly unlikely.

The 2015 National New Urbanization Report showed that more than 70 percent of Chinese migrant workers move to prefecture-level cities. Less than 10 percent choose to go to small towns. For that reason, some small town governments not only face difficulty attracting new residents, they also have to deal with the outflow of their existing population.

Experts point out that cities built on the basis of administrative orders often have difficulty providing sufficient and satisfactory consumer services, and they cannot attract residents with the promise of stable jobs. Zhao Jian, director of the China Urban Research Center of Beijing’s Jiaotong University, believes that any future breakthroughs in urbanization will mainly rely on market mechanisms rather than administrative means, which could potentially lead to a grave “mismatch” of space and resources.