Time for Think Tanks to Work on The Details of Implementing A Land Value Tax

This blog has not always been a fan of SW1 think tanks.  Indeed the superficial fashion and headline chasing of some – notably the Policy Exchange ‘Dumb Tank’ with half baked proposals quickly debunked as soon as the are tried and failed has somewhat devalued there worth and led to a trend towards evidence free policy making.  Where thinks tanks are at there best is investigating long terms trends and international best practice, lifting eyes above the day to day crisis management of civil servants.

One such area is Land Value Taxation.  In our age of rentier capitalism, poor productivity and a housing crisis our latest policy hero seems to be Henry George, with think tanks across the political spectrum championing it.

Of course it is far easier to propose a policy reform than to get down to the nitty gritty details of implementing it.  The great mistake for example of of the Centre for Social Justice was to treat the wicked problem of welfare reform to introduce Universal Credit as a simple one.

Replacing SDLT, council tax and business rates with a new land value tax, even in increments, is a wicked problem.  Beyond perhaps the institutional capacity of the DCLG and treasury to get right.  They need the think tanks help and they need to cooperate to look individually and selectively at many of the issues.

The Letwin review on ‘landbanking’ provides a great opportunity to influence the debate.  It may be utopian but why don’t a group of think tanks, and bodies such as the IFS with modelling expertise, cooperate on tackling the issue with different think tanks tackling one small piece of the jigsaw puzzle, and cooperating on inputs to modelling.  Such modelling has for example provided a great help in acting as a reality check on some other areas of policy development – such as basic income.

There are many aspects to unpick, such as how to identify land holdings without yet a full Torrens based cadastral system.  How to value land in the absence of universal and clear zoning.  How to identify liable and exemptions.  The impact on asset rich but income poor households and the fiscal impact on deferral till death.  What would the macroeconomic impact be of the increased flow of development land?  What are the options for phased implementation?  What are the differential impacts across the country and what changes would be needed to the current rate/council tax redistribution mechanisms?   There is equal potential for simplification here – rather than a complex ‘needs’ formula just take an average land value nationally – those raising above this level throw into the pot pro-rata – those below it drawing from it pro-rata.

Equally important are links to ‘Death tax’ and payment for end of life care, and whether a LVT could fully replace S106 and CIL, or more practically whether area based infrastructure charges would be an exemption to LVT.  Here is an excellent area for potential modelling, especially in terms of expenditure of social housing.

So think tanks get down to it.  The objections to LVT amongst the chattering classes are no longer ideological, now that the majority of the voting population are no longer land owners, kit is practical.

Khan’s Dramatic London Upzoning – Will it Work?

In your first plan you propose housing targets based on a SHLAA (housing supply), only them to find your completion levels are well below that level.

In your revised London Plan you increase the target to exactly what the SHMA (housing need) says, leaving a mysterious gap between the SHLAA level.  You argue at the EIP that the gap will be filled somehow by operation of the plan policies.

It doesn’t happen, so in the next revised plan you increase your target by 50% and increase your SHLAA level so it exactly matches the SHMA level.

In most cases like this you would say the planning authority has lost all credibility.   That either it has to release more land and dramatically up and rezone, but if it is land rather than policy constrained it has to agree major overspill to other authorities under the Duty to Cooperate.

But this is London, which uniquely doesn’t have to have a sound plan, rather it can produce one the SOS lets it get away with irrespective of the panel findings – which it can reject providing it meets the normal requirements of not being ‘wednesbury’ unreasonable.

Prior to the production of the new London Plan you would say that the new Mayor has so far ducked the hard choices and tough trade off necessary in any plan making exercise.  He has taken the a position on the Green Belt even more absolutist than authorities like Castlepoint and South Oxfordshire.  He suggests that we need less tower blocks post Grenfell but higher densities !

The revised London Plan suggests that the Mayor is at last making tough choices.  If you are saying Green Belt is an absolute no (except of course for the 20,000 units in the Green Belt Khan accepts will go in the business case for Crossrail 2 submitted to the Treasury) then you have to upzone.  So the revised London plan contains three major policy changes, an end to the density matrix for large sites, and end to the Garden Grabbing policy, and a dramatic new policy presuming in favour of development of small sites.  Though with the Housing Delivery Test of the horizon, seemingly designed to hammer London, you will get a similar presumption anyway.

The density matrix was somewhat out of date anyway.  Most large sites were way in excess of it and the last London Plan had a retained policy for managing impact of very high densities.   What seem to have been done in the revised SHLAA is simply evaluating sites on trend densities or masterplan assessed densities.  This leaves a large gap for small sites – a gap the new policy is designed to fill.

If you are going to upzone, especially in Suburban areas, then an absolute no no on Garden Grabbing had to go.  If you are knocking down semi and detached houses for flats you need to increase footprint to get efficient building typologies.  The risk is a return to the worst kind of 1980s ‘backland’ developments that some boroughs put in place to regulate.  Surely there is middle ground for a criteria based design led backland policy rather than simply presuming in favour or against loss of gardens?

The background to this of course is that we should be positively YIMBY rather than NIMBY in permitting the planned upzoning of existing urban areas to meet our housing crisis.

Looking at it from an international perspective the London story is familiar.  The pressure to upzone exists in all major western cities with growing populations.  Some cities like Vancouver, Seattle etc. produce plans with sensitive plans for sensitive upzoning around transport nodes, profusely illustrated etc.  What has struck me is that chuief planners promoting these have very limited life spans as the forces of outrage from suburbs rack up.  These forces are so strong in some cities – such as San Francisco – that serious reforms are not promoted at a city level and have to be promoted by the State.  In New York – which has never had a full city plan – city wide reform has been replaced with rolling wide area by area rezoning – to reduce the political fallout.

What Khan is proposing is in effect a widespread upzoning but without a rezoning study, without illustrations of acceptable and unacceptable typologies under the new zoning rules.  Rather these are left to individual boroughs through design codes.  If these are not produced the laissez faire rules of the London Plan apply – for small sites up to 25 units.   So it will be the Boroughs that get all the political stick in proposing rules to make this actually work.

Clearly the housing shortfall in London is so great that major policy change is necessary.  It is unrealistic though to expect London to meet every last drop of its own needs.  In the Budget the government acknowledged that the Oxford-Cambridge Corridor would have to take some London Overspill (though the background studies made major errors and underestimated how much – as I have blogged on ehere before).  London will not manage to triple its historical completions rates in the 20,000s per year, to a figure in the 60,000s.  Also the loss of employment land is reaching critical levels and threatening the capital’s Long term growth.  Green Belt release may play a small part, but my own research suggests it can only ever play a relatively minor role in London.

The new policy is likely to have a disproportionate effect in tory outer London because it will be very difficult to assemble sites small sites in terraced streets as opposed to streets of semi or detached housing.

The policy applies to areas within the higher PTAL areas and to areas otherwise within 800m of a town centre or tube station/rail station.  Separate maps are shown of these (oddly the map only showing 800m of a tube station but not a trains station. but no combined map.  Different boroughs would have very different impacts.  Lack of a map and no open source version of the GLAs town centre definition makes it difficult to define where these areas are?  It is also unclear if the 800m distance is ‘as the crow flies’ or actual walking distance.  As a matter of urgency the GLA should release an open source gis dataset, ideally with definitions based on actual walking distances.

Policy H2 needs to be read alongside policy D1.  Here the onus is clear  on borough’s to identify the areas for intensification and the capacity for intensification in each.        The GLA appears to have used a GIS based method to appropriation the SHMA shortfall between boroughs depending on the proportion of areas within each borough covered and weighted somehow by conservation constraints (para 4.2.4).

The plan is clear that the character of some neighbourhoods will need to change to fulfill the policy.

Incremental intensification of existing residential areas…is expected to play an important role in meeting the housing targets for small sites, particularly in outer London. … existing buildings, where this results in net additional housing provision. Within these areas, there is a need for the character of some neighbourhoods to evolve to accommodate additional housing. Therefore, the emphasis of decision-making should change from preserving what is there at the moment towards encouraging  and facilitating the delivery of well-designed additional housing to meet London’s needs. (para 4.2.5 page 155 )

If you are going for upzoning you need to bite the bullet.  Some areas will need to change in character, some areas will need to have change managed so it protects existing character.  Some areas will need to see restrictions so that character remains protected.Good examples being estates (for example the Tudor Estate in Kingston) where there is a unity of character of buildings.  In other areas the character may be less unified but the open arcadian character is strong. and where design code rules can ensure setbacks and set ins to retain that character.   Where Outer London boroughs may have a point is that the infamous ‘Inner London Bias’ of the London Plan plays little effort in understanding the character of Outer London.  What is important to be protected outside conservation areas, the metroland estates, the cottage estates etc. and what is not.

Rasmussen in the 1930s in ‘London the Unique City’ was perhaps overly romantic in seeing London as the par excellence of democratic scattered planning with domestic virtues of the cottage replacing the royal despotism of planned flats and avenues.  However slums we still have in London, increasingly packed into vericcupation of existing houses in places like Wembley and Wealdstone as enforce sharing packs in ever more into an overloaded and out of date dwelling stock.  Rasmussen had a point about the uniqueness of London.  However the low density aspect of this looks increasingly anachronistic and burdensome.  Go to Southall and you find a population packed into overcrowded two storey houses, of no real merit, in an area that would have been much better planned from the outset at 6-10 storeys around a road with a tram down the middle. The trick to planning in Outer London will be to find those aspects of its scattered and cottaging character worth preserving and those areas that need to be replaced by development forms much better suited to the household types and energy standards of today.

The universal experience from cities around the world is that political pressure eventually builds so that areas zoned for upzoning are increasingly restricted with the counterweight of strategic and national authorities introducing rules to countermeasure this with increasing provision for ‘as of right’ developments.

Take a typical street that might be impacted by this policy – Hook Lane just off Welling High Street in Bexley.  Just off a main street and near a station no parking would be required under the new London Plan.  Pretty much forcing introduction of permitted parking.  These two houses could be replaced by flats four per floor 6 storeys under the policy.  Though six storeys requiring lifts might be a squeeze in viability terms.  Under current DM driven approach this might well be refused for being out of scale and character (though pretty ugly character if you asked me).   The borough would have to introduce a design code if it wanted to control heights to say two or four storeys or introduce minimum plot areas where 5 or 6 storeys would be acceptable (common rules in zoning codes internationally).  Cannily contributions in lieu are needed for affordable housing for schemes of less than 10 units.

Indeed this approach represents a further shift towards zoning and subdivision based planning as we are seeing in so many ways. This is clear is policy D1 with its emphasis on classif zoning parameters such as Floor Area Ration etc. This isn’t yet of course fully embedded within the law. So even if you met the code in full you run the risk of a committee throwing a scheme out leading a wasteful appeal. What is needed is the principal being embedded in a full zoning code with design review of schemes in terms of elevational details and landscaping.

This must come as something of a culture shock to Outer London Boroughs. It will require a revolution in the way they do things. Requiring a proper evidence based approach to what areas are suitable for upzoning and by how much, needing skills on zoning rules that are very undeveloped in british practice.  The Mayor of London might have done this more tactfully. introducing s study based pilot with a borough, or with TFL doing corridor based intensification studies (as in Toronto for example). But clearly the Mayor is in a hurry and had no time, but now will need to be more pragmatic.  Unless outer boroughs in particular engage with the upzoning agenda they will be hammered by the housing delivery test.  A swarm of development firms will already be knocking on doors around plum potential sites and signing up options and development agreements.

What is striking though about the London Plan (which gets a couple of hundred pages longer every time) despite the forests of words there is not a single picture or diagram illustrating principles of intensification.  Applying the principles of best practice internationally the way to go internationally is clearly down the road of form based zoning.  Where ultimately you can put a plan of two sides of A0 simply explaining the rules that apply to development typologies acceptable to different zoning districts.

Here is an example from Cinncinati

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Such an approach would have an obvious applicability in London. Take a borough like Barnet where you have a clear transition across from its rural edge and Green Belt edge villages to its more urban railway suburb town centres. Indeed Barnet might be an ideal pilot for a joint study between the GLA/TfL and the Borough having has it does the highest small sites target.   Another might be Kingston with its extensive work on Character areas much of the technical work having already been done.

Havering Leader K han ‘Waging War’ on Outer London with New London Pla

Romford Recorder 

Mayor of London Sadiq Khan has released his first London Plan with proposals to allow a greater number of houses being built on small spaces.

He says he wants to “make the most of the precious land in the capital” to help tackle the housing crisis, as London’s population is predicted to reach 10.8 million in 2041.

A target to build 65,000 homes every year, with those of those built to be affordable, has been set.

In the 500-page document, the 10-year housing target for Havering is 18,750 with 1,875 homes expected to be built annually.

Currently, the London Plan requires the borough to build 1,170 houses a year.

But Havering Council leader Councillor Roger Ramsey has released a statement saying that it appears the Mayor of London is “waging a war” on outer London boroughs.

He said: “I have started to review the Mayor’s London Plan and will be studying it very carefully in the coming weeks because we want to make sure it will help us deliver our Vision for Havering.

“However, it’s clear already that his suggested housing targets are simply undeliverable and unachievable.

“Even though the mayor says he is committed to protecting the Green Belt, it will put large parts of it at risk.

“Not to mention having a profound effect on the established character of many parts of the borough by cramming buildings into small and unsuitable sites.

“With this plan the Mayor appears to be waging war on suburban outer London boroughs like Havering.

“It overlooks the need for major investment in infrastructure, especially transport, which the mayor himself recognises must be in place for good growth.

“As council leader, I will always lobby to protect the interests of Havering and its residents.”

The consultation on the new draft London Plan begins today and all comments must be made by 5pm on March 2 2018.