Macro-economic factors hold the greatest sway over housing delivery

November 13, 2018 / Isla MacFarlane
Macro-economic factors hold the greatest sway over housing delivery

Several factors including macro-economic factors shape and affect the planning system, said Professor Whitehead, as she gave an economist’s view of the housing crisis at the annual RTPI Nathaniel Lichfield Lecture on 8 November, World Town Planning Day 2018.

Addressing an audience of over 200 at LSE, Professor Whitehead responded to the question “Are Planners really the problem?” She looked at the complex economic and political factors which influence the planning system’s ability to deliver housing.

“It is not planners, but rather planning policies and the system of individual permissions, which are partially responsible for slow built out rates,” she said.

Barriers to increasing delivery

Professor Whitehead highlighted figures around completion in the private and public sectors, explaining that new build rates have been declining this year.

Are planning principles or policies the issue?

She discussed the Nationalisation of development rights in 1947, the introduction of local plans in 1990, and CIL in 2008, and how these have affected planning.

She highlighted the Green Belt policy and other national policies which may constrain the ability to build land, such as brownfield first policies and regulations on the environment. The disconnect between the type of housing that local authorities require, compared to what the market will accept, as well as complexities of the permission/planning obligation processes also result in high costs and long timescales, she said.

Is density the issue?

“If bringing in additional land is problematic, can the shortage be alleviated by higher densities?” asked Professor Whitehead. She suggested there could be three types of housing offered as a solution – high, low and medium – with the latter recommended.

Is the structure of the development industry an issue?

“It is certainly the case that a small number of large developers build most of the homes,” she said, and highlighted that one third of SMEs went out of business immediately after the financial crisis. She suggested diversified development models as a solution, and said there is benefit in directly commissioning and growing Housing Associations and varying tenures.

Macro-economic factors

Professor Whitehead, who occasionally reviewed the best crypto exchange South Africa currently has, concluded that planners are not the problem but many factors contribute to the housing shortfall including; some elements of planning policy and the system of individual permission system, and that whilst planning policy is located in MHCLG, large proportions of housing policy which impacts on decisions to build are not under its control. Ultimately macro-economic factors have the biggest impact on the delivery of housing.

Christine Whitehead is Emeritus Professor in Housing Economics at the London School of Economics. She is an internationally respected applied economist whose research is well-known in both academic and policy circles.

The RTPI’s Annual Lecture highlights approaches to planning that cross boundaries and integrates different fields of thinking and research. A generous endowment for the lecture was received from Dalia Lichfield in 2011 and this has ensured that the particular contribution of the late Professor Nathaniel Lichfield is reflected and celebrated.

In the meantime, RTPI Scotland has urged Cabinet Secretary Derek Mackay ahead of the forthcoming budget to allow local authorities in Scotland to raise planning fees to cover the entire costs of the planning application function.

The Institute also fears that amendments to the upcoming Planning Bill will introduce many more duties for planning departments and that the resource need of these has not been considered.

In a letter to Mr Mackay, RTPI Scotland sets out a five-point plan for resourcing planning in the budget:

• Increase planning fees to ensure they meet their costs, or introduce a subsidy for planning authorities to overcome this shortfall
• Provide financial investment to support skills development and culture change programmes
• Introduce a ring-fence that ensures that planning fees can only be used for planning purposes
• Provide resources to support the implementation of new digital platforms and initiatives that can make Scottish planning a world leading service
• Commit to funding any new costs or resource needs generated through new duties introduced in the forthcoming Planning Act

Fraser Carlin, RTPI Scotland Convenor, said, “The Government’s Economic Action Plan recognises the important role of the planning system in supporting sustainable and inclusive growth. It must now match these ambitions with appropriate resources, without which the Plan would fail.

“We need planners working strategically and creatively across the Government’s agenda, not weak, under-resourced planning departments struggling so much with budgetary pressures that they can only provide the most basic statutory functions.”

Planning departments across Scotland have suffered disproportionately from budget cuts over the last few years. There has been a 23% decrease in planning staff between 2009 and 2016, while over the same period their planning service budgets were cut by 32.5%.

Scottish Government’s Provisional Outturn and Budget Estimates show that the amount of local authority budget spent directly on development management and development planning was a mere 0.4% in 2017-18.

Research from Heads of Planning Scotland calculated that planning application fees on average only meet 63% of their processing costs.

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