A group of leading housing experts gathered at Howard Kennedy’s London Bridge offices last month to discuss the recent housing white paper and the wider issues facing supply in the residential market. Co-sponsored by Savills, the debate included contributions from both the public and private sectors.
To kick off what turned out to be a lively debate, Property Week asked the panel for its views on the housing white paper, published earlier this year, and whether it goes far enough to deliver the government’s own housing targets.
Philip Barnes, land and planning director, Barratt Developments
John Beresford, development director, Grainger
Martha Grekos, partner and head of planning, Howard Kennedy
David Jackson, head of planning, Savills
Julian Larkin, planning director, Redrow Homes
Anna Rose, growth, economy & culture director, Milton Keynes Council
James Scott, planning & communications director, Urban & Civic
Phil Wade, operations director, First Base
Adam Branson, Property Week (chair)
Paul Burroughs, photographer
Martha Grekos (MG): I probably have a more cynical view than most. I think the paper is a great synopsis of the crisis, but it doesn’t actually provide enough to resolve it. It is more ‘business as usual’ with the things it has proposed and I don’t think it goes far enough. I don’t expect a revolution and I know that policy evolves, but what it proposes doesn’t have enough teeth. For example, with the green belt, I was expecting something there to allow for change. We need land at the end of the day.
The whole thing is about bringing forward houses and doing so more quickly, but what it has done is retain the exceptional circumstances test, which is quite a high hurdle to overcome. And, in any event, the government wants to propose that brownfield has to be looked at in the first instance, so there is no change there.
David Jackson (DJ): I think evolution is an interesting theme to follow. I think that before the paper was released, the secretary of state seemed to indicate that something revolutionary was going to happen and, in that sense, it is a disappointment because it is evolutionary. But there is something to be said for the evolution that is in there. There is a genuine effort to try and address some of the issues that we face, such as trying to speed up the process by having just one method for objectively assessed need. That’s very sensible. Why do we need to have several days of debate at a local planning session when we can be definitive? Then there is trying to address strategic planning with the introduction of spatial development strategies.
Again, it’s a sensible step in the right direction to address problems with the duty to cooperate. So I think there are some steps forward that are to be welcomed, but does it go far enough? No. To pick up on Martha’s example, I agree with you on green belt. When you read the paragraph that deals with the green belt, you can kind of see what a revolutionary change might have looked like, but that hasn’t been carried forward. You can see the compensatory elements to justify green belt review, but unfortunately the first part holds everything back. Recent decisions have confirmed that it’s going to be more difficult to get green belt released.
James Scott (JS): If we think about what we were being asked in the build up to the white paper, there was a secretary of state and a planning minister who were listening to a number of people from different backgrounds, and I think the white paper that emerged doesn’t go as far as the ministers themselves wanted. However, its structure reflects that breadth of discussion. They are looking at all the different levers. The phrase ‘there is no silver bullet’ was going round before it was published, and you have to look at lots of different interventions. So I don’t think it’s a white paper with a single big idea; I think you see a white paper with multiple different levers. The question is: will people move them in a way that effects material change?
On green belt, I look at this as a deliverer of large-scale strategic sites outside of London. I would say that the green belt is something where we have to have certainty one way or another; local authorities have to know whether or not the green belt is open for business when it comes to doing local plans. The green belt developers, the people who are running applications and sites through local plans and applications, are doing so on the basis that edge-of-town is easier to deliver than large-scale strategic sites. It’s a bit like the garden village model where you have a core, a gap and then a cluster of major settlements.
As long as you provide the infrastructure to those satellite settlements, you can maintain the green belt; you see that in Cambridge at the moment. If the green belt is released, the viability of the large-scale strategic settlements around the outside will then be materially affected. So I don’t criticise them for not tinkering with the green belt. If I have a criticism, it’s parking the Community Infrastructure Levy (CIL) debate until the budget at the end of this year. If they were going to do one thing that really could have made a big difference, that would have been it. They could have said that CIL does not apply to large-scale strategic sites.
Anna Rose (AR): The problem really with green belt is for those areas just outside of London. What we’ve got at the moment is piecemeal review of green belt where a strategic review would be entirely preferable. If each of those local authorities decides to review the green belt without any idea of what the whole area is doing, we will probably end up with a position where the green belt that we should preserve is lost in part, and some that we should have got rid of is kept. It’s not going to be retained for the reason for which it is there.
Those tiny bits of green belt in those districts are crying out for a review that looks at London as the centre and how we meet needs using the surrounding area. I think it’s incredible that the housing white paper can maintain that the green belt is up to individual authorities’ discretion. The green belt is an important part of strategic planning – the one cannot exist without the other. On CIL, it doesn’t cater for the majority of development proposals, so, at the moment, it isn’t fit for purpose.
What we have is a restrictive S106 system that doesn’t allow for local circumstances. From Milton Keynes’ perspective, we can’t currently design a new tariff for our local plan, which the development industry and the council would be in favour of. It would let us fund infrastructure that communities that aren’t on the CIL list need. At the moment, the CIL is catering for a very small part of the development industry and not catering for it well. It doesn’t cater for the very large or the very small; it doesn’t cover anywhere near the amount of infrastructure that it needs to cover.
We’re waiting for the budget and a lot of local plans are going to be brought in that can’t cover their own development costs and will stretch the existing infrastructure still further. The strength of a tariff would be that it’s locally determined and it’s a contractual agreement between the developer and the council. Therefore, it is an agreed position – it doesn’t have a bartering point. At the moment with S106, there is a viability mechanism and a challenge point at which you can later come back and say it is no longer viable.
In terms of tariff, you’ve already agreed what your land price is, what development you’re going to have and therefore what infrastructure is needed and what the cost is going to be. The joy of a tariff is that you can agree either to fund through the tariff or to do so in kind, so many of our items of infrastructure are provided by the developer rather than a public sector body.
As we know, in austerity times, we do not have the resources to fund a lot of the up-front infrastructure. A lot of our development partners are putting in the roads and drainage as well as building schools in kind. Also, the tariff can be paid right at the end of development. The council can take the risk and borrow up-front and the developer can pay once it has done the development. It’s much fairer in terms of development risk. We can borrow at much lower rates.
Philip Barnes (PB): I think there is a debate about what is the right target. If the government’s target is 1m homes in this parliament then we are on our way to achieving that. I think the measures in the white paper aren’t going to cut across that. As David said, there’s stuff in there that so far as Barratt is concerned will speed up the process and deliver more housing, including the stuff on conditions, reducing the number and complexity of pre-commencement conditions and getting statutory consultees to actually support development.
There are parts of the country where it is quite difficult to get the infrastructure that you need to start development from companies that have a legal obligation to provide it. The fact that the white paper addresses that is good. Barratt doesn’t have a problem with increasing planning fees as set out in the white paper, providing that it is ring-fenced for planning services to enable development.
MG: What about shortening commencement to two years rather than three? And then equally reserved matters being shortened as well?
PB: Is it going to be a show-stopper for our business? Absolutely not. You don’t last long in Barratt if you’re sitting on an implementable consent. If you’re taking 18 months – let alone two years – you’re in trouble. But we buy a lot of our land from promoters like James who have delivered an outline permission, and that involves a process of judicial reviews, site marketing, site sale, we might want to re-plan, there might be technical details that don’t suit us… that can take two-and-a-half years. But it will just make us sharpen our pencils.
John Beresford (JB): Someone in the Homes and Communities Agency (HCA) said to me about the coalition that there were a lot of ideas coming out of ministers and mandarins. It’s a case of throwing everything at the wall and seeing what sticks. With the white paper, there is a lot of stuff in there and some will be better than others. The key phrase is additionality, and that’s one of the things that Grainger likes the look of in terms of delivering more homes. If you go around a big building site, homes are being delivered at the rate at which they can be sold. There is a big debate about that. If you start adding things like private rented sector as a genuine distinct product, that can enhance delivery. There are now local authorities starting to shape policy to get more PRS, which is welcome.
Phil Wade (PW): It’s easy to look at it and say that it’s long on targets and short on substance, but at the end of the day we look at it and it provides challenges and opportunities. For us, things like modular building are a massive opportunity to bring forward housing and speed up delivery. It’s all about speeding up the system, be that planning or construction. So the support for modular build is great.
PW: I think the product is there now in terms of quality, but whether the supply chain is there is another question. The modular construction companies talk about pipeline, but we’re talking about building communities and social infrastructure – building commercial space where people can live, work and play. The modular guys say ‘we need a deal for 3,000 homes’, which is why I’ve just done a deal for Silvertown for 3,000 homes because it works for them. But putting all that to one side, I think it provides a great opportunity to speed up the whole process, and that’s what we really need to do.
JS: The other thing about modular is how quickly government agencies are following up on ideas. You’ve got to give credit to the HCA – they are pushing the modular debate and modern methods of construction (MMC). Phil’s right that the suppliers of those are looking at certain long-term supply; they can’t take the risks on planning in the way that Barratt does or that we can on large-scale sites. So the HCA is starting to act as the middle man to encourage that supply and encourage the likes of L&G to push on with delivery; they are putting real money into that. So we shouldn’t look at the white paper in isolation; we should look at how others are trying to follow behind quickly.
PW: When you saw things like building information modelling (BIM) being debated as this huge saviour of the industry and so on, it never really took off until the government said it was going to have BIM on all its projects. At that point, everybody started embracing BIM. The same applies to modular. If we had public land coming through and the prerequisite was that it had to work with modular, that is something that I think could have made a real difference. It’s about innovation.
PB: We’re trialling it; we have big targets for it. We’re on the cusp of robotic bricklaying of houses. But I just worry that we could put all our eggs in one basket – the perception of tomorrow’s technology.
Julian Larkin (JL): My initial view on the white paper was one of disappointment, having sat around the table with people like the Home Builders Federation (HBF) and hearing stories coming out of the Department for Communities and Local Government (DCLG) about where planning was going, about how there was this revolution coming. Obviously, Brexit changed everything – Theresa May came in and everything changed.
Firstly, I don’t really see it as a white paper; it’s a green paper and with consultation we have to wait another six to 12 months before we actually get firm policy. We’ve got some policy ideas in the white paper and I think that the ideas that are there are good and will improve the system. But they are not yet definitive and we need definition in our market. Whatever the outcome, we need certainty – it makes our lives so much easier.
We need to build houses as quickly as we can and deliver what we can to the market. We’re on a growth curve; we have doubled production in the last five years and will continue to drive that up. We want the policy background to assist that. In terms of specifics, I actually think the green belt policies don’t go far enough. We have quite a lot of land interests in and around London and Manchester and we were looking for something coming out of the white paper on green belt.
What are these local authorities going to do if they don’t have to provide land in the green belt? A number of authorities are wholly constrained, so we were hoping for something in the white paper to assist planning officers who have a difficult job in trying to manage the needs of their citizens and the whims of their members. They need the teeth to say: ‘we need to do this’. You need everything: the larger sites, the smaller sites around villages and the add-ons to existing settlements.
MG: There has been a suggestion by various bodies that there is lots of green belt that isn’t that useful in the way that we have always envisaged, and that it is actually not your beautiful green land. The suggestion is that you could have trials on the London to Cambridge corridor, on what is called ‘environmentally inappropriate land’. What people are afraid of is that if you do that, ‘evil’ developers will take all of it away, but I don’t think anybody has suggested that. Equally, there are tests in the National Planning Policy Framework (NPPF) that provide protection. But if you work through it logically, the NPPF does allow for appropriate development.
AB: Is it a problem with the media? Every time there is a decision to build on green belt it makes the front page of the Daily Telegraph…
JB: I think it is maybe time for a national debate to revisit all the green belts and revise them on a national basis.
DJ: I think Anna’s right that you need to look at it strategically. I think the concern of most local communities is that they lose bits of green belt piecemeal and there is no clear idea as to how it has materialised. If you look at some of the strategic decisions about transport corridors and major brownfield sites in the green belt that don’t serve a green function then it’s different. You can help the green belt achieve some of the things that it’s meant to achieve. That could be something that people could support.
MG: If you can provide an alternative elsewhere then you can show that you’re providing an alternative…
AR: You have to be really careful about retaining what the purpose of the green belt is; it isn’t an environmental policy, so by putting environmental compensation in, you’re changing the purpose. So you take it out of green belt and put it into probably public ownership at a cost to the public purse. Development happens, so it’s then swapped into some sort of environmental land that a local authority has to manage. I’m not sure how that helps anybody. It solves the problem that you should always have been able to develop that site, but it just creates another problem. You’re just moving the problem around. You’re not actually helping. And the idea that neighbourhood plans can somehow change the green belt should be a concern for all of us.
JS: The only problem I’ve got with a wide-scale strategic review is the uncertainty that this then creates within the ongoing local plan process. If you think about the swing factor that a wider review would have on some pretty critical local plans, it’s politically toxic. Green belt is politically toxic, and we in the industry can argue about a grand vision but until people will take that on at a governmental level it won’t be solved locally. The way in which it could be looked at is where the government is investing billions in infrastructure corridors and putting transport nodes in locations in the green belt. There should be a mechanism to review if there is a strategic infrastructure investment.
MG: The only issue is that those corridors have a different process from a legal view and take a while to come through. It’s not as though it’s going to bring forward the housing that we need.
DJ: This raises the key question of the status of National Infrastructure Commission decisions in the planning process. So is it appropriate to review green belt for Crossrail 2 in order to achieve densification around transport nodes? And similarly, with the Oxford to Cambridge corridor, can they bring these issues together? Why spend all that money bringing together two settlements that are constrained by green belt unless you’re going to do something about it?
AR: Those two reports have different purposes, though. If you read the Oxford to Cambridge report, it’s not about the kit but about the delivery of housing. So in that instance, the review of the green belt would come through a spatial plan, not the other legal process. It’s not about rocking local plans that have already happened; it’s about putting a strategic plan above them that looks at those big objectives. At the moment, the housing white paper has far too many things that it thinks are strategic.
What you need are the what and the where. There is a way of looking at the plan-making system that allows these sorts of strategic reviews to take place without knocking the local situation. That’s something we all have to consider when we’re putting our responses in. It’s about how we can make the plan-making system relate to some of the things that the housing white paper hasn’t looked at, because if strategic plan-making comes in as they envisage, then even without the housing white paper saying it can review green belt, realistically it will have to review green belt as a strategic objective. It really doesn’t matter what it says in the housing white paper.
PB: If you look at Manchester, a strategic review was announced and all the authorities that had green belt review proposals up their sleeve stopped in order to wait for the Greater Manchester spatial framework. Having seen the plan out with political courage and commitment behind it, yes it’s put us back two years, but are we in a better place than we were five years ago? My God we are.
JS: Greater Manchester is the only one that is holding on to that strategic review. Everyone else is saying it’s back up in the air again.
PB: I am the most optimistic person in the world [laughter], but my point is: are we in a better position? My answer is yes, but I’m not blind to the issues. What we really need is some bite within the NPPF and changes that say that where local authorities aren’t meeting need, don’t have a local plan and have green belt, perhaps there are special circumstances to justify release. It would force members to review their plans and do something about it. Within the white paper, the reference to exceptional circumstances at least gives us something to go for.
PW: The question is whether the government really understands our industry; I think it finds it a challenge compared to other industries. We’ve talked about planning, design, delivery, green belt… there are so many facets to what we do, but if the government goes to the drugs industry and says ‘we’ll give you £100m if you go and create us another 5,000 jobs’, they just go and build a factory and deliver the jobs. Job done. We’re not like that and I think we give them too much credit for trying to understand the detail that we deal with on a day-to-day basis.
JS: If you read the white paper, it is the most express criticism of industry I’ve read in a government document. We talk about innovation, but it’s saying that we’re still doing things in a way that we were doing 100 years ago.
JB: Houses are still houses. Do we all want to be living in plastic pre-fabs? No, we don’t.
JS: And they will say fair enough. But at the same time, the challenge is to diversify supply. That is a clear message coming out of the white paper. We have to diversify the means of construction, the methods of construction, and the people who are in the industry. Unless we do that, it is implicit in the white paper that the government has supported the housebuilding industry post-recession, talked to people and said that we now need to boost the supply side.
And, as a result, they are not going to back any one player; they are going to back a whole load of players in making their intervention. So do we think there should be a national policy? Again, it doesn’t feel like they are saying we should have a national policy. We need localism to rise up and make the change. The NPPF does exactly that in principle – it only gets involved where there is a gap. I think we can say that has been a useful yardstick: being able to say to local authorities that if they don’t have five-year land supply then they have to look at this.
DJ: I think the NPPF has been a really good innovation. It’s set out a lot of really good, clear policy in an understandable way. If you look at the output it’s produced, it’s a question of causality, but there has definitely been an uplift in consents across the country. The NPPF has certainly contributed to that. Where there is a bit of concern is that a national policy produces standard outcomes and, in certain market areas, the scale of the crisis is so great that standard outcomes aren’t going to get us there. If you look at the places where there is a real affordability crisis, what the NPPF doesn’t do is differentiate market areas to the extent that it needs to. What we should be aiming for is additionality in the pinch points like London and Oxford.
JS: And I think the government gets that, which is why you’re seeing a rollback on policies like that. The HCA is becoming more bespoke, too. It’s a case of what a site needs to unlock it. It’s more targeted, more local. London is a different place, I totally agree. They’ve been trying to intervene less and you’ve seen local authorities rise to the challenge, and we criticise authorities that don’t. The ones that are delivering don’t necessarily get the praise they deserve.
AR: I suspect I’m the only person who disagrees that the five-year land supply has led to more housing; I think what it’s done is slow down plan-making. It may have increased short-term supply, but in market towns across the country it has made it difficult for members to get communities involved in long-term planning. It’s an ongoing problem.
JB: Councils are blaming developers for challenging five-year land supply…
AR: Milton Keynes has 22,000 homes with planning permissions and doesn’t have a five-year land supply. Explain that to me. We deliver, so how can the people who hold the strategic sites put in appeals on different sites?
JB: Some councils think that if there is a need for 5,000 homes and they allocate a big site that has space for 5,000 homes, then that is what will be delivered. In fact, they are only going to get a certain number of houses per annum.
JS: That’s where I disagree with you. That’s a housebuilder mindset on a strategic site. You’ve got to open up multiple points of sale and how you can use HCA funding to accelerate infrastructure; all those options are on the table. I agree that it is not a good idea for authorities to put all their eggs in one basket, but you have to pick the right partners to deliver strategic sites, and if you do, you can have far more than three developers building at any one time. You can see that is the way large housing associations are going.
PB: I think the onus is on the people who say that large sites with only three housebuilders on them are poorly managed to come up with some good research. At the moment, it isn’t there to support the argument.
JS: You can optimise the delivery of those sites far more. A 20-year site should be a 10-year site and we should all be looking at that and taking more risk. We should actively be looking at how we can deliver more quickly by using HCA infrastructure funding to make more sites accessible more quickly.
JL: I deal with large sites and you do need a bit of a helping hand with loans from the HCA – it’s very useful on a cash-flow basis and it does kick-start things on site. But at the end of the day, it has to be paid back and it goes on the appraisal – it does have to be built into viability.
JS: And you are seeing a change in the government’s mindset on that point. You are seeing them allowing repayments out of proceeds rather than at a particular date and so on. The point I’m pushing is that people need to rise to the challenge of the opportunities that are coming forward.
MG: I’d be interested in hearing the panel’s views on how public land is being brought forward from the MoD, the NHS and so on.
JL: I think it was happening before the white paper. There is more encouragement for public-private partnerships and that can only be a good thing in my view. We see a big move towards local authorities being enlightened and looking at housing demand in a strategic way and how they can bring private sector partners and skills on board and share risk to deliver. I think the GLA does a great job of that.
JB: I think some of the sites that the MoD has promoted have been very good at long-term value creation, but it’s also created some good places. It’s got positive outcomes for everyone. I hope it’s rolled out more widely, rather than just a fire sale.
MG: In some cases, one partner brings the land and another brings the money, but at other times there is quite a bit that you have to do to put it together. Compulsory purchase orders (CPOs) are an issue in how brave an authority can be to go down that path.
AR: CPOs could be used more effectively if simplified and if they were fairer on land value. The risk is also always on the public purse; we would be more willing to use them if we could do it more quickly. If we could step in to take over sites that aren’t delivering, that would be really useful. But, obviously, we can’t pay housing land prices and then go on to deliver the housing. We will be proposing a lot of reforms as the Planning Officers Society.
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