A regular theme of Ed Miliband's speeches is to attack capitalism indirectly. Rather than the sort of full fronted assault his father came up with Miliband jnr take care to target bits of it that are unpopular – like the newspapers or the bankers…or the sardine importers.
So his speech at the weekend attacking "land banking" fitted the pattern. This is the term, defined in broad terms, for buying land and then delaying before using it. The "land bankers" are property developers who delay building on land in the hope the value may rise and they will make more money from delaying.
Mr Miliband says:
Across our country, there are land-owners with planning permission, sitting on land, waiting for it to accumulate in value and not building on it.
We have to change that.
Including giving councils real power to say to developers that they should either use the land or lose the land.
Apparently Mr Miliband proposes to spur developers to get on with building homes by imposing fines.
What he fails to appreciate is that property developers who own land and have obtained planning permission have no motive in sitting on the land. "Use it or lose it," says Mr Miliband. But this already applies with planning permission – it expires after three years. Local councils already have the power to stipulate a longer or shorter period.
Even if property developers thought prices were going to rise that would not be a reason for not building homes even if they thought they could profit by delaying selling them. The idea that they delaying building on land out of choice is not credibile.
The real problem is property developers raising the capital to pay for the building works. If a development has stalled due to lack of viability then a council should renegotiate so that building does get under way. This might mean agreeing to reduced Section 106 funding (money given to the council to fund special projects.) Or it might mean reducing the number of "affordable" (subsidised) homes required.
A council might well consider agreeing to less would be better than getting nothing and the site left empty. The Government have made it easier to renegotiate – but Labour opposed the changes. Imposing fines will just drive construction firms out of business.
There may be some "land banking" where firms buy land and then wait before putting in planning permission. This apparently happens with supermarkets trying to scupper places for competitors to open. But the answer is for the planning process to be simpler, more flexible, quicker and cheaper. The Government new National Planning Policy Framework slashes thousands of pages of bureaucracy and makes “change of use.” But Labour have said they would reverse these changes – that would do nothing to help the supply of more homes.
Peter Stacey, of the planning consultants Turley Associates points out that Kate Barker’s 2004 report and the OFT’s 2008 report both found no evidence of housebuilders land banking. "The OFT in its report said that housebuilders need to hold a sensible land supply as a direct result of the convoluted planning process. Housebuilders are, it said, constrained by the availability of suitable land."
“By far and away, the largest land bank is held by the public sector. The Labour Party would be better to find ways to encourage local authorities to maintain their five year land supply as this will deliver new homes where they are needed, rather than threatening housebuilders with yet another tax.”
Mr Stacey is quite right. But it is not just local authorities. I have suggested that central government sells £150 billion of land over the next three or four years to allow over a million new homes while cutting the National Debt.
If Mr Miliband was serious about his policy he would meet building firms. He would challenge them with examples as to why projects had stalled. He would find out the true reasons. But he hasn't met them. Yet he seeks to blame the wealth creating private sector rather than find ways to release them to build more of the homes we need. As Prime Minister he would hit people he never meets and whose lives he would never understand.
Mr Miliband blames profit motive in the private sector for land banking. The true cause is the lack of profit motive which applies in the public sector.