From: Peter Franklin
To: Dominic Raab
CC: Sajid Javid
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Let me begin with belated congratulations on your appointment as minister for housing and planning.
This is the most important job of your political career so far – and there’s a lot riding on what you make of it. It’s not just a case of not making mistakes; on this one you need to make a difference.
If you play it safe, you may well continue rising up the Tory ranks (perhaps all the way to the top) – but beyond 2022 your ascent will be in Opposition not Government.
Unlike many ministers facing a huge policy challenge, you at least have a clear strategic objective: build more houses. It helps that your immediate boss Sajid Javid, is fully committed to this goal. Whether the same is true of his boss is another matter.
One has to ask whether the Prime Minister and her most senior colleagues truly want a dramatic expansion in housing supply. I doubt that they want it in constituencies like Maidenhead, Uxbridge and South Ruislip, and Runnymede and Weybridge. These are all redoubts of the Metropolitan Green Belt, but then so is Esher and Walton – your constituency.
You’re on record as a staunch defender of the green belt. The cynic in me wonders whether that was a factor in your appointment. Certainly, you find yourself caught between the need to get more houses built and your support for the most significant restriction on new development. Awkward.
Admittedly, the so-called nimby vote is a force to be reckoned with. In 2015, something called the Guildford Greenbelt Group got three councillors and over 20,000 votes in the borough elections. This happened right next door to your own constituency, so I’m sure I don’t need to tell you about it.
But consider the bigger picture. As the British Electoral Study made clear the other week, it wasn’t the fabled ‘Youthquake’ that delivered the shock election result of 2017. Rather the big increase in turnout was among the 30-somethings – and no wonder. This is the age group hardest hit by the surge in house prices. They’re too young to have accumulated the savings required to get on the housing ladder, but old enough to start panicking about it. Before long, they could be too old to get a mortgage.
Voting for Jeremy Corbyn is hardly going to help, but if you want people to support capitalism you have to give them access to capital. Margaret Thatcher understood that, but do her 21st century successors?
If we lose a generation of home owners, then we lose a generation of Conservative voters. And that’s not a London-only problem. Our crowded capital may attract the young in great numbers, but after the age of 30 the net flow is outwards – into commuter belt constituencies and beyond. Losing London is bad enough, but if the current Government betrays Margaret Thatcher’s vision of a property owning democracy, then it endangers the Tory heartlands too. Housing is not the only issue on which the party needs to teach across the generational divide, but it is the most important.
So what am I suggesting? Abolish the green belt and let developers build wherever they like? Actually, no. We had that sort of building boom in the 1930s and a lot of it was dire – sprawling ‘ribbon development’ with deleterious consequences that persist to the present day.
Building booms are no guarantee of greater affordability. There were building booms across the western world in the run up to the financial crisis. Indeed, the dodgy financing of those booms helped cause the crisis. But before the crash, property prices went through the roof and homeownership (in the UK) through the floor – and hasn’t recovered.
Prices are a function of both supply and demand. A planning policy that doesn’t care what gets built provides a clear signal to speculators that anything goes. The money will follow, flowing into new development faster than concrete ever can.
So, no planning free-for-all; if we are to build on the green belt it must be done strategically. High productivity cities like Oxford and Cambridge must be allowed to grow. These are heavily remain, pro-immigration places, so I’m sure the existing residents won’t mind making room for incomers. That’s what being tolerant is all about, yeah?
However, allowing expansion where it’s most needed will mean building on some greenfield land – including in the green belt. So how do you manage the political backlash?
Well, you have to strike a deal – in fact a grand bargain. As things stand, the pain and the rewards of new development are unequally and unfairly distributed. Existing residents get all the pain; the developers and a few lucky land owners get all the rewards (as do the lawyers and planning consultants). Putting this right should be your top priority.
The expansion of places like Oxford and Cambridge Should be properly planned on a garden city model. See the winner of the 2014 Wolfson Prize for an excellent example. Needless to say, this needs to be done in full partnership with local communities and the result should be beautiful (and indeed traditional, if that’s what the community wants).
The neighborhood planning system Introduced by Greg Clark provides much of the apparatus. However, it needs to be enhanced to include aesthetic concerns – and to empower local people to veto bad design from cynical developers and out of touch architects.
We need to rekindle the old faith that development makes places better. That not only requires more power (invested in local communities) it is also requires more money (invested in design and build). Luckily, there’s a source for that money, which is the uplift in the value of a piece of land when planning permission is granted upon it. Currently, this is captured by the landowner who has done nothing to earn it. It should be captured for the common good instead – the existing ‘planning gain’ system being wholly inadequate.
It’s an argument recently made by your colleague Nick Boles, a former planning minister. A similar point was made in the ConservativeHome manifesto; and long before either of those, Winston Churchill (in his 1909 speech on land values).
The failure of the Government to move on this issue has allowed Labour to steal a march. But with one speech you can regain the initiative. I wouldn’t bother asking Downing Street for permission. Just come out and say it. The PM can either back you or sack you. If she sacks you then it doesn’t matter – because without land value capture you’re going to fail anyway. With it, you’ve got a financial basis on which to create attractive, liveable, sustainable, affordable communities and win people round to the idea of new development.
A related issue is land banking. The ‘ Letwin review’ has been asked to settle a long running controversy: what could possibly explain the “significant gap between housing completions and the amount of land allocated or permissioned.”
Many people believe that developers are rationing build out to push up prices. So, is that what they’re doing? Here’s a better question: Why wouldn’t they? The big players have the means (effective control of the land supply), the motive (selling on land at a profit) and the opportunity (it’s legal).
The solution is for the Government to do some land banking of its own – by using land already owned by the public sector and purchasing additional land as required. Serviced plots from this national land bank would be sold to housing associations, community land trusts, smaller building firms and self-builders – with the aim of diversifying the housebuilding sector and increasing competition. Alternatively, land could be assembled over much larger areas to enable major developments like new garden cities.
Given the power to purchase land at not much more than agricultural use value and to grant planning permission, the financial risk to the public purse would be minimal.
Doing all of this on big enough a scale to make a difference requires serious organisational capacity. The creation of Homes England (as a successor to the old Homes and Communities Agency) is a good start, but it must be free to recruit and pay talented leaders with an entrepreneurial mindset. Countries like South Korea and Singapore show it can be done – and done to enable a thriving market economy, not supplant it.
More importantly still, you need political backing from the very top. The usual suspects – especially the myopic gradgrinds of the Treasury – must lose their veto on reform.
If you don’t get the backing you need, then resign. Given the current circumstances, there’s some first-mover advantage to be had here.
In any case, what’s the point of being part of a government that won’t do anything serious about our most serious challenges?
All the very best with the decisions that lie ahead of you,
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Peter Franklin is Associate Editor at UnHerd.com.