When Sam Bowman and George Monbiot agree then we know the End Times are near

Rains of blood will obviously follow, cats will lie down with dogs:

Sam Bowman, deputy director of the Adam Smith Institute, said: ‘The housing shortage does not exist because the private sector doesn’t want to build new homes. The problem is that developable land is so scarce because the planning system makes it so.’

This is clearly and obviously so, as we have demonstrated in these pages many a time. But Sam’s not the only person to have got the right end of the stick here. Much to everyone’s surprise, George Monbiot has managed it too:

The Scottish government might address the speculative chaos that mangles the countryside while failing to build the houses people need. It might challenge a system in which terrible homes are built at great expense, partly because the price of land has risen from 2% of the cost of a house in the 1930s to 70% today.

Except that it’s not quite the price of land which has risen. That’s some £10,000 a hectare for reasonable agricultural land these days and that’s suitable for 14 dwellings (according to the density rules that the planning system insists upon). That just ain’t 70% of the cost of a house. It’s land that has the planning permission attached to it that allows you to build 14 houses on it that costs the vast amount: it’s the cost of the chitty, not the cost of the land.

But with that slight correction, yes, we are all on the same page here. Housing is expensive and it’s the planning system than makes it so. Thus, if we desire cheaper housing then we need to reform (“reform” here being a synonym for “blow up with extreme vehemence”) the planning system.

And given that the End Times must indeed be approaching given this convergence of views perhaps we can also hope for a murrain that strikes NIMBYS*, BANANAS** and politicians***?

* Not in my back yard people

** Build absolutely noting anywhere near anywhere people

*** A third and virulent plague upon our society.

Geoffrey Lean’s still not getting it about housing

It’s becoming somewhat tedious to have to continually correct the misunderstandings that people have about the English housing market (and yes, it’s really an English problem, not a British one). Today’s example of just not getting it is Geoffrey Lean in the Telegraph:

You hear it all the time, in the mouths of developers, ministers and commentators. The reason for building over unspoilt countryside is that the nation is short of land for housing, thanks to an unduly restrictive planning system.

This mantra drives government planning policy, and – under its pressure – councils have set aside sites for up to 700,000 new homes on greenfield land. It is also the rationale for allowing, nay encouraging, speculative building that is threatening to swamp village after village across the country: its “physical harm” – even one of Downing Street’s favourite MPs, Nadhim Zadawi of Stratford-upon-Avon, who sits on the No 10 policy board, has warned – threatens to become “the defining legacy of this Government”.

But it’s wrong, plain wrong. For a start, developers are sitting on enough land for 400,000 houses which have already been given planning permission. That’s enough for nearly four years at the present much too low rate of building – or two years of what would be needed to meet a realistic demand.

Yes, that land bank. So, how long does it take to get planning permission (by which we mean, from a standing start to actually being allowed to break earth on the project)? Two years? Four? It’s most certainly not 6 months, is it?

Great, so, we would expect any responsible business to have enough, in stock, of its basic raw material to cover the lead time necessary to create more of that basic raw material. If it takes one week to get more steel then we’d expect a car plant to have, somewhere around and about the place, a week’s worth of steel. So, given that we have a constipated planning system we expect builders to have a stock of their basic raw material, land with planning permission.

That these land banks exist is proof, not that the builders are hoarding, but that the planning system suffers from that constipation. Everyone would be a great deal happier if they didn’t have to have vast amounts of capital tied up in such land.

Then there’s brownfield land. This week a report by the Campaign to Protect Rural England concluded that there is enough of it in England alone for at least a million homes, enough to meet five years of demand, or to build that terrace from London to Cairo. What is more, it is constantly increasing as factories, hospitals and other institutions are merged or close down.

Ah, yes, brownfield land.

Developers far prefer building on greenfield sites because they make bigger profits, as they do not have to clear – and at times decontaminate – the land.

Er, yes, that means that brownfield land is more expensive to develop. To the point that, for some sites at least, the clean up costs are so high that even at current house prices a development proposal is entirely uneconomic.

More than that, what is actually being complained about is not the volume of housing available (although obviously these two are intimately linked) but the price of what is available. Meaning that yes, we want to build a great deal more housing. But we’re not going to bring prices down, the aim and point of the plan, if we insist that only the most expensive to develop land can be used.

Finally – the property company Savills has just reported – central and local governments and the NHS are between them sitting on enough for two million homes, a full decade of supply and enough for a terrace from London to Caracas. Some 600,000 of them are held by the very central Government that has been so loudly trumpeting the scarcity of land.

That might well be true. But think through the implications of what is being hinted at here. Government is so inefficient, so cack-handed, that it’s sitting on £200 billion’s worth of development land (£100k a plot seems reasonable, at least for the SE) and yet the suggestion is that such fools should be tasked with planning the allocation of housing land.

It’s doesn’t work as a logical assumption, does it?

Should governments compensate taxis for allowing Uber?

An interesting thought. Governments have, over the years, privileged taxi providers in a number of ways. They’ve also imposed costs upon them: in the US things like taxi medallions (which can become very valuable in some cities) and in London by insisting on a couple of years as an apprentice doing things like The Knowledge and so on. Now governments are allowing companies like Uber (and Lyft, Sidecar and so on) to enter these markets without imposing the same costs upon those companies. This is akin to government taking the property of a citizen, similar to a compulsory purchase order to build a railway through the land.

So, should governments be compensating those cab drivers? I think Mike Munger has the discussion and the conclusion correct here.

Yes, that cab license is property, akin to land. But compensation for the removal of a legal privilege it’s doubtful should have been granted in the first place is not the same as compensation for the removal of a righteously owned piece of property.

The analogy I would use is that of free trade. It’s often said that OK, perhaps a move to free trade is justified. But there’s all sorts of people who gain from the current, not free, trade. So, those who will gain from the move should compensate those who lose. Which is an attractive idea: except, except. That except being, well, those who currently gain from not-free trade aren’t currently sending cheques to those who suffer from not-free trade. So, why should the reciprocal be enforced?

We consumers are those who would have to compensate the cab drivers, through our taxes. The cab drivers aren’t compensating us presently for the benefits to themselves of the restrictive legal privileges. So, the removal shouldn’t lead to us having to compensate them.

 

 

Well, yes Sir Simon, but how do we calculate this?

Simon Jenkins is reviving the notion that clever people like himself, those Great and the Good, can tell all of the rest of us how to live our lives. His particular example is supermarkets but it could be anything at all really, given the proclivities of some to tell other people what to do.

We went from that High Street thing, to supermarkets, to out of town supermarkets and perhaps now to online sales:

Land is Britain’s most precious resource. The point of planning is to economise its usefulness.

We’d argue a bit there, Britain’s most precious resource is Britons. Their, our, accumulated knowledge, labour and the accumulated labour (also known as capital) handed down from our forefathers. But that aside, yes, of course, we wish to create the maximum economic benefit from whatever resources we have (and that does not mean just money, of course not, we’re talking utility here).

At which point we’ve got to ponder, well, how do we do that maximisation? And the truth is no one knows. That’s why we cannot plan. Should someone, in the 1980s, when considering a planning application for a supermarket have predicted the rise of the internet, Amazon and Ocado? Could they have done so? In the 1990s?

Yes? No?

If not, then it couldn’t have been planned for, could it?

At present, smart planning ought to be thinking ahead of the boom in online shopping. What mistakes might there be in pandering to its gargantuan appetites? What are the implications of every street jammed with home delivery lorries? What of every suburb blighted with distribution centres, supplied by giant hangars littering every motorway?

The correct answer here is “we dunno”. Nor do you and nor does anyone else. We’re all just going to have to suck it and see. Or, as we might put that a little more formally, allow the market to sort it all out. We consumers will work out which of the various options we ourselves prefer, those who cater to our desires will prosper and we’ll end up with a system that might not exult entirely everyone but which does the best to provide aggregate human utility that can be managed at this stage of technological progress.

And yes, that does mean that Sir Simon and his ilk don’t get to plan it all for us. Exactly what annoys them all so much of course.

In praise of Project Gregory

This is a really rather inventive idea that’s just been funded on Kickstarter. We’ve lots of homeless people (perhaps rather fewer in England than many think but still). And we’d all obviously like to find a way to house the homeless. We might say it’s for ethical reasons, civilised ones or just that they clutter up the urban landscape so badly: but housing the homeless is quite obviously a good thing to be doing.

So, why not build little self-contained units, by the roadside, that are then slathered with advertising? The billboard pays for the upkeep (even if not the capital cost) of that housing? On much the same basis that various advertising firms are willing to build bus shelters as long as they get the advertising rights upon them.

An excellent concept except for just one thing:

Cities are engulfed with billboard advertisements which are expensive to construct, maintain and their subsequent renting is a costly venture. The proposal increases the functionality of the structures in a way that the insides could be turned into living spaces. Such an object would produce minimal maintenancecosts, which could be paid through the rental space of its facade. In addition, the architects believe, ‘if we take the electricity cost needed for the billboard to keep it lit during night and we try to optimize it by x%, we find that this saved energy could fully cover all those interior usage needs.”

That might not quite roll off the tongue but that’s pretty good English for some Slovak architectural students.

At which point we come to that just one thing.

Planning permission.

To do this would obviously require the granting of planning permission to build such dwellings. But if we had a planning system that allowed the building of cheap and cheerful urban homes then we wouldn’t (absent addiction and mental health issues) have a problem with homelessness in the first place.

It’s a fascinating solution. But the reason it won’t work as a solution is because it won’t pass through that planning system that causes the problem it’s trying to solve.

Ain’t bureaucracy wondrous?