Daily Archives: 8 Jan 2017

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8 Jan 2017

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Affordable and Social Housing, Austerity cuts, Developers/ Development

Outgoing Shelter chief: “The housing crisis has spread to everybody”

” … The housing crisis “has spread to everywhere. It’s not just poor people, or those who are just managing, it’s right up there.” The average house price in the UK has climbed 29.4pc in the last seven years; in London it has soared by 69.6pc, far ahead of wage increases.

As a result, it has become a hot potato. “It’s a political issue that has become real for a lot of people across the country. Not just in Labour seats, but Conservative MPs have people in their constituencies who are saying my children can’t afford to buy,” he says. “We have a group of people who are in their 50s and 60s for the first generation since the Second World War, looking at their children’s housing prospects, and they are worse than their own.”

Not only is there political pressure coming from voters, but also from big companies.

Deloitte and KPMG both bought flats in the capital for their graduates to live in, and Shelter has teamed up with companies such as Starbucks to introduce a rental deposit scheme which workers can pay back, interest free.

It could have been even worse, he says. “In the last seven years, if interest rates had gone up by 2 or 3pc you would have seen a raft of repossessions like those in the 80s. You would have seen a crisis beyond what we already have. So in some ways housing policy has been lucky.

This affordability crisis has been compounded by a “failure of certain policies”, he says, as well as the financial crisis and the austerity that followed. The previous governments, including New Labour and the coalition, all failed to build enough and put little focus on the supply side, he argues. They all “believed the way to solve the housing crisis was on the home ownership and on demand side, to effectively make money available cheaply through Help to Buy-type products, [which enables first-time buyers to purchase a home with a 5pc deposit] and less so in direct investment in house building.” Help to Buy was a crucial policy after the downturn, designed to get house builders moving again by stimulating demand. But that policy has continued, even while house builders are posting record profits once again.

There’s a problem with this model of solving the housing crisis, says Robb: “it’s broken”. “With the death of public housing and local authorities, the private house builders have had to carry that weight and they can’t,” he says. Part of the problem is due to the land market; the high cost of land forces developers to keep upping prices and making homes smaller. “You can’t criticise them for doing what they were set up to do, they are there to maximise profit for their shareholders,” he says. “That doesn’t necessarily translate into the best housing policy for Britain. That’s why you need more small builders, more land available – public and private – and you need public building. …”

http://www.telegraph.co.uk/property/house-prices/robbthe-housing-crisis-has-spread-everybody/

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8 Jan 2017

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Affordable and Social Housing

The Guardian view on the housing crisis

“For too long councils have been unable to build for rent. The housing white paper should bring them in from the cold

The scale of the housing crisis is now as great as it was in 1951. That was the year in which Harold Macmillan, then housing minister, made his famous pledge to build 300,000 new homes a year. His success in achieving it helped pave his way to Downing Street. But decisions he made then can now be seen as the root of both the current critical shortage of homes and the matching inflation in values which so distorts housing policy. This is what the much-delayed housing white paper – due before the end of the month – has to tackle.

In Macmillan’s haste to meet his eye-catching commitment 66 years ago, many homes were built to inferior standards. In the later case of Ronan Point, the 1966 London tower block that collapsed catastrophically two years later, speed of construction overwhelmed the safety and security of the people who lived there. Just as significantly, it was during Macmillan’s premiership in the late 1950s that the private sector overtook the public as the nation’s leading housebuilder, for the first time since 1939. Public sector housebuilding remained significant for 20 years, but never regained its pre-eminence.

When the squeeze on council spending began in the second half of the 1970s, council housing was an early and lasting casualty, but building for sale did not increase to fill the gap. Without a steady supply of homes for rent, the conditions for today’s housing shortage were set. Private builders maximise value by preferring fewer, larger homes, unaffordable to first-time buyers. It is rational to keep prices up by releasing new builds slowly, and there is little incentive, once planning permission is granted, to fulfil commitments with community value such as primary schools, parks and GP surgeries.

Ever since, governments have been trying to unpick this tangle, but with only half the tools they need to do it with. To have a chance of meeting its commitment to build a million homes by 2020 – a target itself widely considered inadequate – this government must build at scale. Last week, the sites of 14 new garden villages were announced, promising 48,000 homes: these new settlements have few of the values of place creation, community value and housing standards that made Letchworth, the original and best surviving of the garden cities first proposed by Ebenezer Howard, one of the most successful urban developments of the 20th century. All the same, they will, one day, provide thousands rather than hundreds of new homes, and they offer a better chance of the kind of thought-through planning that is making Prince Charles’s Poundbury, an urban extension of Dorchester, look less of a royal eccentricity and more like a model of community creation.

But Poundbury has been 20 years in development. The government’s target is 2020. The private sector won’t meet it. A bigger role for housing associations, the main builders of social homes, needs changes to financial legislation to permit more borrowing. At last the government recognises the part that councils must play. Devolution settlements give larger local authorities new powers; they want to be able to control the speed and style of housebuilding too. That goes further than the new fund, announced in November’s autumn statement, that is intended to enable them to fund the complex financial and legal work necessary for big new developments. As an IPPR report concluded in October, what is needed is an active deal-making process between the devolved authorities and Whitehall, where the former release public land and invest public money in developing local skills. In return, the government rationalises funding streams, allows retention of stamp duty on new builds, and devolves control over council tax to shape types of tenure.

Harold Macmillan laid the groundwork for the privileging of home-ownership over social housing. The housing white paper is the moment to recognise that, until homes for rent are firmly back in the mix, there will be no end to the housing crisis.”

https://www.theguardian.com/commentisfree/2017/jan/08/the-guardian-view-on-the-housing-crisis-right-to-rent

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8 Jan 2017

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Accountability, Cornwall, Developers/ Development, Independent Councillors

New independent group in Cornwall

… a new pressure group [is] being formed in Cornwall this week. Charter for Cornwall has been formed by the people who run the popular anti-developers Facebook group “It’s our Cornwall” and they told CS [Cornish Stuff blog] that the group will seek to be a “conduit for the unfocused energy we see around us – we are an essay in grassroots activism. Let’s make a better Cornwall together”

Charter for Cornwall will pressure those seeking election to the Council in May, when all Cornwall Council seats will be up for grabs, to pledge to support 4 commitments when they do get elected.

A launch statement on charterforcornwall.com says:

“We believe that we cannot give way to despair and apathy. We have to use what democratic rights are left to us to challenge Cornwall Council’s narrow and short-sighted strategy. Elections in May provide one opportunity to make our voices heard and make our future an issue.

We are not alone. Across Cornwall local groups have been campaigning against massive, speculative and unnecessary housing projects. Over 7,000 people have signed the CPRE’s petition Save Cornwall’s Green Fields, calling for a change in the planning system. Over 70 town and parish councils have supported Cornwall for Change, which is demanding a change in direction at Cornwall Council. Posts on the It’s Our Cornwall facebook page about building projects reach an average 2,000 people daily and sometimes as many as 10,000″.

People are dismayed, worried and angry about what they see around them. But anger and sadness too often leads to despair. That despair has to be transformed into hope. We can change things. We can take back control of our future. This is a first step”.

The statement continued,

“We will campaigns to increase community-level influence over the future of our land. We need to change Cornwall Council for the better by electing better councillors. We need a Council that is more open, more responsive and more willing to listen to residents’ concerns. In the short-term we will be supporting those candidates in next May’s local elections who stand for our values. In the longer-term we must work to end the Council’s pursuit of unsustainable growth policies”

The four ‘principles’ of the new group are to

Protect our Cornish heritage (“Councillors have been unable to stop Cornwall becoming an easy ride for property developers”)

Provide genuinely affordable housing (“The Government has cynically redefined ‘affordability’ to include housing at 80% of market prices that are simply unaffordable for most local people”)

Put limits on second homes (“The extension of second home ownership has destroyed community life in many of our coastal towns and villages”)

Plan for Cornish communities, not developers’ profits (“The planning system is rigged. Blatantly unsound data have been used to drive the housing target up to an unnecessary 52,500 minimum”)

The group has spent the last few weeks gathering contributions and support from various political groups, including KMTU who support the initiative. Formed by Pete Burton, Bernard Deacon, Julie Fox The Charter for Cornwall will roll out in three phases in Feb – May with the first phase to agree on the final wording of the pledges Councillors will be asked to commit to.”

21st century Cornwall: Developers Won, Paradise Lost? As Cornwall seeks to introduce planning charge, a new group is formed to pressure councillors

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Devolution, Local Enterprise Partnership

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Is Devolution already with us? A briefing paper on the major changes to regional funding since 2010

A paper provided to East Devon Watch by D W Daniel – feel free to reproduce or retransmit unchanged and with attribution:

Executive summary

1. In 2010 the coalition government commenced a major shakeup of regional funding with the ultimate aim of providing a form of English devolution. This briefing paper attempts to summarise the sequence of changes from an East Devon perspective when it comes to detail. It has proved to be a difficult task. The author has failed to find a single source listing, for example, the sums paid to Local Enterprise Partnerships (LEPs). Many sources aggregate data to produce numbers that cannot be cross compared. Even government sources are inconsistent. The LEPs themselves are also an unreliable source, publicising bids but not the outturn, especially if unfavourable. Bearing these caveats in mind the author believes the briefing presents an accurate and comprehensive picture of where we are at the beginning of 2017 in a process that continues to evolve.

2. Across England (it only affects England) LEPs now control an annual budget of £2 billion. They are self-selecting bodies, Chaired by businessmen with businessmen in the majority. Although there may be a few local councillors on the board, they have to be in a minority. As the National Audit Office points out LEPs have no track record for delivery. There appear to be no metrics by which the investment decision they make can be evaluated and no mechanism for scrutiny. Likewise there appears to be no mechanism for publicly accountable scrutiny of any conflict of interest that might arise in the way these funds are distributed. All this has happened below the radar of public perception, even amongst councillors.

Regional Growth Fund and Local Enterprise Partnerships

3. 2010 was the year Deputy Prime Minister, Nick Clegg, introduced a white paper “Local growth: realising every place’s potential. (CM 7961)”, part of the Localism ideal of “handing power to local people”, announcing a £1.4 billion Regional Growth Fund open to bidders who had ambition and a clear vision for growth. The white paper also announced the eventual abolition of Regional Development Agencies and the establishment of the first phase of 24 LEPs to take their place. “The Government wishes to see partnerships which understand their economy and are directly accountable to local people and local businesses.” The ultimate aim was to move towards regional devolution.

4. LEPs have to be chaired by a prominent business leader and at least half of the board members must come from the private sector. LEPs should be based on functional economic areas rather than regions. The initial intention was that LEPs should be self-funding from private enterprise. In the event this did not materialise. In August 2011 the government allocated funds to LEPs from a one-off start-up fund of £5 million and in the 2012 Autumn Statement each LEP was offered support for “capacity building” to enable them to “support the development and delivery of their strategic plan”. Each LEP was offered £125,000 in 2012/13 for “immediate support”. In a 2016 report the NAO says: “The Department provides LEPs with £500,000 in core funding for administrative purposes, subject to LEPs securing £250,000 in match funding from local partners. All LEPs received the same core funding, regardless of size or structure.” Subsequent growth deals include sums for administration.

5. The first phase of 24 LEPs from 62 bids was announced in the 2010 white paper. These included Cornwall and Isles of Scilly LEP and the West of England LEP (Bristol, Bath, North and North East Somerset, and South Gloucester). This decision meant that the South West could never subsequently be considered as an integrated economic region from the point of view of devolution. By end 2012 the government had approved a further 15 LEPs to fill in the gaps so that the whole of England was covered. LEPs vary in differing levels of size, urbanisation, population, and existing infrastructure and it is questionable as to how many could be suitable platforms for full devolution along the lines originally envisaged.

Heart of the South West

6. In July 2012 the Heart of the South West (HOTSW) LEP, held its first meeting though research shows it was actually appointed by the government in June 2011. The HOTSW covers 17 local authorities in Devon and Somerset and the two unitary authorities of Plymouth and Torbay. It became a Community Interest Company (CIC) incorporated at Companies House on 6 Feb 2014. Its bespoke articles of association added clauses, for example, allowing for the removal, in certain circumstances, of the lock on asset transfer, normally fundamental to (CIC). The current (2017) self-selecting board numbers 20. It is chaired by Steve Hindley (Chairman Midas Group, a construction and development company). Of these 20 board members: six are elected local councillors; four have backgrounds in construction, development or property; three are senior members of educational establishments; three are connected to defence and software industries; the remainder have backgrounds in utility, employment and skills consulting, outsourcing and grant distribution. Only four of the 20 are women. Not the sort of mix you would immediately think of as having an understanding, or being representative, of Devon’s rural and seasonal tourist economy and its mix of small businesses. The Devon County Councillor and leader of East Devon District Council (EDDC), Cllr Paul Diviani, joined the board on 13 November 2013. Despite this EDDC councillors, and Devon County Councillors, have been kept in the dark about the workings, expenditure and outcomes, if any, of our LEP.

7. Devon and Somerset are surrounded by two single county LEPs: Cornwall and Dorset; and the metropolitan West of England LEP centred on Bristol and Bath.

8. It was not until another three years had passed that, in September 2015, news of HOTSW began to filter out into general awareness and then only because they published their fully fledged statement of intent to launch (on our behalf) a bid for devolution. Not until then had any minutes been available in the public domain. As we shall see by this time HOTSW had already compiled a fully-fledged strategic plan and submitted it to government. There has been no public consultation at any time.

Single Local Growth Fund

9. In October 2012 Lord Heseltine published a government commissioned report “No Stone Unturned: In Pursuit of Growth”. His main recommendation was to combine all separate funding streams supporting growth into a single funding pot for local areas. This was accepted in the 2013 Spending Review with the creation of a Single Local Growth Fund (SLGF) of £2 billion from existing skills, housing and transport budgets from 2015/16, an additional £5 billion transport funding between 2016/17 and 2020/21 and a pledge to maintain SLGF at a total of at least £2 billion each year through the next Parliament.

10. This money was intended to be administered by LEPs who were then barred from bidding in any further Regional Growth Fund (RGF) deals and in the 2015 Spending Review the RGF was in effect closed leaving the LEPs responsible for the distribution of all growth funding i.e. de facto taking the place of the former Regional Development Agencies. Interesting to note that in April 2013 the then Business Secretary Vince Cable argued (interview with the Northern Echo) that big decisions on funding must be administered from Whitehall on the basis that some LEPs had very small numbers of business people on their boards and were not publicly accountable and unsuited to manage large amounts of public money. See later comments by National Audit Office (NAO) which also points out that LEPs lack any track record of delivery.

LEP Strategic Economic Plans and Growth Deals

11. In July 2013, the Department for Business, Innovation and Skills gave LEPs guidance and set deadline of March 2014 to submit final versions of their Strategic Economic Plans, which would then be assessed by central government. In March 2014, all 39 LEPs submitted Strategic Economic Plans for approval. In July 2014, the government announced details of funding secured by each LEP over the period 2015 – 2021. In January 2015, the government expanded the deals, with LEPs securing a further £1 billion in total investment between 2016 and 2021. As of March 2016, £7.3 billion worth of Growth Deal funding had been allocated to LEPs. Funding is made as a single annual grant payment, made at the start of each financial year to a nominated local authority to act as accountable body. For HOTSW the accounting body is Somerset County Council. Nothing can be found on how scrutiny is to be conducted. LEPs are grouped into three categories of flexibility in how they can spend Growth Deal funding. This categorisation is based on the Department of Communities and Local Government (DCLG)’s judgement of each LEP’s ability to deliver their Growth Deal programmes and the strength of their governance arrangements. LEPs can receive greater flexibility through improving their governance.

12. As a result of a 2014 freedom of information request, the Department for Business, Innovation & Skills (since merged and renamed) published a table listing the amounts awarded to LEP led and delivered programmes and projects in Rounds two, three and four of the RGF (private sector firms could bid independently- see Augusta Westlands below). HOTSW appear to have been singularly unsuccessful in their bidding as they received nothing. (Cornwall and Isles of Scilly LEP received £13M in round two and West of England LEP £39.8M in round two and £25M in round three). Despite this failure HOTSW is now controlling well in excess of £150 million investment fund to 2021.

13. In Oct 2012 Augusta Westland secured a £46 million cash windfall from the RGF, as a private sector bid, to help the company create a new production line for helicopters targeted at the civil aviation market, with matched company funding. This is a good example of the way the RGF operated historically but highlights the potential for future conflicts of interests as the business controlled LEPs assess and distribute future grants. A Director of Augusta Westlands is a HOTSW board member.

14. In July 2014, the Heart of the South West LEP, following submission of its strategic plan, was awarded £103.2 million from the Local Growth Fund over the period 2015-2021; in January 2015 a further £65.2 million of funding was awarded between 2016 and 2021 (these figures exclude any European funding which LEPs also administer). The LEP estimates up to 22,000 jobs could be created, 11,000 homes built and up to £260 million of public and private investment generated as a result of this funding. The bid proposal included £13 million to provide Hinkley C infrastructure and £55 million of pump priming to provide Hinkley housing. A Nuclear Training College was also proposed. The deal agreed also includes £13.7 million loan funding to three developers to accelerate home building at: Frome, Brixham, Exeter and Highbridge.

15. It is difficult to find these projections in the actual growth plan (because it covers a longer period than the funding) – but they do appear in what are called “Factsheets”, supplementary papers associated with the government published growth deals. There are consistent, comparable, “claimed” growth figures for all 39 LEPs for the 2015-2021 period from which one finds:

(a) HOTSW is claiming to be able to generate the fourth highest number of jobs 22,000 (outbid only by Greater Birmingham and Solihull, Dorset and South East LEPs).

(b) HOTSW is also claiming to be able to deliver the fourth highest number of homes 11,000 (outbid only by Hertfordshire, Thames Valley and again South East LEP).

The author is left wondering at what point ambition over reaches itself.

Growing Places Fund

16. As if this was not complex enough there is also the £500 million Growing Places Fund announced on 7 November 2011, extended by £270 million in 2012. This fund was designed to tackle immediate infrastructure investment constraints, with a focus on housing and transport. The allocations to LEPs were made in February 2012, these were calculated using a formula based on population and employed earnings. The June 2012 HOTSW Newsletter indicates a £21.5m fund is available to them. In retrospect this can be considered as a one-off fund.

National Audit Office findings

17. This transformational process has been subject to a series of reviews by the National Audit Office (NAO). The latest NAO progress report on the Regional Growth Fund was published in Feb 2014. The report found more than three-quarters of the fund set up to boost regional economies remained unspent (£2.6bn allocated in Rounds one to four, but only £492m had so far actually reached projects and £425 million was being held by programme intermediaries (of which £10 million was for administration)). The estimate of the average cost per net additional job of bids selected in round four is £52,300. This compares with £30,400 in the first round, £33,500 in the second, and £39,700 in the third, but these differences probably reflect greater realism. Around half of jobs created were covered by just five of the 291 operational schemes. The general conclusion, as with the previous report, was that this expenditure was not optimising value for money.

18. In a report on LEPs published on 23 March 2016 the NAO made this comment on Growth Deals. “The Department’s [DCLG] published guidance set out what they expected to see in LEPs’ strategic economic plans; however, the Department intentionally did not specify the format that these plans should take. They did this to encourage LEPs to decide the process of formulating plans locally, competitively and in a way that would encourage innovation. This resulted in wide variation across the 39 plans in the way information was presented, time periods covered, and the evidence bases they used. Additionally, the Department did not define output metrics until after the plans were approved. LEPs therefore used different definitions to describe the outputs of their planned interventions, such as jobs. The Department’s assessors reported that they found it challenging to assess the bids consistently; this will have made it difficult to identify the plans that represented the best value for money.”

19. On LEPs the same NAO report says that when the Growth Deals were agreed, the Department did not have enough assurance that they had the resources, capacity and capability to do this, and LEPs do not yet have an established track record of delivery. To oversee and deliver Growth Deal projects effectively, LEPs need access to staff with expertise in complex areas such as forecasting, economic modelling, and monitoring and evaluation. Only 5% of LEPs considered the resources available to them to be sufficient to meet the expectations placed on them by government. Additionally, 69% of LEPs reported that they did not have sufficient staff and 28% did not think that they had sufficiently skilled staff.

20. The NAO also found they were unable to obtain information on senior staff remuneration from publicly available accounts for 87% percentage of LEPs. The median number of full-time equivalent staff employed by LEPs is 8.

Conclusion

21. Over the past six years huge changes have taken place with regard to the way central government grants to regions are administered. But this has largely happened below the radar of public perception. Across England LEPs now control an annual budget of £2 billion. Hundreds of millions of pounds worth of local investment funds are now in the hands of our Local Enterprise Partnership, a self-selecting group of big-business(men) (gender specific term deliberate), who appear to be unaccountable to anyone and unrepresentative of the local economy. This has happened irrespective of whether or not any formal devolution has occurred. There appear to be no metrics by which the investment decision they make can be evaluated and no mechanism for scrutiny. Likewise there appears to be no mechanism for publicly accountable scrutiny of any conflict of interest that might arise in the way these funds are distributed. What has happened to democracy?

January 2017

Main References Sources
Relevant Government papers

https://www.gov.uk/government/publications/local-growth-realising-every-places-potential-hc-7961

Click to access PU1524_IUK_new_template.pdf

https://www.gov.uk/government/publications/heart-of-the-south-west-growth-deal

https://www.gov.uk/government/publications/local-enterprise-partnerships-leps-funding-from-the-regional-growth-fund-rgf

Heart of the South West Growth Deal proposal

Click to access Growth-Deal-2015-Heart-of-SW-Final-3-4.pdf

Parliamentary briefing papers on Regional Growth, Growth deals and LEPs:

Click to access SN07120.pdf

Click to access SN05874.pdf

Click to access SN05651.pdf

National Audit Office Reports

Click to access Local-Enterprise-Partnerships.pdf

Click to access 10285-001-Local-economic-growth.pdf

Click to access Progress-report-on-the-regional-growth-fund.pdf

Independent Report University of Plymouth

Click to access rtpi_research_report_leps_economic_planning_and_delivery_south_west_march_14_2016.pdf

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8 Jan 2017

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Hugo Swire

Hugo Swire and Theresa May: NOT a match made in heaven!

“Some things about her, already evident to those who studied her pre-prime ministerial career, have become clearer to a wider audience. She hates conceited and condescending men who think they are terribly clever, a category that includes rather a lot of her Tory colleagues. This helps to explain the humiliating manner in which she dispatched many of the Cameroons from the government.”

https://www.theguardian.com/commentisfree/2017/jan/08/theresa-may-control-freak-brexit-queen-misrule