Philip Barnes – Blog


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POSITIVE PLANNING NEEDS CELEBRATING

The last year seems to have been characterised by an endless critical onslaught towards town planners. David Cameron proudly told the Cabinet he was going to get Dyno Rod to unblock the planning system. George Osborne described planners as a chronic obstacle to growth.

Luckily, the situation here in the North East is different. There will (and should) be robust discussions and disagreements around particular sites but in general terms, our planners need to be applauded and congratulated for their recent bold decisions aimed at stimulating economic growth in tough times.

9 months ago, Middlesbrough planners advised their Planning Committee to back 4 unallocated greenfield housing schemes totalling over 1000 units. The aim being to both address 10 years of housing under provision and to release funds for regeneration and community facilities. The Council members bravely agreed despite fierce and hostile opposition from residents fearing the effects of the new housing in their local area. The issue then was the need to persuade the unelected Leeds-based Highways Agency to sign off the decisions of the elected Councillors. It took 9 months – so much for localism. Definitely felt more like centralism for those needing a house and those waiting to build. The good news is that the permissions can finally be issued this month.

This is but one of a spate of bold and visionary local planning decisions aimed squarely at creating jobs and giving hope to our collapsing construction sector. Let’s remember that in recent months we have lost a number of North East building companies, including the superb Dorin and Whelan. In Newcastle/Gateshead ambitious plans to develop over 31,000 family homes and deliver 20,000 jobs by 2030 have been published. Whilst it remains to be seen whether both Councils stick rigidly to the strategy in light of mobilised opposition, the ambition is clear and they should be applauded. Indeed the empirical technical evidence points to the need being much higher but that’s a debate for the Public Examination!

Planning permission was granted in Northumberland, for 250 houses at Northgate, Morpeth, despite the Local Plan still being under review. This much needed consent will help to address a shortfall of family homes and also help fund a new mental health unit and a facility for autism patients. Again the planning committee backed the planning officer’s advice. In Stockton the planners have published a revision to their planning strategy recognising the need to allocate more sites in better market locations in order to build sufficient houses for a growing population. This is despite the original Local Plan having only been adopted in March 2010. They also bravely released land recently for 850 houses at Eaglescliffe.

Such fleet-footed responsiveness to market change and community needs rarely gets the credit it deserves. In Hartlepool a draft policy aim to build more executive housing in order to attract more entrepreneurs into the borough was then backed up with a decision to grant permission for 200 homes at Wynyard Park. That development will release £1.2m of private sector money to help fund regeneration and affordable housing in central Hartlepool. Proper integrated spatial planning. Negotiations are now underway for much more development at Wynyard Park, with new housing development being able to fund the infrastructure to open up new land for economic development creating thousands of new jobs.

In South Tyneside, reflective of market conditions, planners are carrying forward a positive approach towards the delivery of new employment and housing development. In particular, new greenfield sites for jobs and investment are being identified in locations which reflect market demand. A review of the recent Core Strategy is already underway. Across the river, North Tyneside planners have bravely tried to identify and bring forward sites at Monkseaton, Whitehouse Farm and Holystone despite a difficult local political leadership with a Tory Mayor but Labour-led Council. The ambition for growth from the planning officers is clear. The political backing has been sadly lacking.

So why have we seen such a positive response from our Planners? Firstly it’s because the effects of the recession have been greatest here and according to Experian, our prospects for recovery are also the weakest. Necessity is always the mother of invention.

Secondly and importantly, the need to protect our fragile construction industry is now widely acknowledged. The sector provides 7.2% of all jobs in the region but its contribution to economic output has fallen by 23.4% since 2007. Without more planning permissions we have nothing to build. The slowdown is alarming and unyielding.

Thirdly, recent research has clearly shown that successful cites grow, they don’t stagnate. In the last 10 years, Newcastle has grown its population by only 0.3% compared to 1.2% in Bristol and 1.9% in Swindon. It has grown its urban area by 0.03% compared to 1.7% in Rotterdam, 1.5% in Marseille and 1.1% in Munich. Whilst the growth of Newcastle has been held back by a tight green belt and restrictive planning policies its competitors have grown 15-20 times as fast. The Council’s ambition to address this is much needed and long overdue.

Of course, in some areas of the North East pre-recession attitudes are proving harder to shift. Areas where developers feel like every application is like a battle to create the jobs and investment which the economy needs. As always, developers will gravitate to where they feel investment is most welcomed and this will undoubtedly be a feature of 2013.

Finally, and luckily, we have enough land resource in the region to develop more land without compromising its environmental quality – so long as it is in the right locations. 91% of our region is currently “non-urban”. No developer, let alone planner wants a free-for-all, but its great to see our planners doing what they can to release sustainable, suitable and available sites for jobs, and investment and economic growth. Now is the time for recognising the role of the region’s planners in trying to stimulate growth despite often vitriolic and personal attacks. Whilst space prevents me mentioning all our planning departments by name, one thing seems clear – joining the anti-planner bandwagon will do little to support recovery and progress. Recognition and support will be more effective.


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HOUSING, HOUSEBUILDERS, DEVELOPERS AND PLANNERS

Believe it or not there are still many people actively involved in delivering new housing development who are not yet on Twitter and don’t have a blog! Also some of them are extremely intelligent and have very useful perspectives to bring to the on line discussions.

One such player is Mark Dickinson, Land Director at Banks Property. Mark is a developer NOT a housebuilder. Developers (a) contract land for sale then, (b) promote it through the planning system (hopefully to a consent) then  (c) purchase the land, and then (d) sell it to a housebuilder, at a profit, to allow houses to be built. Generally, they don’t actually build and sell houses.

Developers are the middle men between the landowner and the housebuilder. They exist because they often show greater risk appetite and forward funding capability than housebuilders to address the UK planning system. Remember it will take at least 2 years of advance funding from contract to consent. Often much longer. For some housebuilders, still recovering from the recession, that forward funding is too hard at the moment.  This is demonstrated by research undertaken by Savills which indicates the developers control around 80% of land allocated for housing in emerging plans.

Developers are therefore able to present a consented “shovel ready” site to a housebuilder at a price, hopefully, which (a) incentivises the landowner, (b) makes a profit for the developer and (c) allows to housebuilder to build and sell on the basis of a development appraisal showing a 20% margin. Without at least 20% in the appraisal the housebuilder is unlikely to be able to secure the funds to secure the purchase and build out the site.

Across the country developers are becoming much more important in securing the vitally important permissions to get houses built to address the housing crisis. That said I suspect we may see housebuilders returning to that space as their results and risk appetite improves. Across the North, for example, prominent developers are, inter alia, Commercial Estates Group, Hallam Land, Dransfield, Banks Group, St Paul’s, St Modwen, Gallagher Estates, Theakston Estates, Northumberland Estates, Gladman Group, ASL, Peel Holdings and Newby Land Management.

Banks Property are a very successful, well-funded, developer working across the North East and Yorkshire. They are part of a larger group with commercial interests across the mining and energy sectors. Mark’s views, in response to my recent post on Housing, Housebuilding and Planning are set down below in italic.

Regarding land banks, I think the problem (certainly in our case) is often very complex. The main reasons why our ‘legacy’ or ‘locked up’ sites – which have planning permissions totalling several thousand units – are not coming forward:

1. Wrong location in the current market,
2. Wrong mix i.e. urban site with high density development which would be unviable with lower density,
3. Current values are not sufficient to justify remediation of many brownfield sites,
4. Price paid pre recession now exceeds current value.
5. Planning obligations too onerous in a changed market

Usually legacy sites become locked up as a result of result of a compounding  of these factors. I applaud you shifting the debate to highlight that national landbanks only represent a small proportion of what is needed, particularly given the huge backlog of demand and many years of under provision.

Land Banks are often quoted as a reason why new permissions should not be granted, but when we undertook an analysis of ‘landbanked’ sites in our region, most were actually locked up due to a combination of the above factors.

It’s clearly very difficult for local authority planners to juggle current viability problems whilst trying to look over the horizon and produce a 20 year plan. My view is that  without the introduction of  financial incentives to encourage brownfield development it just won’t happen on any significant scale for at least 5 years. Also with NPPF changes to exclude gardens as brownfield,  professionals and public are going to have to face up to the fact that under the existing framework,  the proportion of development on greenfield, and potentially green belt, will necessarily increase from historic rates.

For our part, we are committed to continue developing brownfield land as far as possible, but are also mindful that brownfield land cannot absorb all the development needs of our region nor provide the contributions towards infrastructure, education and affordable housing that greenfield development can generate.

Sarah Payne’s blog was a useful introduction to the key delivery issues and highlighted the need for a greater understanding of the crucial commercial realities and risks affecting delivery. By any reasonable measure (and there are many as you know better than me) we’ve got a housing crisis on our hands. This is having noticable social ramifications by widening the gap between generations.  Surely we have to be much bolder in addressing these issues.

Sarah made an interesting  point that the conflation of many issues over time are, at the root of the crisis, mostly politically inflicted and not so much to do with demonised planners who, on the whole do a grand job of implementing government policy. 

Next week I will hope to post some views from a housebuilder perspective. A sector which is often (sometimes justifiably) much maligned but, as Sarah Payne pointed out, in the current system can only operate within parameters of acceptable risk and margin. I particularly liked Colin Wiles recent comment highlighting the clash which occurs when the economic rationality of the housebuilder hits the economic irrationality of the UK planning system!


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HOUSING, HOUSEBUILDING AND PLANNING

Last week Sarah Payne posted a really interesting blog about housing, house building and planning. It can be seen at drpetermatthews.blogspot.co.uk.  It has rightly been applauded in the Twittersphere for bringing a new perspective on the issue. Whilst Sarah is an academic she brings experience of working in housebuilding which provides a really useful underpinning to the academic perspective.

 With the aim of pushing the discussion further I have posted below 6 of my own perspectives on Sarah’s piece. All bar one are, I think, fully supportive.

1. Sarah is right to highlight how polemic the Telegraph vs. PX debate has come. I would say as planners we shouldn’t worry about it!! In my view it’s actually healthy and twas ever thus. (used to be CPRE vs. HBF) The issues at play are massive and hugely political – the protection of “rural England” vs. the denial to a generation of easy access to the housing market. We as planners are the arbiters, balancers and decision makers in this huge and rightly contentious process. A fantastic responsibility for us and perhaps we should embrace challenge and comment from all sides!!

2. Fully agree with Sarah’s comments around land banks. Firstly having a bank of consents (400k) equivalent to less than 2 years need is too low rather than too high in my view. Second the problem is that many consented sites are locked up because much of the land is contracted (not purchased) at pre recession bubble prices. Those deals now need to be renegotiated or expire (potentially taking years yet) before those sites can deliver.

3. Really pleased to see Sarah speak up for the role and value of the planning system and pointing out the massive benefits it has delivered. I do, however, think we planners have to accept it has, will, and SHOULD hold up rates of development. That is one of its primary purposes. My first job was in development control – clue in the title! The question, as always in planning, is one of balance. Given the state of the housing crisis I think the Government is saying the control element should be lifted slightly in relation to some greenfield urban edge land in order get more houses built – thus tilting the balance slightly to try and address the housing crisis. Our role as planners to hold up development in the wrong places will and must remain a crucially important one. We only have to look across the Irish Sea to see the effects of unregulated planning.

4. Sarah’s question, quite rightly, is whether the Government’s recent shift in balance (with the aim of releasing more sites) will actually work in delivering more houses? I am optimistic. Why – for 3 reasons:-

Firstly my experience tells me that when there are more sites active in a market more houses will get built and sold. A range and choice of sites will attract more players and they will compete harder for sales. In Newcastle we have only one greenfield site in the City and we have seen woeful housing output. The Council is now bravely attacking the issue and if we can get 7 or 8 different builders all active on good sites build rates will surely increase. The demand is demonstrably there. The recent success of some new sites in neighbouring North Tyneside proves the point.

Secondly if the planning system encourages more NEW sites to come forward we will see new land contracted at new viable, deliverable post bubble prices. Such land can and does work financially. Already we are seeing how such new sites have helped most of the volume builders post healthy results for 2011/12. Those results (dramatically contrasting with 2009-11 results) will both help them secure cheaper lending for even more land purchases and, hopefully, at long last encourage them to be less risk averse and less short termist.

Thirdly many builders simply won’t promote new sites where there is strong community opposition. Too risky under localism. If it is clear the government agenda is now a more “muscular localism??!!” then this could change. Especially on the back of better results driving down risk aversion.

5. I note Sarah’s caution about Green Belt development. I worry here we could repeat the mistakes of the mid 80s/early 90s when housing output increased but Green Belts around cities were generally protected. Hence many market towns and villages which “happened” not to have green belt suffered from some shocking new estates. This time I personally would prefer to see a greater focus on well planned and well designed garden suburbs around our core cities. I accept that the issues around the London Green Belt are far more complex and mine is more a northern/midlands focus.  Fully agree with Sarah that planning is but one piece of a complicated housing delivery jigsaw sitting alongside credit, public sector austerity and nimbyism.  It’s a very important piece though and worthy of focus as the housing crisis gets worse and worse, month by month. Not to mention the economic opportunity cost from the incessant slow down in construction activity.

6. My final and only point of disagreement relates to Sarah’s £860k/£250k land value vs. £6.5m development cost example. I don’t necessarily agree with the picture of pain for the housebuilder. In most cases the land will be contracted (rather than purchased) until the development is consented and ready to start. In my experience the builder will not be likely to incur lending costs on the £860K because he/she won’t actually pay the £860K until they are certain the £6.5m cost can be funded and recouped. If the land value has actually dropped from £860K to £250K (due to falling sales values driving down the GDV and residual land value) the builder doesn’t lose much as he/she simply doesn’t do the contracted deal. Unless the landowner renegotiates (perhaps unlikely at this stage of the economic cycle) the site is just locked up and the only losers are the young families who don’t get to see the site built. Yes the builder will write off the land option and planning promotion costs which in your example might be around £300k – a small fraction of the £6.5m total cost. Better that write off than incur a major loss on a £6.5m investment!

 Thanks again to Sarah and it would be great to hear views.


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GREEN BELT: GENERATIONAL THEFT OR GIFT?

Generational theft is a term which has been thrown around by right of centre politicians since 2009. Coined by John McCain as a rallying cry against President Obama’s economic stimulus proposals it has since been picked up by journalists and academics.

The thesis is that if the state borrows money now, which it can’t afford to pay back, it is simply landing the next generation with an unsustainable debt and potentially a worse quality of life. This theft of ‘their” money to sustain or improve “our” lifestyle was the start of the debate.

Unsurprisingly others then latched onto the idea.  It is not uncommon to hear generational theft accusations levelled by millennials (aged 20 – 35) at the baby boomers now aged 40/50/60 plus. Indeed some right leaning boomers have openly admitted the charge in order to justify arguments for fiscal austerity. The basis of such accusations is that throughout the 80’s and 90’s the boomers were able to secure cheap credit to buy cheap homes often now nicely paid off at a handsome profit. Everyone got in on the home buying spree. The banks over-reached, a credit and price bubble was created and then, since 2008, the rest is history. It seems clear that the actions of the boomers contributed to the millennials now facing unaffordable house prices let alone limited access to credit.

So where do planning and Green Belts fit in? Well it was also on the boomers watch when Green Belts were over rolled out across the UK. Whilst the phenomenally successful London Green Belt was introduced in the50s, the big wave of these city planning straitjackets across Northern and Midland cities occurred during the 70s and 80s. The Green Belts cut down the potential for new public and private sector housing development on the urban edge – a key feature of city growth in the UK during the 30s, 50s, 60s and 70s.

No one can doubt the success of the Green Belts in achieving the aim of preventing urban sprawl and encouraging urban regeneration. But have there been some negative economic externalities?  Housing supply has shrivelled since the 80s – in part (but by no means all) due to Green Belt policy and other planning restraints. Newcastle for example now has entrenched undersupply of housing going back 25 years. 13 families now leave the City each week in search of cheaper housing and the situation is not unique to Newcastle.

So, back to the original question, are Green Belts a generational theft or a generational gift from the boomers to the millennials. Certainly a gift in ensuring that, for example, Manchester hasn’t merged into Liverpool or Sunderland into Newcastle. And also would we have seen such fantastic inner city regeneration over the last 30 years without Green Belt protection?

But as a boomer myself I can’t help feeling uneasy that my smooth path onto and up my housing ladder of choice is now unavailable to my children. I feel I played a part in that, particularly as a planner with a professional duty to provide houses of the right type for those who need them. I used to laugh at Ronnie Corbett in “Sorry”. Aged 41 and living at home. I suspect it’s now becoming the new norm.

As always in planning, the last line is the need for a balanced approach.  Perhaps that balance should now shift towards a bigger focus on addressing the nations housing crisis than simply protecting all Green Belts at all costs.


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Newcastle vs. Lisbon, Regeneration League

Holidaying in Portugal really brought home how the Olympics has transformed the image of the UK. Brand Britain seemed to be everywhere, from young Portuguese hipsters wearing London themed designer T shirts to premier league football tops on the less fashion conscious. Whilst we in the UK remain understandably fixated on our economic travails and dreadful weather it seems that our relative strength and Olympics success means we are looked on with envy elsewhere.

Get off the tourist track and Portugal is struggling. You can sense it. Beggars on busy streets, half finished building sites on every corner, rough sleepers and masses of vacant shops in even the most affluent areas. If graffiti or queuing had been in the Olympics Portugal would have won stacks of medals.

A trip to Lisbon revealed both similarities and differences with the UK. Firstly both countries clearly moved into the economic super league around the same time and both due to imperialism. Invading and taking over large parts of the world handily provided untold riches via captive new markets and boundless raw materials and new products for the home market. The grandeur of Central Lisbon is on a par with London and they must have felt similar in the early 1900s.

But with the end of empire things are now very different. Whilst our constant focus on innovation has driven UK economic growth Portugal looks to have been treading economic water for over half a century. The Lisbon area now feels more like parts of the north rather than London. Starved of private capital it has clearly relied upon Government and EU funded regeneration investment, in particular through the 80s and 90s.

Comparing how this public money appears to have been spent is interesting. There didn’t seem too much evidence of huge new public realm projects or new galleries and museums but the road infrastructure was modern, extensive and free flowing. Our 45 minute train journey to Lisbon was well used, cost £4 return and ran on long clean trains every 20 minutes. Most stations linked either to a bus interchange or Metro station. The Lisbon Expo98 site is a wonderful new mixed use urban quarter linked to the City Centre by a new rail link and interchange.

But compared to central Newcastle Lisbon felt a bit tatty and unloved. It seems clear that the limited public sector resources have been targeted on infrastructure. I personally liked the shabby chic and fading elegance of central Lisbon and, in particular, loved the fact that the public and private transport system really worked. As someone who regularly uses the Western bypass and often has to make business trips to Manchester by train the contrast was stark.

The massive cultural and environmental improvement of our City Centres is something to be rightly proud of but have we hit the right balance between the easier and quicker arts and landscape projects compared to the more difficult long term infrastructure investment? There is currently a huge policy emphasis on infrastructure spending and from a business perspective this is much welcomed. The massive transport benefits created immediately by the new Tyne Tunnel only strengthen this view. Time spent in the office generating jobs and investment rather than sitting on the Central Motorway is good for the economy. Time really is money and more money equals more taxes and job creation

But back to the economic stuff. My trip to Portugal brought home, looking at the long term, how economically strong the UK is. After all can you name a Portuguese invention?  Looking at the North East alone the railway, electric lamp, steam turbine and safety match immediately spring to mind.

Plenty of reasons to be cheerful in tough times.