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Sunday Times - 7th December
2003
Brown v Nimbys in homes
fight
David Smith, Economics Editor
MINISTERS are to
relax Britain’s planning rules, which will be blamed this week for
contributing to a shortage of almost 90,000 new homes that the country
needs each year.
A report commissioned by Gordon Brown will warn that
Britain needs 250,000 new homes each year but is building far fewer than
that, leading to serious housing shortages.
The report, from a team
led by Kate Barker, a member of the Bank of England’s monetary policy
committee, will point the finger of blame at planning restrictions which
limit the amount of land available for house building.
It will put the government on track for a clash with
Nimby (“not in my back yard”) homeowners and local authorities. Brown,
along with John Prescott, the deputy prime minister, will use the
recommendations of the report to force through changes in planning
rules.
“If planning restrictions are holding the economy
back, they will have to change,” said one government official.
Prescott has already taken powers to force through
housing developments against council objections, in cases where local
authorities are failing to allow the building of a sufficient number of
homes.
It could mean pressure for additional house building
in green belt areas around cities. Local authorities in leafy Surrey,
Hampshire and Berkshire have fought running battles for years over the
release of new land for homes.
Councils in the northwest of England have this year
put in place a moratorium on new house building.
The Barker report will say that the provision of new
homes has been running at between 160,000 and 170,000 over the past two
years, nearly 90,000 fewer than is needed. The shortage has contributed to
sharply rising house prices, leading to official worries about a return to
“boom and bust” in the housing market.
Yesterday Brown signalled his intent to take on Nimby
planning critics, indicating that he would seek to relax rules which, for
example, prevent office blocks being converted into flats. “We have to be
more flexible. The days when industrial and residential areas were
strictly separate have changed,” he said.
The report is not expected to recommend tax hikes to
regulate the housing market. There had been speculation that builders
could face taxes on the land they hold for building purposes — so-called
“land banks” — but that has been rejected by the review.
“The problem is not that builders are holding on to
land. It is that they cannot get the land on which they can get the
go-ahead to build,” said Pierre Williams of the Housebuilders’
Federation.
The Campaign to Protect Rural England warned of a
backlash against any significant relaxation of the planning rules. “If
Kate Barker’s interim review is to be fair and balanced it must fully
recognise the positive role that the land use planning system has played
over more than 50 years,” said a spokesman.
“The system has protected huge areas of countryside
from urban sprawl, helped to maintain the vitality and viability of town
centres and made a major contribution to protecting the environment we all
share.”
The report will back new schemes to encourage
investors to put money into private rented accommodation such as
American-style “real estate investment trusts”, which build or buy up
developments and rent them to tenants.
The Treasury will welcome the proposal and Brown may
announce this week that such schemes will attract tax relief from next
year. In the 1960s about 400,000 homes were built in Britain each year but
more than half were council houses. Local authority house building has now
disappeared and housing associations build only about 15,000 homes a year,
leaving a huge shortfall.
This week will also see the publication of another
report commissioned by Brown, this time into Britain’s mortgage market.
Set up as a result of the Treasury’s assessment of Britain’s readiness to
join the euro, it has been investigating why so few homeowners have
long-term fixed-rate mortgages, common in other European countries and in
America.
The small number of such mortgages in Britain
contributes to the volatility of the housing market by making it sensitive
to even small rate changes.
The report, by Professor David Miles of Imperial
College London, is expected to say that there is no “silver bullet”
solution to encouraging homeowners in Britain to switch to long-term
fixed-rate mortgages. These are more expensive than variable rate or
short-term fixed-rate mortgages.
Miles will also criticise banks and building
societies for letting the mortgage market develop in a way that encourages
people to switch mortgages frequently between the deals offered by
lenders.
There has been a boom in re-mortgaging this year as
borrowers have taken advantage of discounts offered by the lenders. Miles
is expected to say that this works against the long-run interests of the
economy and against the lenders themselves. o Britain’s public sector
faces a huge pensions “black hole” the Conservatives say. Research
commissioned for the party shows Britain is facing a £500 billion bill for
“unfunded” public sector pensions, almost double the figure six years
ago.
Calculations carried out by Charles Cowling, an
expert with Mercer, a leading firm of pension consultants, also show the
liability is increasing at £40 billion a year. The figures are for the
government’s liability for the current and future pensions of teachers,
health service staff, civil servants and members of the armed
forces.
The £500 billion is equivalent to £20,000 for every
household in the country. The Conservatives say the figure when they left
office in 1997 was £270 billion and Labour has employed an extra 500,000
public sector workers since 1998.
David Willetts, the Tory shadow secretary of state
for work and pensions, said: “This shows that the public finances are
nothing like as healthy as Gordon Brown claims. Adding this in, the
government’s debt rises to 77% of GDP, nearly double the chancellor’s
limit.”
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