Housebuilders

Baroness Thornhill Excerpts

Thursday 11th January 2018 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, I agree with much, although not all, of what has been said. It is clear to me from my experience as a former deputy chair of the LGA and the elected mayor of Watford that there is not only a housing crisis but, in particular, a massive shortage of social and affordable homes, which the current system is clearly failing to fix. In my four minutes I want to touch on one aspect of the planning process which is totally undermining local authorities’ ability to provide those much-needed homes and which has already been referred to by the noble Lord, Lord Best—the viability assessment.

In 2012, the National Planning Policy Framework, for the first time, made the viability of a development proposal a material planning consideration. That means that, if the projected profit on a scheme is less than 20%, developers can begin a process of haggling with planning officers to reduce the level of affordable housing and other community benefits, such as infrastructure, that councils can require through their much thought-out policies. This was meant to be used as a sensible exception to ensure that we did not end up with good housing sites going undeveloped because it was uneconomic to build on them, but instead it has become the rule.

In Watford, year on year since 2012, the number of social and affordable homes provided through Section 106 has declined by at least 50%. Our single example is backed up by more formal research by Shelter. It studied 11 authorities covering eight cities and found that new housing sites provided only 7% of affordable housing, when the authorities’ combined figures should have yielded 28%. The Government’s own figures show that 40,000 social homes were built for social rent in 2010, but in 2016-17 that number had reduced to a mere 5,500.

Local authorities have had to cope with the many and varied ways in which developers present their figures and use viability to evade the obligation to provide affordable homes. They have had to “tool up” to challenge the developers’ figures on almost every major application. It has become an expensive battle, involving the employment of viability experts on both sides. It is a grubby business that contributes to a general negativity in the relationship between planners and developers, and, perhaps more importantly, between the council and the public.

Councillors at planning committees feel frustrated. Their set policies to meet their local needs are being flouted purely because of this national policy. In Watford, we have tried to find ways to work with this process—for example, by designing clawback agreements should the viability improve over the life of the build—but this is whistling in the wind compared to the current need.

There is a growing consensus, evidenced by the recent letter to the Secretary of State from the LGA, the CPRE, the TCPA and others, that the system for assessing viability is weighted in favour of the applicant, leading to inflated land prices being paid at the expense of infrastructure, affordable housing and, as has also been mentioned, design quality. This undermines public confidence in the planning system.

The Government have recently closed their consultation Planning for the Right Homes in the Right Places, of which viability assessments formed a part. My and many other councils, along with the LGA and other esteemed bodies, have responded robustly. I hope that the Government will take on board those responses and recommendations, close this loophole and bring greater consistency and transparency to the process. It is becoming clear that this is a counterproductive and damaging measure, resulting in the loss of many thousands of homes for people stuck in temporary accommodation for far longer than I ever thought we would see on my watch, and with the only winners being landowners and housebuilders, who, as has already been pointed out, are reporting record profits.