Building More Homes (Economic Affairs Committee Report)

Earl of Lytton Excerpts

Thursday 2nd March 2017 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, it is a great pleasure to be able to speak in this very important debate. I declare my interests, which in this instance include being a private rented sector landlord and a commercial landlord. Probably more appropriate in this instance, I also declare that I am a practising chartered surveyor with direct involvement in the development process and the employee of a practice dealing with both building cost consultancy and construction management. I am also a vice-president of the LGA and the National Association of Local Councils.

The committee’s report is very welcome for its range and depth of analysis and I congratulate the noble Lord, Lord Hollick, and his team on that. It is to the credit of the committee that a lot of its points appeared in the housing White Paper. The basic premise is sound: we need more homes and we are not delivering enough of them. But that masks a complex raft of issues, as we have already heard. I am not sure I subscribe absolutely to the idea of a broken housing market. I think the housing market is probably performing as we might expect, given all the tinkering around that has gone on over many years. But I am not an apologist for those shortcomings, which are fundamentally significant and affect potential home owners. As the noble Lord, Lord Forsyth, said, there is no silver bullet.

The Government have started to try to simplify things. There is no question that the consistently flagged-up point is the sheer complexity of the system in getting from a greenfield site to a completed development—the very high costs and risks involved in that and which confront those engaged with it. The Government have made a start and are trying to address a number of issues. However, in some areas, analysis and policy still appear less coherent. I will therefore deal with a few of the barriers as I see them working in the particular sector that I occupy.

Housing provision is a pipeline that needs constant feeding. The more you try to chop and change things as you go along, the worse things get. The planning system itself has become quite labyrinthine in its complexity. It has become a legalistic, adversarial exercise played for very high stakes. That applies to development sites of any size, large or small; we consistently hear that it takes no more effort to get a large site under way than a small one. That cannot be quite right.

To prove deliverability, it is necessary to jump through a whole series of hoops, regardless of whether there is any objective need. I have no problem with the need to demonstrate ecological compliance, but proving a negative in circumstances where there is no evidence—and there turns out to be no evidence—of the presence of, for instance, great crested newts or whatever it may be is a cost that is built in and then feeds into the eventual cost of housing. It causes substantial delays, and provides a barrier that militates against smaller applicants, who do not have the vast teams of experts that the larger boys have. There are liabilities in terms of legal tripwires of many sorts, and for one person to understand the ramifications is pretty difficult.

Huge inconsistencies are evident within and between local planning authorities. But as the noble Lord, Lord Layard, said, the system is not of their creation. It has been created by the rest of us—by society. I do not impugn the integrity of overworked planning officers, elected local government members or, for that matter, applicants in general, but I adhere to advice once given to me by my late father’s lawyer: where there is uncertainty, muddle and confusion, dishonesty comes close behind. That may range from the overexuberant application of a particular set of rules at one end of the scale and, at the other, some rather sharp practices. I have experience of all of those. Local planning authorities have to deal with some aggressive and bullying tactics in the course of their business.

The lack of adequate staffing at planning authority level is well known. Noble Lords should try finding an authority with any in-house heritage competence, for example, or for that matter willing to pay an outside provider for it. I and colleagues have experience of pre-application advice turning out to be a complete waste of time. It is almost as if the officers dealing with the thing are operating on separate agendas. But I do not think that is a criticism so much as a demonstration of inexperience, diffidence and self-protection. However, it results in inordinate delays, so I support the point made to the committee that much more resource needs to be put into local authority planning, and if fees are to increase they must be hypothecated to the planning administration budget and not be capable of being vired to some other account. I do not treat as entirely apocryphal the account that reached me of a developer being asked by an authority if he would fund the employment of an additional planning officer needed to deal with his own application.

The practice in which I work regularly comes up against significantly drawn-out timeframes, particularly on reserved matters approvals. I know that the Government also have that in focus. Once a resolution to grant is made, it can be many months, stretching into years, before you can get the remaining issues resolved. Some requirements are patently absurd, such as one that a colleague recounted to me where an ecological receptor site was required to accommodate an unlimited—it was specified as unlimited—number of reptiles and to be maintained in perpetuity. Maybe the officer was being overprotective, but, whatever the reasons for that sort of thing, it creates needless delays and adds to costs.

On democracy, local authorities are of course political animals and they seek to reflect the desires of an electorate who often do not want to take on board the wider needs of the nation’s requirements in housebuilding—still less those of an adjacent constrained authority, possibly one of a different political colour. I have seen attempts to dump—to use an unparliamentary word—development on the periphery of an authority area or an area where voters’ politics differed sharply from those of the controlling party on the council, and so on and so forth. There are potential mismatches between the neighbourhood aspirations and the perceptions of the potential ability to assimilate new development as compared with the obligations placed on principal authorities by a Government and the Homes and Communities Agency requiring them to do better.

Politics mixed with planning creates friction and drag in the system, seemingly in direct proportion to the respective parties’ belief in their powers of veto. A word of warning here: to pick up the point made by the noble Baroness, Lady Young, about the quality of what we produce, if we enforce fast-track development, the risk is that we do not get the highest quality that we ought to have. We need to be careful about that.

The bigger issue is that if we want democracy and set out to expand that to communities, which I support, speed and efficiency may well suffer, particularly if participants do not understand the basic policy or principles behind it or do not wish to engage themselves in the financing of neighbourhood plans, for example. Resources need to go into that. The question is often asked, “What does this development do for the people of our municipality or community?”. In reality, the question should be the one once suggested to me by a Liberal Democrat aspiring parliamentary candidate which is, “Where is it most convenient and appropriate for people to live, work, have their recreation and travel about sustainably?”. Development needs to be looked at in a reworked 21st-century version of how medieval settlements came into being. They were strategic. They had communications and they were defensible positions. There was access to food and materials and all the other things that were needed. We need a reworking of that because that is part of the desire line that will make these communities not just some other shell that takes 40 or 50 years to bed-in socially, but somewhere that is cherished and invested in for the longer term.

I could raise many more issues, but I will foreshorten my comments to just touch on a few myths that seem to be doing the rounds. The Government seem to be blowing hot and cold on the balance between the private rented sector and the home-owner market. They cite that investors and home owners are in direct market competition. But they have not provided any credible evidence that I have seen to back that up. I noticed that the bar chart in figure 5 of the committee report, which is borrowed from another source, on the percentage of household income spent on rent as opposed to mortgage repayments, does not seem to be a comparison of like for like. I am sure that it was not lost on noble Lords that matters of insurance, repairs and maintenance, which are not typically reflected in a mortgage repayment, would skew the results of that, never mind the parallel issue of proving creditworthiness and raising the necessary deposit to obtain a mortgage in the first place. Some of the disadvantages meted out in recent Budgets to the private rented sector that seem hypothecated on that sort of premise are not well targeted and will cause damage. Although the sector could justifiably be expected to perform better—I do not doubt that there could be better landlords about—it is none the less an important sector which needs to be nurtured and cherished, along with all the other things that the Government are doing.

One statistic coming from government was that those now approaching retirement were home owners by the age of 30 in a much greater proportion than pertains at present. I suggest that mortgage finance, lifestyle choices and other relevant matters were quite different in the late 1980s. Certainly, the example of my children has been that, as young adults, they live highly mobile lifestyles, often flitting between jobs or even between different localities within a country or between countries. The last thing they appear to want is to be geographically fixed and lumbered with a mortgage or indebted to parents for an otherwise unaffordable deposit. To this should be added some very substantial transaction costs that have now been built into the system and particularly affect the London market.

I live in a part of Sussex where there is a lot of demand for short-term lettings— people between houses, on short-term placements and so on—but we have also in the past, and do so currently, let to families with children who have been with us for a decade. The children come along as four and five year-olds and leave as teenagers. If that is not sufficiently long-term, I do not know what is, but it is wrong to try to constrain the market. One problem is that if people feel that they cannot let short-term, they will not do it at all, or they will set up a holiday let or something like that. There has to be removal of some of the impedimenta that mean that people feel threatened and that they do not have a ready exit from a longer-term situation.

There are many issues involved in this area of activity. I commend the committee on an excellent piece of work. I do not agree with absolutely everything that is in there, but it is a very workmanlike approach and I hope the Government are listening.