Levelling-up and Regeneration Bill (Fourth sitting)

Greg Smith Excerpts

Committee stage
Thursday 23rd June 2022 Public Bill Committees

[The Chair]

Thank you. I call Greg Smith.

[Greg Smith (Buckingham) (Con)]

Q Thank you, Mr Bone. I have asked this question of a number of the witnesses. There has been a controversy in recent years on the assessment of housing need for an area and who should decide what the housing need is for an area when it comes to the development of neighbourhood plans, local plans and so on. Where do you think is the most appropriate level for housing need to be assessed to put into local plans? Should it be national Government? Should it be principal planning authorities? Should it be—as in the West Midlands, which you are the Mayor of—mayoral areas? Or should it be at a lower tier?

Andy Street: Thank you for that question, because this process is pretty bust; it is lovely that the Housing Minister is in the room for this debate. The answer to the question of where is that I have no difficulty with it being assessed by the upper tier planning authority—so, in our case, the met authorities. But I do not think that that is really the problem. The problem is that something systemic is incredibly wrong. We followed up the detail of this using Coventry as the case study, where the system of assessment through the Office for National Statistics has churned a number that is clearly nonsense. It shows that the growth of housing needs in Coventry will be more than 30% over 10 years. In the rest of the West Midlands, the average is about 11%, so you think, “This isn’t right” and you follow the story through. We have had a number of incredibly helpful and very honest conversations with the ONS, which has acknowledged in a letter to me that the number is wrong and is getting more wrong, as the assumptions that it made are not playing out over time. But when the wrongness—if that is not poor English—of the number is revealed, there is nothing in the current system that forces the local authority to review its plan, so there is a huge misstep in the process between that calculation and the actions that are then taken.

I have not raised this issue with the current Housing Minister, but I had lengthy correspondence with the previous Housing Minister. I believe it is an area of huge potential improvement, but the system is clearly broken, and I would be very happy to furnish members of the Committee with all the detail on Coventry, which was such an obvious outlier. Let us be clear that the consequence is that the city council is pursuing a policy that it has to pursue because of the numbers—I do not doubt the council’s internal working—and it is digging up the green belt around Coventry on the basis of spurious calculations.

[Greg Smith]

Q I am very grateful for that answer, which I recognise from my own constituency and the wider county that it sits in. On the basis that the system is broken, the Bill would seem like the obvious legislative vehicle to fix it. I am trying to tease back to my original question, which was about who should decide and using what data. What would be your best suggestion? I appreciate that there will be no magic bullet, but what would be your best solution for deciding a new system of determination?

Andy Street: I have no difficulty with the ONS, which is clearly the most objective, calculating the numbers—there is no question about that. I have no difficulty with the city council then being guided by that number, but the point in the middle is that there has to be a way that that can be challenged. There has to be a way to know whether it is on target and then it has to be reviewed, and the council has to have an obligation to review its plan if the numbers are wrong. It is not about who does the calculation; it is about the consequences of that calculation and feeding it through the next stages.

[Greg Smith]

Q I appreciate that the use of the word “target” is controversial in this debate, but would there be benefit in making any figure that is calculated by the ONS and propagated by central Government locked in as advisory, as opposed to a set-in-stone number?

Andy Street: I still do not think that hits the point. The point is: whether it is fixed or a target, if the number can be challenged and proven to be wrong, what is going to happen? I can see where your logic is going—if it is only advisory, a council has more room for manoeuvre—but I think there is something even more fundamental, which is that there has to be a way of testing that number and then making sure that, if it is acknowledged by the ONS not to be accurate, it can be reviewed.

[Greg Smith]

That is very helpful. Thank you.

[The Chair]

We have unfortunately almost run out of time. I was tempted to see whether the Housing Minister wanted to come back and chat to our witness, but he seems to be pointing to the fact that time is up. Or does he want to use the remaining minute?

--- Later in debate ---

[The Chair]

I call Greg Smith.

[Greg Smith]

Q Before I ask my question, I should say this: it is not an interest to declare, but I should say for transparency that when I was a councillor in Fulham, Mr Boys Smith was one of my ward residents and he is known to me.

Nicholas Boys Smith: Many years ago.

[Greg Smith]

It was many moons ago, but I thought I should put that on the record for transparency.

We have been looking at what the Bill is seeking to do in terms of protecting heritage and identifying that which makes a place within the planning system. For rural communities, one of the defining characteristics, certainly of every village that I represent, is the farmland and the food production that goes on in that village. It is the farmers who maintain the hedgerows, the beauty of the place, and so on. Therefore, can I explore with you, in the spirit of protections for heritage, place, and identity for a locality, how much, in a rural setting food, production and agriculture should equally be protected or at least considered as part of the planning process? Perhaps we could start with Lizzie.

Lizzie Glithero-West: I am just pondering that for a moment. Your question is on the balance of the production of food versus land being taken out of production—is that the nature of the question?

[Greg Smith]

Q That is certainly part of it. To clarify, it is equally the case that a lot of rural communities would not look the way they do if it were not for farmers maintaining the hedgerows, looking after the land and maintaining the footpaths that people use for leisure. If you are going to identify the characteristic and heritage of a place, as well as the physical architecture, in a rural community, it must surely equally apply to that which makes the countryside happen—if I can boil it down to its lowest common denominator. My question is, to what extent, on top of architectural heritage and so on, should that equally be considered in the planning process?

Lizzie Glithero-West: I feel I am perhaps leaning into a discussion about the Environment Act, but it is absolutely a part of levelling up. As archaeologists, we do not see a dichotomy between the natural environment and the historic environment. In fact, none of our landscape is purely natural in that sense. Hedgerows and features in the landscape—often scheduled ancient monuments—can provide homes for biodiversity. The two need to be thought about together. It is actually really fundamental in the roll-outs of the Agriculture Act and the Environment Act. Heritage is a pillar at the heart of the 25-year strategy and it is so important that it remains so, hence some of our concerns around the Environment Act.

We absolutely believe in public value for public goods. As some of those public goods would be around the preservation of heritage, which then goes on to support rural communities and biodiversity, it is all part of character of place to be able to use those assets; they are at the heart of place both in the town and in the rural landscape. A lot of the measures we are talking about today contribute to that.

We would like to have seen more in the Environment Act. We were concerned about some of the definitions, and that heritage was removed from some of those protections. The future farming regime and how farmers are paid for public goods will be fundamental to the point you raised—that although those features in the landscape and these places often might not be seen as valuable for food production, they are incredibly important for rural tourism, local communities, biodiversity and heritage.

[Greg Smith]

Q Thank you. I appreciate that answer. Before I bring in the others, I appreciate that there will be crossover with the Environment Act and the Agriculture Act. However, I am looking at this very much through the lens of the Levelling-up and Regeneration Bill, and planning reform. Mr Boys Smith, you were indicating that you would like to come in.

Nicholas Boys Smith: Yes. I can come in with passion and, perhaps, too much aplomb. One of the most consistent, heartfelt and distressing pleas that I have heard, that the Building Better, Building Beautiful Commission has heard and that is shown in evidence more widely is that people feel that new housing is done at them, not with them, and that it is of everywhere, not of “here”. That theme emerges in every piece of research I have done or read, even if it is expressed differently.

At one of the very first co-design workshops I ran, a marvellous lady from the West Indies—I forget which island—said that she wanted places with a heart and places that could not just be anywhere. You hear the same thing in the Cotswolds, Buckinghamshire or York. It comes up time and again. We know from neuroscience that people need and want that sense of place—a place that is their home in the world. It is unquestionably the fact that we are not currently providing that. That is something that is particularly heartfelt in your type of community, Mr Smith.

Why is that? There are several reasons. One is that although our policy on design quality and on the nature of developments we create is often quite aspirational and sounds nice, it is not cutting through in reality. If you look at the houses and the types of place we create, they are pretty similar from Cumbria to the Cotswolds—to take two random places beginning with c—or from Berkshire to Buckinghamshire, or wherever. They are very standard typologies, done with very similar highways rules.

We were doing a design code for a housing association that wanted to do houses that fitted in with rural communities. The highways rules and expectations for parking and for splay circles—things that sound technical and boring—meant that they could not. We desperately need to empower people’s preferences—it is right to do this; the NPPF has already made some good moves—for the types of places that they pay a premium to live in, so they must value them. The best way to achieve that is to stop banning the types of village centre that we have essentially banned. That does not quite answer your agriculture question directly, but it does indirectly.

If we are able to stop villages growing carcinogenically, by which I mean you have a village centre and then sprawl being—rude word—into fields around, we could perhaps allow a secondary village centre, which is perhaps more nature-similar and linked, and accept that perhaps some of the houses or flats in the village or town centre have fewer cars and are a little bit tighter together. Lots of the types of traditional village or small town street, you just could not build, although it is getting easier now. Until recently you could not build at all, but thanks to recent changes, it is getting easier.

We need to allow a visualised expression of local character to more axiomatically set local standards and expectations, as defined by local people—not by me or you or the council, although it might have a role. That becomes absolutely essential and it will allow us—again, you can see the premium in the numbers—to develop at slightly higher densities. I call it gentle density, which, again, people will pay a premium for. It does not need to be spewing out into field after field. If we can, we should create a type of walkable, attractive, gentle density, and the focus on design codes linked to the NPPF and the new national model design code in the Bill makes that more possible. It will not solve all the challenges, because they will be existential and go on forever, but it is the best and most credible route.

[Greg Smith]

Thank you. Adrian, do you have a view on this?

Adrian Dobson: Just to reiterate the point about density. Higher densities can be acceptable. If they are designed in the right way, that is very valuable. The Town and Country Planning Act 1990 has served us quite well in many ways, although criticisms of it could be made. We have some slight concerns about over-centralisation. The concept of local plans and local design codes, where good designers can respond to that local context, is one of the traditional strengths of the UK planning system.

Nicholas Boys Smith: Can I constructively, in a good and friendly fashion, disagree with that point? Is that allowed? I don’t want to be out of order.

[The Chair]

We encourage you!

Nicholas Boys Smith: It is constructive and friendly, Adrian; it is not meant to be unfriendly. I agree with the principle of what you say, but I think the reality is different. If you do a comparative analysis of the power and strength of our local plans compared with equivalent documents in other countries, our local plans are incredibly weak. They are policy documents that are verbalised and in practice allow you to do almost anything most of the time. Let me paint a picture. In Sweden, in much of America and in parts of France, and in different ways in Holland or Denmark, it is much easier for someone almost to pick a house out of a catalogue provided by a much wider range of providers, rather than being reliant on a small number of house builders who produce far too high a proportion of our homes.

We are living in a—am I under parliamentary privilege? I don’t know. I am not sure whether I am allowed to say “cartel”. We are certainly living under a massively overly concentrated market, because the local plan has not managed to set regulatory clarity. A lack of regulatory clarity, although associated with nationalised development rights, is a major barrier to entry, and it is exactly how it is operated. I agree with what you say in principle, Adrian, but sadly not in practice. I hope that was okay, Mr Bone—sorry.

--- Later in debate ---

[The Chair]

I am going to call Greg Smith, but I will put the witnesses on notice that, at the end, I will give you the opportunity to change the course of history by telling the Committee what it should be doing.

[Greg Smith]

Q I am going to throw something of a curveball, because it is the sort of question that I am hopeful the think-tank world might have a view on. Throughout a lot of the evidence that we have heard during previous sessions on this Bill Committee—Alex, you talked about the south-east housing crisis in one of your answers—we have this presumption that building is the only answer to the question. From my constituency casework and from prodding around the issue, I have a theory that we do not really have a very good grasp on the gap between supply and demand, particularly in London and the south-east, where house prices are so much higher.

As we are looking at a Bill that essentially enables greater house building in our neighbourhood planning, can you offer a view on whether factors such as stamp duty, particularly at the punitively high rate that George Osborne imposed as Chancellor on the top end of the market, have had a disproportionate effect on movement within the housing stock we already have in this country? If people are not moving up to the very top tier of housing—the very large family homes and so on—there is a domino effect all the way down to the bottom of the market for people who are trying to get into starter homes and one or two-bedroom flats. Do you know of any assessment, either by your own think-tanks or across the think-tank world, that could answer that question? Just how big, in reality, is the gap between supply and demand? What other factors within the state’s control could we look at to take those barriers away?

Alex Morton: We are doing a paper called “The case for house building”, which may not be to your taste; it will argue that, unfortunately, supply is an unavoidable part of any solution. It is frustrating that many other factors, such as interest rates, immigration and stamp duty, are contributing to the housing crisis, but the unavoidable reality is that supply affects price—there is no market in which supply does not have an impact on price. Throughout most of human history, the average cost of a house has been close to the build cost. If you really want to be technical, it is the capitalised future stream of rental income—house prices sometimes get out of line because there are asset price bubbles—but if you work out the rental stream of the average property over 30 years, it should be close to the build cost. Anything above that is fundamentally caused by an imbalance between supply and demand.

Ian Mulheirn has very eloquently made the case that we should not focus only on supply. I totally agree, but I think there is sometimes a desire to wish away the problem. Having said that, I empathise quite a lot with politicians, because it is annoying that other issues are contributing. I would argue that immigration is probably the quickest and shortest lever you could pull; I am thinking of the Chesham and Amersham by-election, for example, in which a party that strongly supports more immigration and more refugees was somehow arguing that there could be no building in any kind of southern constituency.

However, that does not get us away from the fact that for a long time we have not built enough houses for the people who are already here. We can see that in levels of homelessness and overcrowding, particularly for people at the bottom of the market who are really suffering and cannot have families. It is just unconscionable not to do something about that. So yes, cut stamp duty; yes, reduce immigration; but unfortunately there is just a big backlog. We will have a report out soon on this.

[Greg Smith]

Q Just to clarify the question that I am trying to get to the bottom of, my point is not that there will not ultimately be a gap between supply and demand; it is about the effect of factors such as stamp duty on supply. How much are the barriers to movement in the housing market dampening supply?

Alex Morton: We have done a couple of papers on this. There is a clear link between the number of transactions and the speed at which house builders can build out, as I think you have been hearing from other witnesses. The number of people who are prepared to buy new build is relatively constant; Help to Buy has shifted that, but absent Help to Buy, it is a relatively constant number. If transactions increase, so will the number of houses built. I can send you our paper “Stamping Down”, in which we talked about how reducing stamp duty would boost transaction levels. For me, part of the problem is that even if we get housing up to 300,000 for some years, we should be doing that along with other measures—we might then be able to start taking our foot off the pedal in about 10 years’ time. The backlog is so large that we should do all these things. Worrying too much about the exact mix is almost dancing on the head of a pin. We need to reduce demand and increase supply now, and then in five or 10 years, having done those things, we can review where we have got to.

Will Tanner: I agree with quite a lot of what Alex has just said; I think it is about both supply and demand. I take a lot of Ian Mulheirn’s arguments, particularly about the role of interest rates, but I agree with Alex that we have not built enough homes for a very, very long time. We did a report called “Stamping out a bad tax”—another variation on the word “stamp”—that looked at abolishing stamp duty because, as a transaction tax, it has distorted effects within the market, in exactly the way you describe. There are ways of paying for that through second-home taxes and taxes on enveloped dwellings and the like. It is possible to do that in a fiscally neutral way, but it would be wrong for me to suggest that that will solve the housing crisis in one fell swoop. Ultimately, we need to do a number of different things. Over the last 10 years or so it has been easier for politicians to do demand-side changes to the housing market than to do supply-side changes, and that has led to some of the backlog that Alex talks of.

I would argue that some of the things in this Bill, particularly around compulsory purchase, land assembly, spatial planning and the role of development corporations, potentially unlock considerable amounts of supply. That is why this Bill is an important addition to the housing and planning system—it potentially fixes some of the roadblocks to supply over a number of years.

[The Chair]

Q I am going to go to the final question. Alex, what is the one thing that this Committee could do to improve things?

Alex Morton: I think we have covered most things that I had down. The one element that we have not touched on is the goal of streamlining planning and local plans. Perhaps more should be being pushed down than up. By that I mean I would that rather local plans were a series of site allocation policies and strategic policies around transport, and then local people should have a greater say on what happens on those sites, whether through neighbourhood plans or the neighbourhood priority statements that the Government are already trying to do. There is an argument that if development is happening in your community, and you can shape how it looks and what infrastructure and other benefits come with it, you are more likely to be in favour of it, or at least not hostile.

Therefore, rather than trying to have a system that says, “Let’s strip out all the local plan policies”—which I think is absolutely necessary, and the Government are absolutely right to proceed, because local plans take far too long and are out of touch by the time they are finished—you could create processes around how we get on sites, particularly larger sites, where they have been allocated, and how we engage with the community as part of that local planning process, so that, at the end of it, you have a local plan with a list of sites and some overlapping strategic policies, and then local people get to choose things like design or what benefits come with it. That would be a good way to square the circle around streamlining, without running to this argument that you are centralising and taking powers away. I don’t think the Government is trying to do that; I think they are genuinely trying to fix the housing crisis, but I understand why MPs are saying that, and I think that could be an alternative way, as the Bill develops, to get there.

Will Tanner: The area where I think the Committee could make a real difference is around the levelling-up missions and the overarching framework around the Bill. I am not sure the Minister will necessarily thank me for saying this, but I think the reporting requirements and the architecture around the levelling-up missions could be strengthened considerably in two primary ways.

First, we have seen through the Office for Budget Responsibility and the Climate Change Committee the importance and strength of an independent body to hold the Government to account for delivering against its own targets, and I think the levelling-up missions would benefit from that level of scrutiny and accountability. At the moment there is a bit of a risk of the Government setting out its own interpretation of progress rather than us having an independent view. Bluntly, the Government should welcome that as a way of ensuring that the whole of Government is driving towards the same end. There is a bit of a risk at the moment that the Department for Levelling Up becomes the sole vehicle for driving levelling-up policy.

In a second but similar way, I think there is a missed opportunity in terms of not aligning that reporting framework against a Treasury set of fiscal events. Ultimately, levelling up is so interdependent with tax and spend policy that if the Treasury is reporting at different times, particularly around changing tax measures or making large public spending decisions through the spending review, there is the risk that levelling up falls through the cracks of the way the Government makes major decisions, rather than being completely aligned as a whole of Government mission, as I understand both the Prime Minister and the entirety of Government believe it to be. That would be my systemic change.