New Housing Supply

Stephen Timms Excerpts

Monday 5th June 2023 Commons Chamber

[Mr Davis]

Part of that fits in with what my hon. Friend the Member for Weston-super-Mare (John Penrose) said, but I will deal with the point about the high density of the population in a moment.

Let us talk about the politics of nimbyism. Today, in a village in my constituency, a small development of 100 homes would generate thousands of objections. That is inevitably what happens. A garden town could deliver tens of thousands of homes and, if put in the right place, would probably generate a few hundred objections. I will talk about how to minimise that, too. Such a scheme would be fruitless unless we can ensure that new developments generate the funding they need to become places where people actually want to live. That is key.

Part of the problem with the existing process is that a mass of potential funding for infrastructure can quickly disappear, captured not by the local community but by landowners and developers. As soon as a hectare of farming land gets planning permission, its value will shoot up roughly a hundredfold. That is the order of magnitude. It goes from £21,000 for the average hectare of agricultural land to an enormous average residential land value of £2.1 million per hectare—that is outside of London. However, the vast majority of that will go to the landowner and the developer. About 27% will be captured by the state, mostly by the Treasury—that is over and above the money brought in by section 106 agreements.

There is no guarantee that money will be spent locally. Indeed, there is almost a guarantee that it will not be spent locally—I am looking at my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), a former Treasury Minister, as I say that. This system starves local communities of funding that could pay for necessary infrastructure within the development, such as schools, roads, train stations, GPs and hospitals, fibre optics or cycle lanes—you name it—or even funding that could pay for larger and cheaper homes, which comes to the point about density. The result is piecemeal development around existing settlements that lacks the proper amenities to cope.

The solution lies with the example I have referred to already, set during the 20th century. The construction of new towns was centred around radical but effective legislation that allowed new town development corporations to buy large tracts of land at their existing use value. That meant that when buying up farmland for garden towns, the corporations paid the agricultural use price rather than the hope value, or hypothetical market price. I want to propose a slightly more sophisticated approach, because I do not really like expropriation—I am a Conservative, remember. We will have to have some sort of compulsory purchase, but there should be a proper compensation for that.

Consider an example of a 1,000 hectare garden town, a little smaller than Welwyn Garden City. Purchasing 1,000 hectares of land at agricultural value would cost £21 million, but as soon as it has planning permission the value would rise to £2.1 billion—remember that number. There is no change to the underlying land usefulness and no work undertaken—that is just a change of planning permission. But a Government-created garden town development corporation might pay the existing owners, let’s say, 10% of the development value. That is still £210 million, so we are now talking about a pretty rich farmer. That is ten times the existing use value and a profit for him of £190 million, but it still leaves £1.9 billion of uncaptured asset value. That £1.9 billion surplus can be used to invest in the town’s infrastructure, schools, medical centres, parks, pedestrian walkways, high-speed optical links, and road and rail connections.

[Sir Stephen Timms (East Ham) (Lab)]

I commend the right hon. Gentleman on securing the debate; he is making some very important points. Does he agree that part of the success of the new towns was around the provision of social housing and that there needs to be a substantial programme of that within the programme that he is setting out to the House this evening?

[Mr Davis]

Frankly, I see nothing difficult about that, because I am talking about creating communities that have been designed. When communities are designed, all sorts of social structures are created. I will come back to the detail in a minute, but I do not have a problem with anything that the right hon. Gentleman mentioned.

As I say, the design is done as a single entity. Unlike the chaotic marginal extensions and infills of current development, we can ensure the developments are well designed. We know how to build successful communities— we have plenty of evidence. We know how to design out crime. We know how to separate traffic from pedestrian ways and cycle-to-school routes. If we select locations properly, we can ensure links that facilitate getting to work, shopping and entertainment.