THE OVERALL SCALE OF HOUSING BUILDING REQUIRED

  The statement of the Deputy Prime Minister on 18 July did not suggest any other approach to the scale of future development than that already agreed, other than that recently approved in Regional Planning Guidance. This presupposes that the levels set in the RPG combine at a national level to prescribe the level of housing provision required to provide everyone with access to a decent home by 2011. This is not a presumption that we would agree with. At the heart of the regional planning dilemma in England is the fact that RPG9 for the South East was produced in accordance with 1992 household projections while the rest of the country's regional guidance has been produced in accordance with the 1996 projections. The difference between the projections is not just their base date and technical information but also a fundamental difference between the underlying population projections in terms of the treatment of inter-regional migration.

  The 1992 inter-regional migration figures which underlie the projections for the South East are based upon the regions outside of the South East actually retaining larger elements of their population than a straightforward trend based forecast would suggest. The 1996 projections forecast continuing levels of out migration from other regions into the South East. The figures therefore that have fed into the South East Regional Guidance are based upon a presumption that the other regions will retain more of their population. At the same time Regional Guidance for the remainder of the country is based upon the assumption that past rates of migration will continue. This imbalance between the two sets of data, although raised at the relevant Regional EiPs, has never been addressed, as consecutive Panels have refused to debate the implications of previous decisions taken by Secretaries of State. This unwillingness to consider the implications of previous decisions on the complexities of migration patterns results in regions being treated in a rather isolated manner and does not lead to joined up planning at national level.

  It is of course likely that the overall differences between the census data and the mid year estimate statistics will be jumped upon by certain participants as evidence of the need to reduce the level of housing provision still further. Caution is required, for while census data is an important information source it has to be translated into population, migration and household formation rates. This should be done as quickly as possible for it is our experience that the pressure for additional housing in many locations throughout the regions has been steadily growing over the last decade and as such, might well suggest household formation rates have been underestimated.

  The household projections are not estimates of total need but forecasts of effective demand for housing under recent socio-economic conditions. As such these forests are likely to fluctuate depending upon a number of variables including:

—  Increase in GDP Per head of 0.25% per year may result in an increase of 5% in the household projections to 2016.

—  Decrease of mortgage rate by 1% over period of projection may result in an increase of 7% in household projections to 2016.

—  Decrease in unemployment by 1% over period of projection may result in an increase of 1% in household projections to 2016. Annex G of "Projections of households in England to 2021"

  These variables may not be independent and their results can not be summed. The following changes however all suggest that given projected economic conditions, forecast demand will continue to grow. Since 1996 the following has occurred:

—  The continued economic growth of the Eastern, South East and East Midlands regions, supported by the relevant Regional Development Agencies.

—  A decrease in mortgage rates of 1.5%.

—  A decrease in unemployment in the Regions.

  The impact of all these factors is to increase effective housing demand. It is therefore projected that prevailing economic conditions will cause the levels of household formation from the same population to increase by approximately 7%.

  It is accepted, as stated by the DPM, that there are areas of market failure and that these also need to be tackled.

  There are two basic approaches to assessing housing need to be adopted. First, is to model the rate of household formation from given populations as in the DETR/Chelmer Model; these implicitly accept that the socio-economic situation which occurs in the preceding years will be maintained and therefore can not be seen as a completely policy free forecast. There are strong suggestions (Alan Holmans—Cambridge University—and others) that certain household needs are excluded from these projections. While these projections include sharing and concealed households (which are excluded from the housing need calculation) there are other housing aspirations within the population which are not met or considered by the DETR/Chelmer approach. The alternative approach is the work undertaken in Local Housing Needs Studies. These studies often identify substantially higher levels of housing need which may often be in excess of 100% higher than the DETR forecasts and the RPG/Development Plan provisions. Such local needs studies do not reflect the level of effective demand under the current socio-economic situation but instead represent the aspirational requirements of the population.

  It must be concluded therefore that while adjustments to the level of housing provision as set out in RPGs and development plans maybe increased so as to better reflect the level of housing need forecast, this will not meet the housing aspirations of the population which will result from the amalgamation of the local housing needs studies.

  Not only is there confusion as regard to whether one should attempt to accommodate effective demand or overall housing aspirations, a further complication is brought into the assessment by the nature of the debate at Regional Examinations in Public. It is common practice in all regions for areas which are popular in terms of housing demand to attempt to argue reduced levels of need compared to the DETR/Chelmer forecast and take no account of local aspirations as implied by their own local needs study. A great deal of effort is put into the arguments to reduce the amount of housing required both by planning authorities and by anti-development lobbyists. If, rather than attempting to deny a problem or argue it away, there was a more robust assessment based upon facts rather than just opinion, then the EiP may identify more accurately levels of housing need and by defining the problem robustly then the difficult political decision about to what degree this need is going to be me and when can be made. In many cases it is the failure to identify robustly the emerging needs of the area that results in policies which do not and cannot address the real problem. In order for the Government to meet its objective of providing everyone with a decent home, the level of debate at a regional level has to be improved so that the issues and problems can be properly defined. Only when a problem is defined in its scale and nature can successful polices be constructed and implemented.

HOUSE PRICES

  The announcements made by the Deputy Prime Minister are unlikely to significantly reduce house prices. As stated earlier the incompatibility of the South East Regional Guidance with that of the rest of the country means that there is a significant level of need which has been left out of the nation's housing need calculation. In addition to this, the fact that the DPM's own house building rate for the South East is below that which was advised by his EiP Panel means that this deficit is increased still further. Therefore, even if action was taken by the DPM to deliver build rates at the level presently required in RPG9, this of itself is unlikely to impact significantly on house prices.

  In the remainder of the country outside the South East, building rates have on the whole also reduced, particularly in parts of the East Midlands Region although in some cases only to levels prescribed by Regional Planning Guidance. It is noticeable that even in locations where the rates are comparable to prevailing RPG there have still been significant price rises. What is noticeable from studies done by the Centre for Urban and Regional Studies at Birmingham University, both in the West Midlands and in Yorkshire is that there can be significant areas of price rises within the same region, or indeed within that of a single Authority but also large areas of failing markets. This would tend to indicate that a crude matching of household projections to total housing numbers is unlikely to achieve price reductions. The existing approach to the provision of new houses is based upon the continued occupancy of houses which are unpopular by virtue of design and/or location. The problems of poor market areas and their need for renewal are generally resolved by assumptions that keep the existing population in place and often attempt to "improve" the area by making it the only housing choice for some new households when allocating the provision of new housing. It is often assumed at regional level that area renewal will occur simply by restricting the level of new house building. The evidence against this is clear in that many households are prepared to make substantial sacrifices in order to obtain dwellings within popular market areas, while either avoiding or only temporarily occupying areas of market failure—the latter leads to higher turnover and under investment, as well as increased travel.

  Equity release fuelling a buy to let market in the face of falling stock market values is also supporting price increases especially at the lower end of the market. It is however expanding the opportunities for private renting allowing households access to decent housing at less than the cost necessary to purchase.

  Further pressure on house prices is coming from the aspirations of households who choose not only locations but also dwellings which have particular internal space standards. In this respect PPG3 has been instrumental in creating a more buoyant market for second hand properties which typically have more generous space standards and are often built to lower densities. As many of the new properties coming on the market are at high densities and have lower internal space standards, including limited garaging and parking their appeal is limited to certain sectors of the market. The drive to purchase higher levels of personal amenity space both internal and external are likely to continue. Therefore, households will purchase what they may regard as compromised new properties because that is all that is available. The competition for and therefore the price of older properties will continue to rise—we can envisage the traditional price premium on new housing being overturned in the passage of time.

THE EFFECTS OF PPG3

  The application of PPG3 is having unforeseen effects on housing delivery, choice, travel and house prices.

  Interpretation of PPG3 has resulted in local authorities being confident in rejecting housing development both on greenfield and brownfield sites, without having to take into account the need to provide land for housing. There is nothing in PPG3 or indeed in any of the RPGs which provides redress against Authorities who fail to deliver sufficient housing. The Deputy Prime Minister is well aware of districts who have consistently failed to bring forward sufficient sites to meet their development plan requirement—in the case of Rushcliffe for example, potentially leading to a shortfall of almost 10,000 dwellings over 10 years. In Hertfordshire the County Council are proposing to rely solely on urban capacity in their Structure Plan review. This will give rise to serious delivery problems, fail to enable other planning objectives to be realised, for example enhancing the relationship of housing and jobs and the delivery of affordable housing, and will also fail to address significant part components of market demand likely to result in increased long distance commuting. Such policies arise as locally elected Members are less and less willing to make unpopular decisions in terms of the release of land confident that no effective sanctions will be applied in order to ensure the delivery of an adequate level of housing in places where it is needed.

  The nature of the reasoning which is now applied to PPG3 is demonstrated by a recent planning appeal decision in Bradford, where the building rate is below that required by the RPG. The Secretary of State dismissed an appeal on a greenfield site on the basis that the City was not meeting its housing target and therefore that restricting greenfield development would increase the take up of previously developed land. In reality of course there is little correlation, and the City continues to under perform. Hertfordshire will similarly underprovide under the County Council's prospective plan and the housing needs of Hertfordshire people will end up being met in Cambridgeshire and Bedfordshire.

  PPG3 is also generating a scarcity of supply related to land value, which in turn has an effect on land costs. Land values are being escalated because urban landowners are fully conversant with the fact that previously developed urban sites are a very scarce asset. As the sequential approach in PPG3 is being interpreted, the very existence of the site means that no other competing greenfield sites will be released and therefore the land owner can and does hold back the release of his asset until a development scheme can be approved which meets his aspirational land value. The fact that this might take a number of years is unproblematic because PPG3 ensures that no competing sites are released and land values continue to rise.

  On a more general note I would suggest that there is a residual dilemma between the use of land within settlements for housing provision and improving sustainability. PPG3 through Urban Capacity Studies encourage development within existing settlements. In many ways such an approach to the distribution of housing can only reinforce existing patterns of travel, in that they do not provide for the integration of housing and employment or the creation of new environments. Such schemes generally achieve little more than increasing the urban grain. The ability for areas to provide all their housing needs in such a form will not change patterns of behaviour at all. It is possible that the approach now being adopted by Councils in their interpretation of PPG3 is actually adding to commuting distances and reducing the existing mix of housing and employment within urban areas. It is certainly our experience that, notwithstanding the valuation point above, residential values are beginning to force out employment uses on the periphery of town and city centres, and authorities ranging from Birmingham and Sheffield to shire authorities such as Kettering are now considering controlling redevelopment in certain urban areas in order to resist the loss of established employment uses. The logic to such changes in land use are simple; many businesses require or prefer up-to-date easily maintained buildings, close to good transport links. This, in addition to the fact that there are no sequential tests for the release of greenfield employment land, means many employers are using the opportunity of increased land values brought about by residential proposals to relocate away from city centres and locations which are easily accessible by public transport to more peripheral locations thereby paradoxically adding to a reversal of commuting patterns.

  The other side of this equation arises where proposals emerge for large scale regeneration leading to conflicts in land uses. In the Thames Corridor we are aware of significant problems that such objectives are producing with one of our clients (BPB) whose factory at Purfleet recycles some 4% of the UK's waste paper. Their continued presence on a riverside site with rail connections is being compromised by the proposal to place residential development immediately adjacent to it. If such residential development goes forward it is possible that BPB will relocate outside of the UK with a loss of in excess of 300 jobs. The problem therefore is not the overriding objective in terms of regenerating the Thames Corridor but that the demand for housing land has become so acute in the South East that developers are prepared to invest in areas which effectively displace existing operational companies.

  There is also a delivery issue insofar as although the housebuilding industry is willing and able to construct and market on previously developed urban sites, most sites are small. Apart from issues concerning economies of scale in actual building costs—a relatively marginal issue—put simply, the delivery of 100 houses on 10 separate sites means 10 separate applications, consents, legal agreements, contracts and so forth. The rate of delivery is inevitably delayed compared to that obtainable on one site of 100 dwellings. This has a major influence on increased costs of new properties provided.

  In many ways it is the planning process which has exaggerated the timescales for development and has prevented the delivery of large scale strategic schemes which provide good sustainable environments. The relatively short term of development plans has meant that much of the time the plan period has passed and development has taken place in an ad hoc manner in small infill or discordant extensions to settlements which do not bring about the benefits of large scale planned urban extensions. Although previous development plans identified development sites for a 10 year period, the time taken to prepare plans has meant often only five years of new housing land had to be identified. PPG3 now effectively embodies a need only to identify land for the coming five years. The problem however is that in most cases a five year supply of land might be achieved by ambitious or creative estimates of urban capacity and small scale releases. This process removes the need for long term planning, especially as there is no requirement to make up any shortfall in provision when the plan is reviewed.

  One final point is linked to house prices discussed above. That is the product choice available. It is widely acknowledged that those who are willing to purchase houses on urban capacity sites have different needs and aspirations to those seeking suburban type housing. If the supply of the latter is curtailed people will either escalate the price of existing suburban stock or will travel to where such housing is available. New settlements in Cambridgeshire, at Peterborough (Hampton) and Milton Keynes may end up providing housing for people from much further afield than envisaged at the expense of increased principally road borne commuting.

GEOGRAPHICAL DISTRIBUTION

  Having attended a number of EiP into Regional Planning Guidance, it is becoming more apparent that there is a need for national debate upon the distribution of housing and that inter-regional issues such as commuting, economic regeneration and international migration require to be addressed. An example of this is the 10,000 dwellings that were forecast to meet the need of migrants from the Commonwealth which were explicitly excluded from the East Midlands on the recommendation of the Panel Chairman. There was no dispute from the East Midlands Local Government Association that these 10,000 dwellings would be needed somewhere within the country, but of course none of the neighbouring regions were willing to accommodate this need. To a certain extent the same is true of the economic policies being pursued between the regions. Both the East and the West Midlands have economic policies which are predicated on labour force increases beyond that which might be available from the number of housing being provided, and yet both are suggesting increased cross border commuting to provide the solution to predicted labour shortfalls.

  In terms of the general distribution of housing demand it is well recognised practice at both local and regional level for the planning system to try and direct demand into areas which have the lowest level of market demand. As such locations are invariably the poorer areas and have less political influence such a procedure is understandable although counter productive in terms of sustainability. This is because areas of low market demand are likely to be subject to future market failure and therefore require further intervention in the future and are less likely to be well related to major areas of employment and services. Such approaches require the general public to gamble with their investment in areas of poor market, secondary locations and often new housing types.

  In terms of the East and South East this is clearly correct in relation to Ashford and Thames Gateway when compared to the west side of the Capital. Even Milton Keynes could be classified in a similar vein although it has now established a significant momentum of its own as an economic growth point. Nevertheless distribution into these locations is considered in general to be an acceptable planning goal. In particular, the continued growth of Milton Keynes and increased growth in the Cambridge-Stansted corridor is supported and both have the potential to provide high quality sustainable environments on the basis that large areas of land will be released allowing for a comprehensive approach to be taken not only to residential provision, but to the concurrent provision of services and employment. It is considered important for the Government to provide the mechanisms to realise the scale of release that is required in order to achieve these aims.

  We welcome the cross regional approach, advocated in RPG9 in particular, and leading to the genesis of Sub Regional Studies—in the case of Milton Keynes, essential as its influence extends over three Regional Planning areas. The Deputy Prime Minister will be aware of the Milton Keynes and South Midlands Study which looked at the capacity for growth over an extended timescale. We welcome the DPM's expression of support for a new millennium village and consider that Northampton too could accommodate such a project. Representations already made to the Structure Plan have identified a site capable of accommodating potentially 2,000 dwellings and a significant element of employment within a new urban extension to the town. While not in itself a millennium "village", it nevertheless has all the attributes of such a scheme but with the additional advantage of being a planned urban extension to a major existing town.

  The principal issue is now converting an understanding of the magnitude of the issues highlighted by the Studies into the delivery of sustainable environments that provides the necessary transport infrastructure and deliver homes and jobs over a timescale longer than that normally encompassed in RPG and by the cumbersome and bureaucratic development plan system the is so easily blown off course by local political interests.

BALANCE BETWEEN SOCIAL AND MARKET HOUSING

  The balance to be struck between social and market housing is really dependent upon government's approach to the overall scale of housing provision. It may supply housing at a rate which reinforces past social and economic trends or extend housing provision to meet the aspirations of that part of the population either explicitly excluded from the regional household projections or implicitly excluded because current levels of housing provision do not enable their aspirations to be met for either social or market housing.

  Although the Government states that they are failing to provide homes for teachers and other key workers, this is really a function of remuneration levels in the South East and the requirement by public sector unions to maintain collective bargaining for the country as a whole. While it is true that teachers and other essential workers in the South East cannot afford to enter the housing market because of the restriction in the supply of housing, this is certainly not true in other areas of the country whereby their levels of remuneration, coupled with relative job security (through scarceness of supply in relation to the number of jobs available) enables ready access to housing. The problem of affordability and key workers in the South East is clearly one of the Government's own making in the disparity between the income and the high cost of housing that is in large part driven by their own policies of restraining supply.

  In these circumstances the choice with regard to tenure is more about who should be excluded from the housing market rather than making provision to include additional households. Given that the overall number of dwellings has been set for most, if not all, English regions at a level less than could be taken up by open market demand, there is an argument that there is no need to promote any alternative forms of tenure.

  In areas of housing pressure however, there is a perhaps a consensus that certain households—frequently public sector workers—should have access to subsidised housing. Such an approach is clearly inequitable for many other businesses operating in these locations who have to hope that employees can afford to meet the cost of living. If the already limited supply of market housing is to be reduced still further because some of it is to be reserved as subsidised housing for key workers then all other sectors of demand are effectively shouldering much more of the cost of restrictive housing policies than others.

  Studies by the Centre for Urban and Regional Studies in Birmingham suggest that there are areas of low demand in Yorkshire and Humberside and in the West Midlands but these are adjacent to and sometimes within the same local authority area as areas of high market activity. These studies also suggest that fewer and fewer of the population are willing to enter into social tenure. This drop in demand is particularly acute among the young.

  In terms of England as a whole it should be noted that the levels of private tenure remain lower than in many other European countries. Often supporters of increased affordable housing provision cite the example of Germany and Scandinavia where private ownership is low and private rented and social rented is high as a pattern of tenure to emulate. This however, is the exception rather than the rule amongst our European neighbours.

  I have undertaken a critique of many studies into social and affordable housing need and as stated earlier in many cases these aspirational requirements cannot be met in the context of existing pattern of provision. An example of this is a recent study done for Rotherham Borough Council whereby the whole of the affordable housing need identified by the study would require rented accommodation to be provided at rental levels significantly below that prescribed for RSLs in order for these potential households to enter the affordable housing market. In this case the level of aspirational household requirement was in the order of 2,000 dwellings per year compared to a DETR forecast for the population of the district of only 360. This indicates the potential scale of "aspirational" housing demand.

TO WHAT EXTENT SHOULD DECISIONS RELATING TO HOUSING INCLUDING NUMBERS, TENURE AND DENSITY BE TAKEN BY CENTRAL AND LOCAL GOVERNMENT

  In terms of the overall numbers of dwellings required, it is considered that a national strategy should set out the general aims and objectives to be achieved by planning policies. We would favour the establishment of regional housing requirements at regional level but embracing a wider cross section of informed stakeholders including the industry responsible for delivering the requirement and with proper cross regional considerations taken into account. The steps leading to establishing the scale of growth should be informed by the debate of agreed and disputed facts: access to the debate should be restricted to those who can participate in such a debate rather than extended to interest groups who merely choose a factor which produces the highest level or lowest level of housing which suits their particular political need. Broadly, either a political consensus is needed in arriving at the final figures or they need to be prepared on a wholly non political basis. While setting the level of housing at a regional level the decision should make it clear what factors have been taken into account and how these have affected the overall level of provision. Such guidance is not given at the present time and to a large extent is fudged and should not preclude local authorities from interpreting the the guidance—and effectively seeking from leave from Government to modify it based on more up-to-date information as it becomes available. Such an approach would both satisfy the needs of certainty in the long term, provide local choice and accountability whilst ameliorating the present situation whereby by the time development can be implemented, the scale and circumstances of its need may have changed.

  In terms of delivery, greater central intervention may be necessary through simplifying and speeding up the system and by establishing targets and accountability for local authorities. Enterprise zones, simplified planning zones, and the Development Corporations have proved to be the means to deliver development objectives. Whilst we are always reluctant to downplay the role of locally elected representatives, the disparity in political control at any one time between central government and at least a proportion of local councils and the demonstrable objection of a vociferous element of the population to new development per se, whether urban or rural, makes the task of delivering the nation's need for homes and jobs a matter of too great an importance to be left purely to local councils.