HSA Conference – York

1. HSA Conference – York Localised planning, sub-regional housing markets and affordability outcomes: modelling a new regimeProf Glen Bramley(Heriot-Watt University, Edinburgh, UKContact: g.bramley@hw.ac.uk; +44 (0)131 451 4605)19 April 2012

2. Overview of Paper • Major regime change in 2010 to ‘localised’ planning for new housing • (Previous planning system, policy 2004-09 and post-2010) • National Planning Policy Framework • Unpacking NIMBYism - public attitudes to local housing development • Predicting local opinion and planning stances • Initial responses by local authorities • Forecasting market and social impacts – sub-regional model • Conclusions

3. Previous System • Comprehensive LU planning system (widely supported) • Plans (LDFs) vs development consents (discretionary) • Neglect of supply in policy till 2004 (Barker) • Regional spatial strategies & numerical targets, • Requirement to consider effects on affordability • New Quango NHPAU • More investment in social housing and infrastructure • But system still failed to deliver much increase in output

4. Housebuilding Output

5. Regional Affordability Trends Source: Pawson & Wilcox, UK Housing Review 2011/12, Table 2.3.2.Based on averages of FTB prices and all household incomes of working households

6. Localist Planning Reform • Critique of previous system as ‘broken’, ‘bureaucratic’ (and unpopular) • Scrap regional planning bodies and regional strategies • Scrap top-down numerical housing targets (& NHPAU) • Remove some planning guidance (re density, ‘garden grabbing’) • Local authorities to take decisions (except where devolved to local communities) • Incentives – extra grant related to number of new homes (NHB) • Broad continuance of planning gain agreements but formalised ‘Community Infrastructure Levy’ • Presumption in favour of sustainable development

7. National Planning Policy Framework • Draft published 2011 heralded radical simplification, streamlining, promotion of economic growth & development (via ‘presumption’) • This caused great furore • Final version published March 2012, notwithstanding rhetoric, rows back quite a bit from that • Defines ‘sustainable development’ – balance of economic, social, environmental • Still gives primacy to Development Plan (LDF) – but must be up to date (1 year to update post-2004 plans!)- may draw on regional policies and evidence ‘where appropriate’ • Green Belt protection unchanged; encourage brownfield; • Meet full need+demand evidenced for HMA (via SHMA) • 5/10 year land supply, deliverable, with 5/20% buffer, implem strat. • Plan for mix of size/type/tenure, incl afford hsg • Encourage larger urban extensions & new settlements

8. Sustainable Development?

9. Primacy of the Plan

10. So what does ‘presumption’ mean?

11. Unpacking NIMBYism – public attitudes • Past evidence/literature suggests NIMBYism quite prevalent in England • 2005 survey suggests strong resistance to additional housing within existing urban neighbourhoods (‘CityForm’) • Impacts on traffic, pollution, parking were strongest -ve factors • 2010 BSAS suggests majority opposition, esp among - those with a strong view - middle classes - owner occupiers - Tory/LibDem/Green - South - suburbs

12. Attitudes by Tenure & Overall

13. Attitude by Type of Area

14. What would persuade them? • Side benefits of new housing, particularly- employment opportunities- greenspace, parks- improved transport links- schools, leisure, shops, medical etc. • Financial incentives to residents not rated per se • Smaller starter homes, affordable homes to buy & rent

15. Predictive Model for Support/Opposition • Developed predictive model for support or opposition, simple or conditional on various side-benefits • Step 1 – logistic regression model within BSAS micro data with attached area attributes • Socio-demographic factors – age (-) children (+) renter (+) flat (+) soc class III (-) low income (+) • Political affiliation – Lab (+) Lib Dem (+?) BNP-UKIP (-) Green (-) • Area factors - bit city (+) village (-) low density (?+) South & Outer London (-) area satisfaction (+) deprivation (+) existing supply level (+) open/green land (+) Green Belt (-) • Step 2 – predictive functions on equivalent aggregate data at LA level • Predict majorities for development under various conditionality assumptions (e.g. provision of greenspace & leisure; provision of wider package of service & transport benefits) + switching possibility

18. Summing up Predicted Patterns • Using moderate assumptions about conditional support and delivery of some side-benefits (levels 2 & 3*)…. • ..more support in NE, Y&H, E Mids; still net oppos in other regions, esp SE and East • …more support in central cities, and in ‘most rural’, and depressed areas; still more opposition in suburbs (esp London) & prosperous areas * Levels: 1. unconditional support 2. support if open space & leisure improved; 3. support if wider range of improvements incl educn, healthcare, transport4. as 3. but include switching from opposition to supportComment: level 2 probably most realistic, given public spending and developmentviability constraints.

19. Planning Stances • Can we actually characterize, define, and measure the planning stance of a LA? • Not easy given discretionary UK system, ragged completion of LDFs, non-standard SHLAA & AMR documents, strangely uneven collection of stats by DCLG etc. • Considered 11 indicators and selected 5 for composite based on power to predict flow of new permissions • Five selected were: log outstanding permissions/100 hhld; % small sites; social completions /100 hhld; % applications granted l t ave; land available % hhld • (Other indicators discarded were: brownfield share; % area Green Belt; recent % granted; ave decision time; 5 year land supply %). • Existing planning stances more positive in North and East of country; more positive in central cities and most rural areas; most negative in suburban, peri urban and affluent areas

21. Predicting Change in Stance • Combined predicted conditional support for development with existing planning stance index at LA level, to generate 4-way discrete typology • A lot of LAs (60%) predicted not to change • 95 predicted to shift down their supply, 44 to shift up (slightly more optimistic 87:53) • Shifting up more common in north and midlands • Shifting down predominant in London, south (and YH); in south outside London, 62 downshifts vs 3 upshifts (!) • Minority of upshifters are City Centres and deeper rural – some of these have other constraints e.g. National Parks • Downshifters include many areas formerly known as significant growth locations

23. Reviewing Soundness of Targets • Revised NPPF makes judgement of soundness of evidence base on housing need & demand key to what will happen • These judgements will be made by planning inspectors • They are likely to look at household projections, but what else?(affordability levels or changes? Environmental & infrastructure capacity?) • How will prolonged recession in construction impact?(in short run, a lot of unimplemented permissions/allocations) • System is supposed to be based on localism but a lot of intervention from PINS could generate a lot of friction

24. Smarter Incentives • Not discussing financial incentives ‘New Homes Bonus’ in detail in this paper, but would suggest…. • Larger marginal incentive targetted at smaller number of authorities • Above threshold level of output • Only for areas with significant shortfall • Only where clear sub-regional collaboration • Extra bonus where job growth above threshold

25. Initial Responses of Local Authorities • Some local authorities were back-pedalling on RSS targets in anticipation of election, including legal challenges • Some local authorities reacted very quickly following Election • Others biding their time, uncertain of legal position and how other aspects of system would change (e.g. LDF core strategy, attitude of PI’s, PFSD) • Two unofficial surveys in Sept 2010 & May 2011 provide a consistent picture • About half of LAs sticking to current numbers, most of rest reducing to some extent (ave about 20% reduction for these)

27. Sub-Regional Economic Model • Model developed from NHPAU feasibility study for group of LAs • Econometric functions linked in spreadsheet simulation for different policy or economic/demographic scenarios • Shows impact of varying planned numbers through supply, household numbers, prices and affordability • Consistent with earlier models • Impacts moderate and take time • Spatial interactions important – for example, London affordability affected a lot by provision in surrounding South East regions

29. Key Component Models • Housing supply (private completions) • Migration (gross, x age group) • House prices • Household formation (micro based) • 1st 3 estimated on short panels 10 years x 102 HMA areas • Some spatial interaction terms • Some cross-sectional variables of interest • IV treatment of supply & prices

30. HMA Areas Showing Price Growth

31. Predicting Impacts of Localist Shifts • Combine predicted shifts in planning stance based on BSAS analysis and existing stance analysis with subregional market model • Basically vary flow of permissions for up/down- shifters by +/-50% & trace impacts • Overall average impact for England quite small • Regional impacts larger but in opposite directions- more new housing in N (but not Y&H), Mids- less new housing in S, esp SE (and YH) • Affordability impacts match this, at smaller scale - overall deterioration of c.1% - but 8% worse in SE, 5% in London, 3-4% in EE • Exact magnitude subject to several uncertainties - but logic and direction of effects very compelling given the evidence

33. Housing and the Economy • Concerned that likely pattern of shifts in planning stance under localism will be broadly perverse from point of view of existing affordability and housing need problems • Further concern that this could well be perverse from economic growth point of view, given that south of England has strongest recent growth record and growth potential (e.g. from innovative firms, private sector) • Quite strong negative correlation between affordability and GVA growth, already (r=-0.56) • Predicted changes are predominantly downwards in the higher growth areas and vice versa (r=-0.38 at district level) • Systematic downshift in the key growth regions (SE, EE) • More positive shifts/stances in deeper rural areas could be unhelpful or lead to excessive sprawl and high commuting costs, emissions etc.

34. Affordability and Predicted Plan Shifts by GVA Growth

35. HMA Areas showing GVA Growth

36. Conclusions • The 2010 regime change in England is pretty radical for UK;hence impacts very uncertain; although revised NPPF more ‘reassuring’ • Public attitudes generally negative, especially in key southern suburban & small town areas- but may be susceptible to shifting with good packages of infrastructure and appropriate housing • Incentives unlikely to be enough (altho CIL may help) • Actual decisions so far show cuts in plan numbers esp in south • Index of planning stance and predicted changes in stance generally negative in pressured south • Modelled impacts show affordability benefits take time and spill across boundaries – creating ‘planners dilemma’ • Subregional collaboration desirable but wobbly • Much depends on how PI’s interpret ‘soundness’ of local plans in light of ‘evidence’ in SHMAs & SHLAAs • Overall balance of evidence suggests significant danger that new regime will lead to less housebuilding and worse affordability • ..and it is likely to further limit national economic growth