Monday, 25 July 2011

Ross Martin: Simpler planning system could help build a way out of recession

Published in the Scotsman, 23/7/11

"To shelter from the coming economic storm, we must boost our defences, starting with the housebuilding sector

First, we had the financial crisis which precipitated a collapse of the established economic order. Next it was the Westminster political establishment, caught with its hands in the expenses till. Now, as we watch on like a voyeuristic red top reporter salivating over scandal, the tabloid press appears to be hacking itself to death through its own immoral, professionally grubby and personally hurtful practices.

The resultant general crisis in confidence is gathering pace, twisting together a triple helix of social, economic and political reputations into a single, all-consuming destructive tornado. Even the Metropolitan Police have been sucked into the storm, with Scotland Yard's finest forced to resign in an atmosphere of accusation, suspicion and mistrust.

It is anybody's guess as to where this reputation-wrecking twister will strike next, who or what will be shredded in its path. All around, the hatches are being battened down as other parts of society prepare for the worst. From scandal to corruption, from incompetence to inability, the impact of dodgy decisions in so many walks of life is now emerging.

Across the private sector, we've already seen pensions being slashed, wages cut and jobs lost. A large number of once-proud companies, such as many well-known high street stores, have simply ceased to exist. Now the winds of change, driven by the economic-political-social storm centred on London are beginning to reach Scotland.

The effect of these chill winds will be felt most keenly here, where the public sector is such a dominant feature of our landscape. Of course, fiscal-political deals between the Scottish Government and HM Treasury have sheltered us from the icy blasts until now, but we cannot be protected forever.

We are about to feel the full force unless we can quickly mount a strong, well-constructed defence. If we are to protect ourselves from the inevitable impact, we desperately need to rebuild our country's economic defences, and fast.

Brick by brick, using the tools of trusted trades where a hard day's work is rewarded with an honest wage, this can indeed be done, starting with the housing sector.

Even though the mortgage market has still to reopen accessible entry points, demand for new housing, across all sectors, remains strong. Innovative financial products, such as shared equity schemes, mid-market rents and other mechanisms that can strengthen our housing base are beginning to make a marginal difference, but our planning system still impedes development.

In order to deliver the Scottish Government's central policy focus of sustainable economic growth, we must make it easier to build more new housing, and simultaneously redevelop the 50,000 houses that are currently lying vacant in Scotland. Many more properties are being used for other purposes, such as under-utilised storage space above struggling shops in our town centres.

While remaining true to the environmental targets of our world-leading climate change legislation, we must introduce greater flexibility into our planning system and encourage, through financial incentives, a greater diversification of our housebuilding sector. By changing the tax treatment of existing properties and encouraging their re-use, by incentivising the redevelopment of derelict sites, and by introducing a range of other measures to enable new sites to come forward, we can make a real difference.

It is a scandal of our time that the construction industry is on its knees, when we have the skills base, the ingenuity and the desire to better match the supply of a more varied housing stock with the undimmed demand for new homes.

We need to identify the blockages that are stopping the development of what could be a strong economic defence against the fast approaching fiscal storm. Aside from the few public sector projects that have been sanctioned by the Scottish Government, including the M74 extension and the M80 upgrade, and the continuing expansion of the still buoyant supermarket sector, the rest of the construction industry continues to bump along the bottom of the recessionary floor. We can, and we must, do better.

For example, almost all Local Plans, the map of any local authority area designated by potential type of land use, are premised on the hope that very large-scale housing allocations can fund the huge and expensive items of infrastructure required to support them. Many of these "Major Growth Areas", where councils have allocated between 2,000 and 5,000 houses to individual locations, are struggling to get started.

The Scottish Government's original, optimistic target of 35,000 house completions per annum will never be met until greater flexibility is introduced into these development plans. A realistic approach to infrastructure challenges must therefore be taken, recognising the difficulties that many of these large-scale sites have in securing up-front funding for major items of infrastructure.

For example, where a new high school is required, the up-front cost of well over £30 million makes a site unfundable and therefore undeliverable at this time, and this is without even looking at new or upgraded motorway junctions or rail stations. Where councils have managed to allocate large scale sites in areas where these items of infrastructure already exist, in all or in part, these sites do of course have a chance of coming forward.

However, in other areas, where these sites are unlikely to lay a single brick in the next few years, councils should be enabled to bring forward additional smaller sites which can make a start tomorrow.

It is clear that sites of varying size are required to get the housing market moving again, everything from a few houses built by local developers to sites of 750 houses or so put together by the big house building firms and or innovative investors.

The level of infrastructure investment required for these smaller sites, eg a new primary school rather than a new high school, can be supported, even in the challenging economic climate.

So, if allocated, many of these developments could begin tomorrow, immediately creating well paid, skilled jobs and kick starting local economic activity.

A little ingenuity and a lot more flexibility is now required to enable the planning system to deliver on the fine and laudable aims that the parliament aspired to when passing this legislative planning framework; increased efficiency, more localised decision making and greater clarity on costs for all concerned.

With additional incentives on the re-development of existing (so called brown field) sites, the re-use of existing residential units, and an increase in the density of housing developments, where appropriate, a huge and timely boost could be given to the house building sector at local and national levels.

Such an injection of economic activity would strengthen our defences against the oncoming fiscal storm considerably. This would provide quality employment for thousands of individuals, strengthen the supply chain by benefiting small businesses and deliver new homes for families.

A number of simple steps to deliver this robust range of benefits could be taken today. These building blocks for economic stability, and the preparation for sustainable growth, are ready to be laid.

Scotland has the people, the skills and the ingenuity to construct a better future. It's time to get the policy trowel out and get started".

Ross is CSPP policy director


  1. The article argues several good points but it is NOT a critique of the Planning System - it is a critique of financing arrangements, fiscal tools and local councils. Would somebody please spell out how the Planning System itself is at fault here? The attack on planning appears to be just a throw-away line with no substance - a weak, knee-jerk reaction.

  2. Hi Andy,

    Thanks for your comments. Here's Ross' reply

    "The planning system is too rigid, setting housing supply targets based on guesswork in the current fragile economic climate, rather than providing market flexibility to deliver choice of tenure and type of housing.

    The development plan process still takes too long, even though it was meant to have been a/ shortened and b/of fixed period - neither of which is happening, thereby increasing uncertainty"