The government has threatened local councils with the loss of planning powers, unless they meet house building targets.
Yet local councils are approving planning applications in an average of nine out of ten cases. In the rare exceptions that applications are referred to the Planning Inspectorate, councils’ decisions are upheld in three quarters of cases. Of course, some ‘nimby’ (not in my back yard) councils are less generous with their approvals than others.
Why then, when 321,000 planning applications were approved for new homes in 2016-17 but just 183,000 actually built, does the government continues to blame councils for the lack of affordable housing supply?
So, with 423,000 approved planning permissions for new homes yet to be built, why isn’t the government focusing its attention towards the big home builders? The ones sitting on landbanks, profiteering from rising values or those building high-spec executive homes in areas where they are simply not needed.
It is not in the big home builders’ interests to complete houses in areas where there is ample supply. But holding back supply increases the competition for homes, increasing sales prices and the home builders’ profits – so why wouldn’t they? After all, those uncapped and enormous profits, and obscene executive bonuses have to come from somewhere.
Local authorities are certainly carrying their weight when it comes to enabling housing supply; of course, the carrot of the New Homes Bonus certainly helps. The New Homes Bonus grant is paid by central government to local councils to reflect and incentivise housing growth in their areas. It is based on the amount of extra Council Tax revenue raised for new build homes, conversions and long-term empty homes brought back into use. A further payment is made for providing affordable homes.
The bonus awarded Cornwall the princely sum of over £17 million in 2017/18 (including 719 afforable), only bettered by Tower Hamlets, which was awarded over £33 million (including 355 affordable).
Never mind that the nimby councils are forcing less affluent families away from their areas by refusing new builds (and thereby not replacing social housing); the resulting increased demand in more welcoming council areas is providing plenty of opportunity for these councils to profit from government incentives.
Local councils are well positioned to monitor planning permissions – and withdraw them, within a sensible timescale if not acted on – and this might well encourage the big home builders to build. But why aren’t we enabling and incentivising local councils to build locally and for themselves, to replace the housing stock they were encouraged to sell through Right to Buy, and now can’t afford to replace? Local councils are able to invest borrowed money in just about any other area, but they can’t borrow money to replace their own housing stock which is now nearly all passed over to Housing Associations.