I have been reflecting on the recent propviews article which draws out the astonishing stat that developers are effectively charged at the margin 80% tax in carrying out their business.
It got me thinking back to when I worked at Southwark Council before, during, and after the financial crash. In the before, it was an exciting and exhilarating place to work, with an array of interesting projects, several Regeneration Areas, and a superb bunch of people to work with (there was a lot of camaraderie in shared endeavour of working at the Chiltern House office!).
Looking back, the exhilaration was disguising what I now see as an overheated market (for one planning committee I had 5x major applications being put up) and it of course all came to a shuddering halt. After all the applications dried up, and the cranes stopped, it was profoundly moving to watch each day from Walworth Road the lonesome Strata Tower continue its construction – each extra floor going up gave me some encouragement that things were going to be ok.
Back in the office, there was debate and a decision needed to be made: do we wait for the market to recover and get the policy-mandated 35% affordable housing? Or do we recognise that development brings so much more than subsidised housing (construction jobs, end user jobs, supply chains, local businesses, stamp duty, the economy, GDP etc etc) and that something is better than nothing?
It may not be a surprise that we went with the latter. But here is the key point – we gave an incentive with conditions attached. Drafted into the S106 agreements was a mechanism whereby *if* a developer got going within 12 months, the affordable housing level dropped; if start-on-site went past 12 months, it kicked back up to 35% and the policy was intact and sound. Developers respond well to incentives rather than being beaten with sticks.
Another key point to note was that there were no ‘mid’ or ‘late stage’ reviews! There was a recognition that if a developer was willing to take on the risk then good for them – crack on.
The difference with today is stark. There does not appear to be any recognition from Local Planning Authorities that there is a problem – ‘we don’t recognise those numbers and the policy is not changing’. The result has been a collapse in housebuilding in London, the causes of which are well summarised in this post which I won’t go into now (only to say that policy shifts have a lag and the consequences of decisions made years ago are now becoming apparent).
The upshot is there needs to be urgent planning surgery in the ICU. There is feverish talk it is on the way.
Pull down threshold levels, issue Planning Directives and Guidance Notes, incentivise investors and developers who are only going to start building if they can convince their board and funders that there is at least a chance of making a profit. So scrubs on, and scalpel!
Gordon Adams was for over a decade the Head of Planning and Public Affairs at the Battersea Power Station Company. Prior to this, he was a team leader in the Major Applications at LB Southwark. He was also a former Planning Committee Member at the Old Oak and Park Royal Development Corporation (OPDC). He now runs his own planning and development consultancy, Crooble.
