Wednesday, November 29, 2006

How not to fix homelessness

Cicero stirred late this morning- he had been making a speech out of town and did not return until just before two in the morning.

Through the numbing dirge of the Today Programme that came on to awake me, I suddenly sat up bolt upright in bed and issued Latinate curses.

Ken Loach, the director of the television drama "Cathy Come Home" was being interviewed concerning the latest Shelter Report that has just been released that suggests that one in seven children are homeless or living in sub-standard accommodation.

Shelter was established after Ken Loach's film publicized the issue.

Homelessness is likely to become a growing problem, as the cost of housing, relative to earnings, continues to rise. Shelter is raising an issue of significant concern.

What made me sit upright was the comment that housing shortages are caused by the free market. Furthermore, Loach explicitly said that the problem was that the economy was no longer being planned. He suggested that British industry needed to return to a planned model too.

The 1960s and 1970s saw the peak of state planning in the British economy. British Shipbuilding, the National Coal Board, British Leyland, British Steel- all entities that were ultimately destroyed, not be the fact that they had to operate in a free market, but because they were lead by State Planners and could not impose free market disciplines upon themselves. In the name of "protecting jobs" Communist shop stewards were able to blackmail managements' into suicidally uncommercial business plans. The imperative was to save jobs, no matter what- the result was catastrophically uncompetitive businesses. State Planning meant the Austin Allegro and the Morris Marina- not only were these abysmally poor cars, they continued to be made, even when it was obvious that they were disastrously uncommercial.

The problem for housing in this country is not that housing needs to be planned. The decline of public housing provision in this country is not the fundamental cause of housing shortages- the problem is the supply of housing overall.

So why is the market not able to provide supply to fill the demand for housing?

Put simply, it is not allowed to.

The combination of environmental protectionism- which I do not object to- and NIMBYism, which I do object to, has choked off supply. Rural Communities can not provide housing for young people, as the number of households has increased. Ironically this has led to there being insufficient demand for Village shops, and even pubs. Many country villages are now wealthy dormitories, dominated by second home owners and bereft of community life.

How could this have occurred?

One word: Planning.

The vested interests of NIMBYism have set planning regimes that are far to strict.

The time has come to create a much more flexible environment in which to balance the contending needs of housing, the environment and the economy. I do not believe that this can be "planned" by bureaucrats, any more than British manufacturing could be planned in the 1970s.

The first step might be to repeal the Town and Country Planning Act . It should be replaced by a much more flexible regime; not flexible as in softer, for some areas, like building quality, might be controlled more strictly, but flexible as in recognizing that "planners" should not always, or even necessarily, have the last word in the Community.

Ken Loach: it is Planning that has created the housing shortage, and I do not believe that it can fix it.


Anonymous said...

Here, here.

And I'd add Land Value Taxation to encourage more efficient use of land.

One of the most depressing calls I here is the call of 'the current regulation doesn't work, we must have more!' when the problem is not lack of regulation but too much.

Anonymous said...

Ken Loach needs to be sectioned for madness!

Tom Paine said...

Spot on. Development *is* centrally planned, and a fine corrupt mess it is in consequence. I think we do need some more Council Housing - the sell offs probably went too far and only "sink housing" is left in many places. Council houses are a better solution to the problems of low paid key workers in inner cities than the Government's catastrophic meddling with private housing; imposing quotas of "affordable" housing on private developments which destroy value.

All the most beautiful cities in Europe took shape BEFORE city planning. Zoning is important to sketch plan cities, but private owners need more discretion to find the "highest and best use" of their own land without interference from bureaucrats and NIMBIES.

James said...

I might agree about planning, but if there isn't some kind of correction, people will always speculate on the value of land, and that will always lead to people sitting on unused property rather than selling it. There are plenty of inner city areas that are effectively derelict because people are speculating on the value, and in these areas planning permission has effectively already been given.

That's why LVT, or at least some kind of progressive property tax, is so important.

Cicero said...

James- you have answered your own question. Land Tax seems an eminently sensible proposition, and I think that creating more flexible conditions for the housing market should be accompanied by tax changes