This article by Geoff Mawdsley appeared in the Scotsman.
How much time do you spend thinking about the planning system? Not a lot perhaps. Yet if you are a first-time buyer struggling to get a foothold on the property ladder, you might be interested to know that planning policy has been a key factor in Scotland’s soaring house prices.
In fact, planning has an impact on some of the most important aspects of our lives. Meeting our future housing needs, ensuring the economy develops in a sustainable way and preserving the environment all depend on getting it right.
That is why Reform Scotland believes there is a need for a radical overhaul of both our planning and housing systems. Today we publish a report entitled Planning Power which calls for the devolution of planning and housing to local people, making the systems more responsive to their needs and wishes and giving them much greater control over how their communities develop.
The 2006 Planning Act was a step in the right direction. It should speed things up and increase the opportunity for people to become involved in the planning process from an early stage. But fundamental defects in the system remain. These are largely cultural and, as both the Scottish Government and its Council of Economic Advisers have pointed out, have meant the system fails to respond adequately to demand and can act as an inhibitor of growth.
This is particularly evident in the housing market where, despite the recent downturn, the trend over recent decades has been rapidly rising house prices. The average house price in Scotland went from £69,312 in 1999 to £174,433 in 2009. Housing has become less affordable, particularly to those on low incomes and first time buyers and this has had a destabilising effect on the economy. Several factors have contributed to the rise in house prices, but one has been the shortage of land for housing – a clear signal that the planning system is not responding to demand.
The shortcomings of the planning system stem largely from lack of incentives to ensure a balance between economic development and the protection of the environment. Under the current system of financing local government, councils do not gain sufficient financial benefit from allowing new development to make it worth their while. There is often a disincentive because new developments usually mean they have to finance additional services such as new roads or schools.
Local communities have even less incentive because new development often leads to loss of environmental amenity with nothing in return. At the same time, developers are answerable not to local people but to the local authority. All of this encourages the so-called Nimby (Not In My BackYard) attitude and is a source of conflict between developers and local communities.
The starting point for reform should, therefore, be making local authorities responsible for raising most of the money they spend, as outlined in our earlier publication Local Power. This is essential if councils are to have greater autonomy and be more accountable to their local communities. Currently, councils have little local control over tax raising and should, over time, be given the freedom to set the rates of a range of different taxes. Control of business rates should be the first step.
The planning system would benefit hugely from greater financial autonomy. Instead of costing money, it would mean that new development – whether residential or commercial – would bring extra revenue to councils, outweighing the cost of providing additional public services. The local authority finance systems in Switzerland and Germany have provided incentives to ensure a better balance between development and conservation which has led to much more stable house prices.
Undoubtedly, different local authorities would adopt different approaches to planning, as they can do now. But they would bear the financial consequences of their decisions and be answerable to their electorate for the balance between new development and conserving the environment.
However, there is room for local planning decisions to be devolved down to local community level so they are taken as close as possible to the people they affect.
This could be done by giving local communities the right to acquire powers over areas such as planning from local authorities. This would only happen where communities expressed this wish in a local referendum. Such an evolutionary approach recognises that the current network of community councils in Scotland is patchy with some working better than others. Until areas have properly-constituted community councils, decisions would be taken by representative committees of local councillors.
Initially, local communities would receive funding that matched the powers devolved to them. However, this should take into account increases in households and businesses resulting from any development. They should also be able to attach conditions and negotiate compensation agreements with developers.
This greater local control should see development taking place where its value to the community outweighs its costs in terms of loss of amenity. This will encourage sensitive, smaller scale development that blends with the local area.
It is certainly preferable to a system where a higher authority can impose a development on a local community in return for what they view as adequate compensation but which the people who live there do not. National or major developments would still have to be decided by the Scottish Government and the wider local authority. Even in these cases, though, developers would have to negotiate with local communities to deliver sensitive projects.
This should limit the Nimby mentality and force local communities to weigh up the costs and benefits of any development. It would promote negotiation between developers and communities rather than confrontation.
To complement reform of the planning system, the Scottish Government should shift from support for new social housing to support for households, empowering them to make their own choices about housing.
Making this policy work would require the transfer of responsibility for housing benefit from Westminster to Holyrood. This would enable the development of a new and simpler Scotland-wide system of housing support which took into account specific Scottish needs, local rent levels and the circumstances of those receiving it. Combining the money currently going towards housing benefit and social housing providers would enable more generous support to be given directly to households. Landlords would then have a genuine incentive to let their properties to them and help ensure that support went to those most in need.
This would not only enhance tenants’ choice, but also make the whole housing system more responsive to their needs and wishes. Such a system places greater trust in housing providers, whether registered social landlords, local authorities or those in the private sector to make their own decisions and respond to the needs of their tenants. It would also place them on a more level playing field, although this would require a review of the legal structures for rented housing to ensure that tenants all had the same rights.
There are a number of options, but extending assured tenancies of unrestricted length to all tenants would be a sensible starting point. While this would not be popular among private landlords, it could be balanced by enhanced rights to repossession for rent arrears and abuse of property. It would certainly help to enhance competition and drive up standards.
This policy assumes that people are able to make decisions for themselves. But we should recognise that giving tenants this enhanced choice and responsibility may mean that some need additional advice and support, particularly in the early stages because they are unused to paying rent. This, along with most other aspects of housing policy, would be the responsibility of local authorities.
Taken together, these reforms of housing and planning represent a fundamental shift in power downwards in our society.
Reform Scotland sees this as part of a broader trend towards greater devolution – long overdue and urgent.
• Geoff Mawdsley is director of the think tank Reform Scotland