Saturday, 16 December 2017

Quote of the day - Roger Scruton on the British elite...

Hard to think of a better summation of the braying, negative politics now prosecuted by Britain's establishment elite:
A large part of the political class, and seemingly a sizeable proportion of the country’s educated elite, have distanced themselves from the majority of the country. Never in modern times has there been such an overt and even contemptuous attempt to deny the legitimacy of a popular vote. Edmund Burke in the 1790s gave credit for our freedoms to ‘the wisdom of unlettered men’; William Ewart Gladstone believed that ordinary voters ensured the morality of government; the great French political theorist Alexis de Tocqueville realised that everyday experience enabled people to make sensible choices. But today, some prominent voices imply that only those with university degrees have opinions worth listening to. We might be back in the 1860s, when the Liberal MP Robert Lowe, who opposed giving working men the vote, sneered that ‘you should prevail upon our future masters to learn their letters’.
Absolutely - the rest of the article's good too.

Should Council's be doing this?

I understand the financial imperative for local authorities to seek investments that will provide (possibly) assured future income. But there is a point at which you have to ask whether using the Public Works Loan Board (PWLB) to invest in commercial property is either fair or the proper use of such borrowing:
Through this innovative partnership, local authorities borrow money from central Government via the Public Works Loan board at a fixed low interest rate and regenerate surplus land that they own by building a Travelodge hotel as either a stand-alone project or as part of a mixed-use development. Not only does this create jobs and boost the local economy but it also provides a substantial return of profit for the council.
It looks great, doesn't it? After all the commercial interest (Travelodge in this case but it could be other businesses) gets access to cheaper finance than would be the case had they borrowed from normal commercial sources. And the Council gets that much vaunted 'regeneration' and an income from owning the freehold. It all seems like a brilliant idea but it does raise questions especially where the deal is less of a partnership that the one described here.

The first question is how local authorities with preferential borrowing rates and a benign tax environment are affecting the property market, especially for the sorts of investment - shopping malls, car parks, supermarket sites and so forth - that are favoured because of their (hopefully) reliable income. It may well be the case that the value of these assets is inflated by the capacity of local councils to invest larger sums given low interest rates on their borrowing.

The second question is whether the PWLB exists for the purpose of commercial property investment - especially the sort of investment Bradford Council has undertaken by simply buying an existing car park for several million quid. Surely the operation of the PWLB shouldn't be merely 'prudential' (does the ground rent exceed the cost of borrowing) but should contain some recognisable social value.

Finally, do local councils have the expertise to engage in this sort of property investment - what looks like low risk may turn out to be more problematic. Imagine buying up a freehold only to find that the income from ground rent dries up or becomes difficult to collect? Local councils are looking for long term income here without necessarily appreciating how market and social change will affect that long run - what happens to car parks in a world of self-drive cars? Do AirBnB type models undermine the budget hotel? And how will the medium term play out in the world of retail letting?

Councils will, of course, turn round and say, 'but we've no choice as we've no money'. This merely returns to the original driver of such investments - falling council revenue budgets - while the risks associated with such strategies are unclear and the impact on property markets elsewhere store up further problems. And this is all before we consider how many billions councils will add to public borrowing.

Should councils be doing this?


Monday, 11 December 2017

Everything wrong with planning in one paragraph...

This is California but don't let's pretend it's any better here in England:
Mandatory parking requirements, sidewalks, curb cuts, fire lanes, on site stormwater management, handicapped accessibility, draught tolerant native plantings… It’s a very long list that totaled $340,000 worth of work. They only paid $245,000 for the entire property. And that’s before they even started bringing the building itself up to code for their intended use. Guess what? They decided not to open the bakery or brewery. Big surprise.
Sanphillippo goes on to cite example after examle of how planning and regulatory codes stop things from happening - leaving unused buildings slowly rotting in valueless environments because fancy urban experts wandered round pretending that there's some magical value in those buildings that aren't being used, won't get used and will stay empty unless you get creative and flexible.

I'm in Bradford. This is half our problem.


Thursday, 7 December 2017

No Sadiq, upzoning and densification don't resolve housing costs

You need 'urbanized area expansion' too:
The idea that the Bay Area might build more housing on greenfield sites – single or multifamily – isn’t even contemplated. Nor does the piece cite examples of where large scale infill densification actually rendered housing affordable in the absence of new greenfield construction. I’m not aware of any such cases.

That’s not to say that upzoning or densification are a bad things. I would support upzoning and building more infill in nodes proximate to transit stations. (I also think we should be honest that our intent in this is in fact to change the character of the neighborhood). But if you’re taking urbanized area expansion off the table, don’t ever expect to bring housing prices down materially.
No new building land, no fall in house prices relative to earnings.


Quote of the day: On hanging out

Fast food shops provide a place for kids to hang out:
Having saved the children from the perils of walking to school and active play we are surprised that they are fat. In fact I suspect that half the appeal of fast food joints to schoolchildren is not the food per se; rather it is the chance to hang out with their friends and make minor decisions about what they want to do next without adults looming over them.
At my school we weren't allowed (below sixth form) to leave the grounds at lunchtime. Each day a precious few passes were granted to fifth formers - we could, if we secured one of these passes, go as far as Crown Point (about 400 yards from the school gates) where there was a convenient cafe.

The other part of the quote is just as pertinent - children have few opportunities to be children, everything has to be managed, organised, supervised and monitored. The idea of just going out to play has gone. Worse still, we tend now to treat children just hanging out as pretty much anti-social behaviour.


Sunday, 3 December 2017

Quote of the day: Churchill's eulogy for Chamberlain

Brilliant this:
"It fell to Neville Chamberlain in one of the supreme crises of the world to be contradicted by events, to be disappointed in his hopes, and to be deceived and cheated by a wicked man. But what were these hopes in which he was disappointed? What were these wishes in which he was frustrated? What was that faith that was abused? They were surely among the most noble and benevolent instincts of the human heart—the love of peace, the toil for peace, the strife for peace, the pursuit of peace, even at great peril, and certainly to the utter disdain of popularity or clamour. Whatever else history may or may not say about these terrible, tremendous years, we can be sure that Neville Chamberlain acted with perfect sincerity according to his lights and strove to the utmost of his capacity and authority, which were powerful, to save the world from the awful, devastating struggle in which we are now engaged. This alone will stand him in good stead as far as what is called the verdict of history is concerned."
The search for peace is sometimes in vain but it is never wrong.


Wednesday, 29 November 2017

The London Plan - building a playground for the elite

Today, the Mayor of London published his "London Plan", a strategic look at development in the world's greatest city (except for Bradford, of course, but we hide our light under a bushel and don't call ourselves a city any more despite being one):
It's a strategic plan which shapes how London evolves and develops. All planning decisions should follow London Plan policies, and it sets a policy framework for local plans across London.
Exciting. And there will be some good analyses of the plan from assorted consultants, lobby groups and academics over the next few months as its consultation plays out. The Mayor - as these sort of people are wont to do - is bigging up the Plan:
“I am using all of the powers at my disposal to tackle the housing crisis head on, removing ineffective constraints on homebuilders so we make the most of precious land in our capital,”
I gather the Mayor went on to talk about "tearing up" planning rules that prevent housing development (while proposing new rules to stop people opening businesses in case children might get tubby). There's going to be 650,000 new homes rammed into an already crowded city, piled up on top of railway stations, stuffed into gardens, perched on top of shopping parades. Densification is the order of the day - London, in housing terms becomes Mr Creosote. After all, even the Campaign for the Protection of Rural England - NIMBY central - think the plan is ace. CRPE tweeted:
We're pleased to see a commitment to protecting and enhancing the Green Belt from @SadiqKhan in his draft London Plan. A protected and thriving Green Belt is just as important for our cities as our countryside.
OK, so they tweeted this with an attached photograph of a view across Windermere - about as far from London as it's possible to be and stay in England - but the CPRE are clearly happy.

The thing is that this is the problem. London isn't so much overheating as burning to a cinder, at least in housing terms. Yet the Mayor smiles saying, 'we won't touch the Green Belt, heavens no, that might cost me votes'. And the result of this is what geographers, Joel Kotkin and Wendell Cox call a "playground for elites":
Once exemplars of middle-class advancement, most major American cities are now typified by a “barbell economy,” divided between well-paid professionals and lower-paid service workers. As early as the 1970s, notes the Brookings Institution, middle-income neighborhoods began to shrink more dramatically in inner cities than anywhere else—and the phenomenon has continued. Today, in virtually all U.S. metro areas, the inner cores are more unequal than their corresponding suburbs, observes geographer Daniel Herz.
For London, the sort of middle income places I was brought up in (Addiscombe between Beckenham and Croydon) aren't really middle income places these days. The cramped - for a family of six large and loud people - three-bed semi we lived in would now sell for £400,000 or more, way beyond the means of the sort of people doing a middling sort of job in an insurance company like my Dad did back in the 1960s. These days, couples like my Mum and Dad aren't having families in London because they can't afford it.

What London's Mayor doesn't understand (something he shares with his left of centre mayoral colleagues in Barcelona, New York and San Francisco) is that the policies he thinks, to use a Blairite term, triangulate between the need for housing and the NIMBYs are the very policies that create the rising prices and rising rents, that make for that "barbell economy", and that make a place like London increasingly dysfunctional. Urban containment - zoning restrictions, densification, focus on what the Yanks call transit loci - is the problem not the solution. It's sustained by the fact that those childless younger people having fun in the city can't understand that their loud, brash and busy lives are a fin de si├Ęcle.
The suburbs, consigned to the dustbin of history by many urban boosters, have rebounded from the Great Recession. Demographer Jed Kolko, analyzing the most recent census numbers, suggests that most big cities’ population growth now lags their suburbs, which have accounted for over 80 percent of metropolitan expansion since 2011. Even where the urban-core renaissance has been strongest, ominous signs abound.
For London, those suburbs are no longer Grove Park, Eltham or Chiswick but Milton Keynes, Ashford, Basingstoke and Reading. And:
Nearly 80 percent of all job growth since 2010 has occurred in suburbs and exurbs (see chart, page 45). Most tech growth takes place not in the urban core, as widely suggested, but in dispersed urban environments, from Silicon Valley to Austin to Raleigh. Despite the much-ballyhooed shift in small executive headquarters to some core cities, the most rapid expansion of professional business-service employment continues to happen largely in low-density metropolitan areas...
Put simply, failing to grasp the urban containment nettle will be fine for London short to medium term - it has the advantage of being the world's top financial centre and having the UK government (sort of New York and Washington combined) - but not facing up to this problem will do just what Kotkin and Cox describe in New York, Seattle and San Francisco, create a playground for the rich elite serviced by a low paid population living in a city they can't afford.