Sunday, 26 April 2015

Are we building the wrong sort of housing?



Whatever we think of the Coalition government's benefit reforms, one thing they have revealed is how short we are of one-bedroom property. Both the limit on housing benefit for under 35s and the 'spare room supplement' have acted to remind us that the fastest growing household type is the single person. Later marriage, single parenthood, divorce and longevity all mean more people living on their own. Single person households now make up 28% of UK households.

So why is it then that the house-building businesses want to build family housing? At the recent examination in public of Bradford's 'core strategy' the sessions on Wharfedale and Airedale were stuffed with developers arguing for more housing - 3-, 4- and 5-bed family homes - on greenfield sites in those valleys. There was no clamour for apartments or smaller units more suited to single people and especially the single elderly.

This might be a problem. Here's some thoughts from the USA (where the cities are increasingly filled with single households - 71% in Washington DC, 57% in New York):

The rise of singles calls in particular for more micro housing: apartments the size of studios or even smaller, and "accessory dwelling units" (think in-law cottages or garage apartments) that might be built in the back yard of existing homes. It also calls for a different model of housing where, for instance, four singles might share a communal living space adjacent to their separate units instead of each having their own living room.

The problem over there - and increasingly over here too - is that the regulatory environment (not just planning although that's the main culprit) makes it very difficult to build anything other than family housing. If we are to meet housing needs therefore, we need to escape from the current objective assessment of need methodologies since they are not taking sufficient note of that need's demographics. Just as importantly, changing our strategy to focus on hidden households (most of which are single people) means that the need to take vast slabs of open country for house-building is reduced.

None of this removes the need for planning reform but it demonstrates that the current system is designed to meet the housing needs of traditional families whereas demography tells us we need to move in a different direction. To return to Wharfedale, those family homes the developers are keen to build will sell - filling up with people moving out from Leeds and Bradford. And the housebuilders wedded to a 'buy-build-sell' development model will continue to prefer high land values sitting on their balance sheets (it reduces the competition and prevent new market entry). But inside the cities the homes those people moving to Wharfedale leave behind present a problem - feeding a private rental market but finding those unwanted family homes ever more difficult to rent.

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Saturday, 25 April 2015

In praise of the (election) workers


The last few leaflets
At the start of this seemingly interminable election campaign I was delivering 'In Touch' leaflets in Denholme. In that peculiarly Yorkshire spring precipitation that can't decide whether it's rain, snow, sleet or hail. I'd listened earlier to assorted pundits, journalists and such like holding forth about the issues in the election and social media was cluttered with gangs of smiling campaigners waving placards.

And I thought that the image of the election campaign given us by the media is pretty unrealistic. A more accurate picture of election campaigning would show me in a wind-cheater, scarfed up and shivering a little as I plod up Hillcrest Road delivering my own personal little message. And thousands of others doing likewise everywhere across the country. Not just the ones in those Twitter pics waving banners but loads of others who are delivering a few leaflets because they support the cause, because the candidate is a friend, because someone asked and they thought 'why not'.

So when you're feeling a little cynical about politics and politicians think instead about the lady delivering my leaflets up Wilsden Hill, a beautiful, almost unique collection of old agricultural buildings, workers cottages and great views. Or about the old man who delivers them round your way. Politicians (well nearly all of them - I can name a few that don't) recognise the importance of these people, listen to them and understand that they do it for a whole host of reasons.

Yesterday, as the temperature dropped and the clouds gathered in preparation for today's rain, I was delivering my leaflet in Harden. At one house a couple were sat in their summerhouse drinking tea - taking a mid-afternoon break as they put it - and we had a brief conversation. Mostly about the fact (which they hadn't appreciated) that there are local council elections on the same day as the general election but also about my lack of 'minions'. I didn't go on to explain that what 'minions' I have are, in truth, volunteers and mostly elderly. These are the people who help me campaign every year and their number and capability diminishes with each passing year.

When I was first elected - 1995 by just fifteen votes - things were very different. Across the four villages of Bingley Rural we ran a full polling day campaign having canvassed more than half the ward. Every polling station (bar two with only 150 electors each) was manned from 8am through to 8pm, numbers were collected and crossed off. And we knocked up and pulled out - even down to one colleague baby-sitting while someone went to vote and another driving someone to vote as she'd had one or two too many to drink. I remind everyone that this is why I was elected on that day.

On 7th May the same applies - there will be MPs and councillors elected because of those men and women who plodded up damp drives, gashed their fingers on rusty gates, fought the evil that is the English letterbox and braved 'beware of the dog' signs. For sure, all the nice comfortable warm folk clicking on things in their living rooms will have helped too but the real slog done by the party workers come rain or shine is the reason why safe seats stay as safe seats, why marginals are held against the swing and why people we didn't think will get elected get elected.

There are too few of these people - we couldn't muster the numbers to run a full, old-fashioned polling day campaign these days - and the national party headquarters, filled with young folk who've never done one of those campaigns, are not interested in finding more. Yet those people who do that delivering, canvassing, writing addresses, sticking on stamps and bashing in poster stakes are the political party - without them it's just a badge or a brand sustained by large donations or, worse, through state funding.

So, before all the different political leaders, campaign managers and political strategists start taking credit (or blame) for the election result, let's celebrate those ordinary election workers who delivered, rang, stuffed and knocked. They are better and more important than all the David Axelrod and Lynton Crosby sorts that litter our political scene. Well done - whatever party it's for- and thank you.

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Friday, 24 April 2015

Housing: 'managed sprawl' rather than rent controls and public subsidy

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For decades the UK had rent controls. Mostly we didn't call it fixing rents, we called it 'council housing' and we subsidised those rents. Some councils deliberately - for specific and ideological reasons - ran a low rent policy building up huge gaps between the rents that council tenants were paying and the level of market rents (in a dwindling stock of private rented property). As with all price fixing the result of this was a distorted market - local councils couldn't afford to build new homes because the rental income wasn't sufficient to justify borrowing, there was no private rented sector worth mentioning and home ownership was seen as the gold standard.

With right-to-buy the council housing business changed overnight. Tenants who were in work took the discounts and bought their homes. And largely carried on living in those homes. Capital constraints on councils and tight housing revenue accounts meant that new council houses became ever more like hen's teeth especially given central government's preference for housing associations and other 'third sector' housing providers. The result was that council housing - more correctly called 'social housing' by this time - was ever more residualised, increasingly filled with the least well-off and those most reliant on benefits.

By 1997 the seeds for our housing 'crisis' were in place as house building (specifically in places with economic, job and population growth) had slowed as a result of a sclerotic planning system, a rented sector that didn't generate surplus for reinvestment and a development sector wedded to levering high land values rather than efficient construction. The result of this was the explosion in house values - between 1997 and 2010 these values nearly tripled - and these homes became less affordable. Without access to social housing, workers began to rent - between 2001 and 2011 the number of people renting in the private sector nearly doubled as the market met the housing need of people who couldn't afford to buy and failed to qualify for social housing.

We now have the situation where, particularly in London, the scale of the private rental sector is such that regulatory intervention - a re-tightening of the regulations liberalised in the 1980s - is being discussed. Much of the debate relates to quality and to preventing the abuse of vulnerable tenants by unscrupulous landlords. There's a secondary part of the debate that asks whether the type of tenancy (the private sector is dominated by short-term tenancies) merits reform to give people renting a little more security. These are pretty sensible debates with arguments on both sides but where there's a real desire to improve standards within an important housing sector.

But there's a growing call for government - local or national - to intervene in the setting of rents, to implement rent controls:

We need to start getting serious about how to address the housing crisis in London, because it’s not just those on minimum wage or housing benefit that are struggling to afford to live here. Teachers, civil servants, retailers and service workers essential to the running of our city are all threatened by the crisis. Though not a silver bullet that will singlehandedly solve the crisis, we should think about how rent controls – done sensibly – can be part of a comprehensive plan to ensure that all Londoners can afford a home in our city.

And such proposals, especially wrapped in Harvard-educated management-speak as David Lammy does here, are something of a temptation. It seems so simple. Yet when we step away from the moderate, reasonable argument the truth remains - limiting rents must always mean limiting the market income which will always mean that there is less supply. And London has enough of a supply problem resulting from decades of indecision on housing and the continued - and wonderful - success of the city as a driver of economic growth.

To help us understand this, we need only look at the USA where big cities like New York, Los Angeles, Washington DC and San Francisco have a long history of rent controls as a housing policy tool:

But rent control mainly makes housing expensive by taking units off the market via high occupancy rates and low turnover. Tenants who don’t want to lose their good deal stay in their apartments. This means that newcomers—or anyone not lucky enough to have a rent-controlled unit (including prospective homebuyers)—must compete for a more limited stock of market-rate units. If New York City abolished rent regulations today, it would double the number of available market-rate units, meaning housing costs would be shared more equitably across the population. As things stand now, many people pay more, because so many others pay less.

The evidence is that, far from rent controls acting to reduce housing costs, the effect is to make the housing market even more static than it was already. In New York - and we'll be familiar with this approach in the UK - the preferred tool now is to require that developers of (overpriced because of rent-controls elsewhere in the market) new homes make a proportion of those homes 'affordable'. The problem is that, even without enforced affordable provision, the regulatory cost of building in the city - and London isn't so very different - is verging on prohibitive.

The affordability problem remains a challenge -  as the American Planning Association  discussed recently in Seattle:

The shortfall of affordable housing arguably would take 50 years to fill at the current rate of production in San Francisco—the very frustration expressed by Rahaim. It might take 25 years in New York City. But betting it all on increasing supply is fraught, too. It’s expensive to build in the city, and costlier still to build increased height and density without considering the needed infrastructure to support those kinds of environments.

But the answer does lie in making land available linked to good transport links. It won't make London's housing as cheap as housing in Barnsley but there is a need to open up the possibility of what we might term 'managed sprawl' - allowing the expansion of cities so as to release some of the pressure on the inner boroughs.

In a broader view, a more regional approach, with polycentric, high-density centers supported by transit, has the advantage of breaking out of the borders of the super-hot markets.

Right now our housing debate lacks balance - too much stress is given to managing price within a sclerotic, dysfunctional housing market rather than on reduced the things that slow down that market, add cost and prevent affordable development.

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Thursday, 23 April 2015

England, my England...




It is St George's Day. England's Day.

So, dear readers, it's perhaps time to ask again what it means to be English. Are we echoing some distant past of mythical purity where only those like me who can trace ancestry in England back into the mists of time are allowed to be English:

His dead are in the churchyard—thirty generations laid.
Their names were old in history when Domesday Book was made;
And the passion and the piety and prowess of his line
Have seeded, rooted, fruited in some land the Law calls mine.

We can hark back to some Saxon ancestry but that doesn't define what it means to be English except in some unhelpfully narrow ethno-cultural manner. And Englishness can't be defined (and Kipling doesn't suggest this is so either) by those genetic roots but rather it comes from the layers of history bringing us to where we are today - a beautiful country filled with creative people. People who should be proud of that English heritage but who have lost the words and the song to make that so:

And everyone stares at a great big screen
Overpaid soccer stars, prancing teens
Australian soap, American rap
Estuary English, baseball caps

And we learn be ashamed of all we walk
Of the way we look, at the way we talk
Without our stories or our songs

How will we know where we come from?
I've lost St. George in the Union Jack
That's my flag too and I want it back

The English seem at times so diverse that these traditions are without meaning. We stress - rightly - our sponge-like absorbtion of other cultures, each time with our own sweet twist. We eat curry, pizza, kebabs and hamburgers washed down with lager, white wine and coca-cola. And don't see these things as diminishing our English identity.

For many years that English identity - for reasons of power and politics - was buried in the idea of Britain. We were brought up to believe ourselves - speech, leeks and kilts aside - essentially the same as the Scots and Welsh. Missing the truth that those Scots and Welsh didn't see it that way - for them Britishness and Englishness were so entwined as to oppress their real identity. Now the English are learning that the Britishness of our establishment meant the same subversion of identity - a subversion made worse by those who took English to mean white and Saxon.

England is built on the lives and contribution of millions. Not kings and prime ministers but ordinary men and women. When we look out across the moors of Northern England we should recall the men who shaped that landscape. As we view the civilised farmland, the kempt landscape, of Surrey we should remember the people whose work shaped that place. And as we stand in some city street perhaps take a moment to consider the folk who built that place - the cathedral, the shops, the streets and the parks. And as we do this consider again William Henry's words:

WHAT have I done for you,
England, my England?
What is there I would not do,
England, my own?

For we - all of us regardless of race or faith or hisory - are England. All of us. And the future of England is for us to choose, to place another layer on the work of "the mere uncounted folk" who built the England we enjoy. Today is St George's Day - our day and the day of all those ordinary men and women who made this wonderful place. A place as close to heaven on earth as you'll find.

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Wednesday, 22 April 2015

My Nine-point Manifesto...

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I know pompous of me. But here is the sort of agenda we need - my manifesto as it were:

1. An education system that gives a more equal chance to children of similar intelligence
2. A welfare system that encourages and rewards work, discourages idleness and comforts misfortune
3. Health care that is built around people’s needs, is flexible and treats us like humans rather than numbers
4. A tax system that doesn’t take money from the poor to give to the relatively well-off
5. A system of public finances that gives priority to the needs of all and the concerns of the poor, sick and unlucky rather than the pastimes of the well off
6. A housing system which doesn’t feature people on £50,000 plus living in subsidised housing while others sleep in boxes under bridges
7. Scrapping an international trading system where our goods are freely traded while poor countries goods are barred by tariffs and import controls
8. International relations founded on conversation rather than the aggressive, post-colonial exporting of “democracy” to places without any effective, functioning government of any sort
9. Guarantees and protection for free speech and free assembly, a place where the balance between liberty and security tips strongly towards freedom

To do all this I suspect we'd need to leave the EU, spread power and decision-making far wider and trust people more than we do at present. But these are ambitions - government is a difficult business at any level and it's the day-to-day choices that matter, 'events' as Macmillan called it, more than the grand policies or vast pages of law.

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So cut the basic rate of income tax?

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Tax cuts stimulate employment best when they benefit the lowest paid most. Or rather as is pointed out here, the bottom 90% of taxpayers. So while I absolutely support taking the poorest out of tax altogether - indeed I would support an ambition that no-one below median income should pay income tax - a basic rate cut would be a real boost for growth and jobs;

Variation in the income distribution across U.S. states and federal tax changes generate variation in regional tax shocks that I exploit to test for heterogeneous effects. I find that the positive relationship between tax cuts and employment growth is largely driven by tax cuts for lower-income groups and that the effect of tax cuts for the top 10% on employment growth is small.

But then we knew tax cuts were a good thing didn't we?

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Monday, 20 April 2015

A reminder why we have an international aid budget

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I get the anger at there being cuts at home while the budget for international aid has been protected. And, for the record, I don't support the mandated 0.7%, the de facto hypothecation of the budget or the preference for bilateral deals. But having an international aid budget isn't simply a case of us rich folk being nice to poor people in Africa. Investing in those places - helping them develop - is absolutely in our interests.

As we've been reminded:

Whether it was the Mediterranean's deadliest refugee drowning in decades remains to be seen. But it was certainly terrible, and its political effects could spread far. One of the survivors of a refugee boat that capsized late on the night of April 18th in the waters between Libya and the Italian island of Lampedusa said that at least 700 people had been on board. Just 28 have been rescued so far. That would make it by far the worst maritime disaster in the Mediterranean since the second world war.

A great deal has been made of the decision by the EU (and individual states including Britain) to end "planned search and rescue operations in the Mediterranean" because it was believed that fishing refugees from out of the sea only encouraged more of them to attempt the risky crossing. I do not support this policy - it is quite simply inhumane. I remember the suggestion - I think from P J O'Rourke - that instead of turning these folk away, we should be on the beach with a towel and a passport. We keep saying how we want risk-takers and people with get up and go - isn't that the very definition of these refugees?

The solution, if that's the right word, is for there to be less reason to leave Africa in the first place. And while war and the depredations of lousy government are part of the story, economic opportunity is central - just like us, these Africans are seeking to better their lives and are taking enormous risks in doing so.

And this is why we have an aid budget. It's also why that aid is better directed through multilateral agencies like the World Bank and International Monetary Fund than through cosy bilateral deals or, worst of all, through the agency of well-meaning but wrong-headed NGOs. Right now our aid programmes are a mixture of anti-globalist nonsense, the subsidising of rural poverty and a few strong infrastructure programmes (mostly around health and education). It's not the size of the budget but its direction that is the problem - we need investment that comes with strings, with a bit of that Washington Consensus that the left are so touchy about but which has been the single biggest reason for reductions in world poverty.

So long as the gap between opportunities here and opportunities there exists people will try to arbitrage the gap - some will be ordinary economic migrants, students and the like. But there's big money to be made smuggling people across borders and, as the Americans have found, it's almost impossible to stop people crossing those borders. So investing in those countries so they have the infrastructure needed for development makes every kind of sense if we want to prevent out richer places being a huge magnet for the billion or so folk out there who'd like a better life.

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