Strong Foundations?

The conservatives published their thinking on housing policy yesterday.

The biggest issue that housing policy needs to address is housing supply. They propose to do this by scrapping regional plans and replacing them with increased incentives to develop. The latter part of this is certainly a step in the right direction. But the incentives seem small (central government will provide matched funding of council tax on new properties for 6 years and as this is part funded by scrapping HDPG it is not all additional). It also doesn't address the crucial question of how one could convince local authorities in, say, South Manchester to build more housing that might have large benefits for the city-region as a whole. Some kind of higher level body is needed in these circumstances to internalise the (potentially large) cross boundary externalities and provide the right incentives.

At the same time, the proposal is that back gardens will cease to be brownfield while local communities will get to redefine their own green belt. I imagine the overall effect of these two changes will be to reduce the supply of land and it is not clear whether the incentives would be sufficient to overcome this.

There are proposals involve Local Housing Trusts building houses for local people. Community size can be increased by 1% per year if 90% of the local population is in favour. I assume this is aimed at rural communities. Theoretically this could help with very localised problems, although there will be strong disincentives for existing home owners that border the new development to object, so the 90% criteria could be pretty tough. I also think that local houses for local people is a very unappealing principle.

Piloting "right to move" for existing social tenants sounds interesting. Proposals for more complex intermediate shared ownership schemes are less convincing.

Finally, they will scrap HIPS but retain energy performance certificates. These will now only need to be produced once the sale is agreed but somehow it is claimed that this will still change behaviour. I would suggest more that is needed on that particular line of reasoning.

Overall, then, a mixed bag. Some interesting ideas, some marginal and a few odd ones.

Manchester: top of the league?

I was in Manchester yesterday for the launch of the Manchester Independent Economic Review (MIER).

The review argues that Manchester is the city in the North most likely to be able to raise its growth rate and, by doing so, drive growth in the North. To achieve this, it needs to make difficult policy decisions (some of which are not devolved at the moment)

I agree that there's a case for thinking that a few resurgent cities might help achieve regional growth objectives. The work on productivity differences that we did for the MIER is certainly consistent with Manchester being one of those cities (although, note, not THE city - but that's cautious academics for you).

So, to those hard policy decisions. The review identifies skills as a priority. I'm sure that's true but it is difficult to know what role local authorities might play. I think those in Manchester assume devolution here would mean control over the existing skills budget. I don't have a strong position on this (as yet), although at a minimum they could take some local expenditure which is wasted (e.g. on too many shiny new buildings) and spend more of it on skills.

Talk of shiny new buildings brings us to land use planning (for housing, commercial and transport). On housing, in particular, the local authorities have decision making power but need to come up with some credible method of collaborating. They then, within reason, need to build the kind of houses people want to live in, in the places where people want to live. (Ditto for office space). This means less brownfield and more building in South Manchester. This will be politically difficult (and also raises questions about the extent to which national planning guidelines would prevent this anyhow).

On transport, they need some strong political leadership on congestion charging. I also think that they, probably, want to convince the government that their £2.5bn of TIF projects represent much better value for money than £25bn on high speed rail (more on this in the near future). Again, both politically difficult decisions.

Do they, as the report suggests, need increased powers at city region level to achieve this? I'm not sure that the MIER makes the case for this one way or the other. Collaborative agreements, the new regional plans, and less binding national guidelines might be enough on many of the policy areas. Others would strongly disagree. I am increasingly convinced that the available evidence does not answer this question either way so expect to hear lots of people claiming the opposite.

Overall, the MIER highlights the ambitions of (some) in the city. I understand there will now be some kind of response as well as a strategic plan to take things forward. It will be interesting to see how things develop from here.