The "Tesco riots" in Bristol have led to yet another round of supermarket bashing.
Writing in the Guardian, Peter Wilby argues that small shops generate positive externalities on their community and that because of this politicians should adopt policies to "partially re-create, and preserve what is left of, the independent retail sector through, for example, [through] tax concessions; a community right to take over or find buyers for threatened businesses; and enhanced powers for local councils to protect retail competitiveness."
Would enhanced powers for local councils help? Research by CEP affiliate Raeffaela Sadun suggests Mr Wilby might want to be careful what he wishes for. She writes: "In 1996, new regulations made it much harder for UK supermarkets and other retailers to develop new out-of-town outlets – so-called ‘big boxes’. In part, these regulations were supposed to ‘save the traditional British High Street’ by protecting small retailers. [My research] shows that they might have actually accelerated the decline of independent stores." The problem, in short, was that restricting out of town development led to the growth of smaller store concepts ('metros', 'locals' etc) which more directly competed with independent retailers. Expect all kinds of other unintended consequences if we decided to come up with a new way of allowing local councils to 'protect' independent retailers.
CEP Urban and Spatial Programme Blog (formerly SERC)
Wednesday, 4 May 2011
Tuesday, 3 May 2011
Football Stadiums
SERC affiliate Gabriel Ahlfeldt has been doing some interesting work on the impact of football stadiums on local house prices.
Looking at developments at Wembley and at Arsenal, they find that new stadiums have a significant positive effect on house prices. Does this mean that the NIMBYs are wrong when they oppose this kind of development? Not necessarily, because the evidence tells us only that they receive a financial gain in terms of house prices (and that this exceeds construction costs). It is possible that this financial gain doesn't sufficiently compensate home owners for the added inconvenience of larger crowds (assuming the redesign increases capacity). Of course, although home owners are usually more vocal, larger crowds and increased house prices will certainly make renters worse off. The other caveat is that this research predominantly provides evidence relating to redevelopment of an existing stadium.
Completely new developments generate additional issues that are much harder to assess. The authors try to tackle this issue, by considering the impact on housing near to Arsenal's old ground (house prices fall) but I find this a little harder to interpret. I can see that a view of an attractive stadium might partially offset the inconvenience of matchday crowds but I find it hard to see why the removal of crowds from areas around the old ground shouldn't be positively capitalised in to house prices.
For those of you who want to read further, the underlying research paper will shortly be available as a SERC discussion paper.
Looking at developments at Wembley and at Arsenal, they find that new stadiums have a significant positive effect on house prices. Does this mean that the NIMBYs are wrong when they oppose this kind of development? Not necessarily, because the evidence tells us only that they receive a financial gain in terms of house prices (and that this exceeds construction costs). It is possible that this financial gain doesn't sufficiently compensate home owners for the added inconvenience of larger crowds (assuming the redesign increases capacity). Of course, although home owners are usually more vocal, larger crowds and increased house prices will certainly make renters worse off. The other caveat is that this research predominantly provides evidence relating to redevelopment of an existing stadium.
Completely new developments generate additional issues that are much harder to assess. The authors try to tackle this issue, by considering the impact on housing near to Arsenal's old ground (house prices fall) but I find this a little harder to interpret. I can see that a view of an attractive stadium might partially offset the inconvenience of matchday crowds but I find it hard to see why the removal of crowds from areas around the old ground shouldn't be positively capitalised in to house prices.
For those of you who want to read further, the underlying research paper will shortly be available as a SERC discussion paper.
Thursday, 28 April 2011
(English) Heritage and Cities
A couple of weeks ago I wrote about the need for new (tall) developments in our more successful cities.
I was reflecting on this issue while reading about the history of London (specifically Peter Ackroyd's entertaining "London: The biography"). Both expansion and redevelopment appear to have been crucial in explaining the continued success of London. When London became increasingly constrained by the physical boundary of the city wall, living conditions deteriorated rapidly (as illustrated in nauseating detail by the recent BBC series on Filthy Cities). Expanding beyond the walls was thus crucial for the continued expansion of London. The parallels with the modern green belt are obvious.
Redevelopment has also been important, perhaps best exemplified by the transformation of the Docklands and Canary Wharf. But London's long history throws up an important tension - how do we balance the needs of the changing city against a desire to preserve the heritage that makes London special?
I don't yet have a good answer, but the more I read of debates around redevelopment in London the more convinced I am that the current system may not provide a satisfactory one. To take just one example Make's proposed redevelopment scheme at Broadgate just received planning permission despite the possibility that English Heritage were about to list (i.e. protect from redevelopment) the entire Broadgate office campus. The new scheme will double the amount of floor space previously provided on this central London site. It's conceivable that London would actually benefit from an even larger new building on the site but the controversy around the development has focused almost exclusively on the aesthetics of the new and existing buildings. If English Heritage had listed the whole campus even this limited increase in central London floor space would have been blocked.
Many economists, this one included, may not have much to contribute on the aesthetic debates (my personal opinion, for what it is worth, is that the scheme will replace one fairly ugly looking set of buildings with a new bigger building that's still pretty ugly). But it does raise the question of the right institutional set up for balancing the need for change against the importance of preservation. The danger of our current set up is that it is unclear whether the constraints imposed on the listing system for buildings achieve this balance. Ed Glaeser suggests imposing a strict limit on the number of buildings that could be protected. Adding a new one would mean removing something else from the list. There are clearly other solutions, but the importance of change and growth in cities suggests this is an area which would benefit from further debate and analysis.
I was reflecting on this issue while reading about the history of London (specifically Peter Ackroyd's entertaining "London: The biography"). Both expansion and redevelopment appear to have been crucial in explaining the continued success of London. When London became increasingly constrained by the physical boundary of the city wall, living conditions deteriorated rapidly (as illustrated in nauseating detail by the recent BBC series on Filthy Cities). Expanding beyond the walls was thus crucial for the continued expansion of London. The parallels with the modern green belt are obvious.
Redevelopment has also been important, perhaps best exemplified by the transformation of the Docklands and Canary Wharf. But London's long history throws up an important tension - how do we balance the needs of the changing city against a desire to preserve the heritage that makes London special?
I don't yet have a good answer, but the more I read of debates around redevelopment in London the more convinced I am that the current system may not provide a satisfactory one. To take just one example Make's proposed redevelopment scheme at Broadgate just received planning permission despite the possibility that English Heritage were about to list (i.e. protect from redevelopment) the entire Broadgate office campus. The new scheme will double the amount of floor space previously provided on this central London site. It's conceivable that London would actually benefit from an even larger new building on the site but the controversy around the development has focused almost exclusively on the aesthetics of the new and existing buildings. If English Heritage had listed the whole campus even this limited increase in central London floor space would have been blocked.
Many economists, this one included, may not have much to contribute on the aesthetic debates (my personal opinion, for what it is worth, is that the scheme will replace one fairly ugly looking set of buildings with a new bigger building that's still pretty ugly). But it does raise the question of the right institutional set up for balancing the need for change against the importance of preservation. The danger of our current set up is that it is unclear whether the constraints imposed on the listing system for buildings achieve this balance. Ed Glaeser suggests imposing a strict limit on the number of buildings that could be protected. Adding a new one would mean removing something else from the list. There are clearly other solutions, but the importance of change and growth in cities suggests this is an area which would benefit from further debate and analysis.
Wednesday, 27 April 2011
Where to build?
I liked this sequence of maps from Audacity showing land use restrictions in England. The website contains other interesting facts and figures, although I am unconvinced that the solution to our current housing problem lies in forming 250 New Towns. I would rather see the planning system more responsive to price signals, a reform which would tend to favour development near to our (relatively) successful urban areas.
Tuesday, 26 April 2011
The Campaign for High Speed Rail
David Begg (pro) and Jerry Marshall (anti) discussed high speed rail on the Today programme this morning.
Professor Begg wants to dispel myths about high speed rail - the most significant being that 'Britain is too small for high speed rail'. He suggests that the world's 'most successful' high speed rail line runs between Frankfurt and Koln. This may be true, but as my colleague Gabriel Ahlfeldt points out Frankfurt-Koln cut journey times from 2 hours 15 minutes to 59 minutes which is an order of magnitude greater than the time savings for HS2 to either Birmingham or Manchester.
Professor Begg thinks the costs of HS2 are being overstated by focusing on the total costs ignoring the split between revenues and subsidies (fares reduce costs to the government from 30bn to 17bn). The who pays question is important, but it is still the case that the total cost is 30bn.
These costs need to be compared to benefits. Mr Marshall, thinks that these benefits (estimated at 44bn) are being overstated because they are (partly) calculated by turning time savings on HS2 in to money by 'valuing' the time that people save. Mr Marshall thinks the number used to value the time savings is too high because it assumes people are unproductive on trains. Professor Begg doesn't appear to disagree on this point but he thinks the benefits are understated because the number of passengers will be higher than predicted (arguing that HS2 uses conservative numbers for passenger growth). There are other railway experts, however, that think that HS2 has overstated passenger growth by using more recent number where passenger growth has been large.
Personally, one point in the argument summed up the whole thing to me - Begg's observation that he and Marshall sit at opposite ends of the spectrum on HS2. To my mind, this is precisely the problem. Both the costs and benefits of HS2 are large and uncertain. I prefer instead to focus on the opportunity costs: are there things that we could be doing with 30bn that would yield a higher return than "44bn"? I think the answer is almost certainly - "yes" - in both the area of transport (more intra-city schemes) and more widely. This is why I remain sceptical on HS2.
[Disclosure: I sit on the Analytical Challenge Panel for HS2]
Professor Begg wants to dispel myths about high speed rail - the most significant being that 'Britain is too small for high speed rail'. He suggests that the world's 'most successful' high speed rail line runs between Frankfurt and Koln. This may be true, but as my colleague Gabriel Ahlfeldt points out Frankfurt-Koln cut journey times from 2 hours 15 minutes to 59 minutes which is an order of magnitude greater than the time savings for HS2 to either Birmingham or Manchester.
Professor Begg thinks the costs of HS2 are being overstated by focusing on the total costs ignoring the split between revenues and subsidies (fares reduce costs to the government from 30bn to 17bn). The who pays question is important, but it is still the case that the total cost is 30bn.
These costs need to be compared to benefits. Mr Marshall, thinks that these benefits (estimated at 44bn) are being overstated because they are (partly) calculated by turning time savings on HS2 in to money by 'valuing' the time that people save. Mr Marshall thinks the number used to value the time savings is too high because it assumes people are unproductive on trains. Professor Begg doesn't appear to disagree on this point but he thinks the benefits are understated because the number of passengers will be higher than predicted (arguing that HS2 uses conservative numbers for passenger growth). There are other railway experts, however, that think that HS2 has overstated passenger growth by using more recent number where passenger growth has been large.
Personally, one point in the argument summed up the whole thing to me - Begg's observation that he and Marshall sit at opposite ends of the spectrum on HS2. To my mind, this is precisely the problem. Both the costs and benefits of HS2 are large and uncertain. I prefer instead to focus on the opportunity costs: are there things that we could be doing with 30bn that would yield a higher return than "44bn"? I think the answer is almost certainly - "yes" - in both the area of transport (more intra-city schemes) and more widely. This is why I remain sceptical on HS2.
[Disclosure: I sit on the Analytical Challenge Panel for HS2]
Tuesday, 19 April 2011
More tall buildings needed?
In his review of Ed Glaeser's book (Triumph of the City), my colleague Olmo Silva draws attention to one of the key policy proposals - build up, not out.
UK policy in this area is mixed. Home ownership favours non-urban living (because private renting of flats eases multi-occupancy problems). Relative to the US, we have abolished mortgage interest deductions for owner occupiers (a plus) but we have many policies that push for greater home ownership (a minus). Congestion charging in London plus high fuel prices tend to push people away from suburbs built around the car towards urban friendly public transport. Public transport spending is higher in the UK than the US, although we are just about to see large falls in expenditure (and a lot of money likely wasted on high speed 2).
Planning policy in emphasising brownfield over greenfield development makes the development that occurs in cities denser, but at the risk of some development occurring away from cities that would otherwise have occurred there. The greenbelt constrains development at the edges of the cities but at the danger of "leapfrogging" resulting in long commutes by rail or car. In terms of building up, London's mayor has just reinforced restrictions on historic sight lines, while London's tallest building (the Shard) took many years to get approval.
Although more pronounced in the US, UK cities still educate a disproportionate number of our poor children. Housing policy (including supply restrictions and the emphasis on mixed use) mean that middle income families increasingly opt for non-urban homes as the only way of avoiding schools that they feel will not adequately provide for their children.
Improving urban policy in the UK will require us to grapple with these difficult issues. Unfortunately, this is likely to prove difficult for all our political parties.
UK policy in this area is mixed. Home ownership favours non-urban living (because private renting of flats eases multi-occupancy problems). Relative to the US, we have abolished mortgage interest deductions for owner occupiers (a plus) but we have many policies that push for greater home ownership (a minus). Congestion charging in London plus high fuel prices tend to push people away from suburbs built around the car towards urban friendly public transport. Public transport spending is higher in the UK than the US, although we are just about to see large falls in expenditure (and a lot of money likely wasted on high speed 2).
Planning policy in emphasising brownfield over greenfield development makes the development that occurs in cities denser, but at the risk of some development occurring away from cities that would otherwise have occurred there. The greenbelt constrains development at the edges of the cities but at the danger of "leapfrogging" resulting in long commutes by rail or car. In terms of building up, London's mayor has just reinforced restrictions on historic sight lines, while London's tallest building (the Shard) took many years to get approval.
Although more pronounced in the US, UK cities still educate a disproportionate number of our poor children. Housing policy (including supply restrictions and the emphasis on mixed use) mean that middle income families increasingly opt for non-urban homes as the only way of avoiding schools that they feel will not adequately provide for their children.
Improving urban policy in the UK will require us to grapple with these difficult issues. Unfortunately, this is likely to prove difficult for all our political parties.
Friday, 15 April 2011
Is the New Homes Bonus working?
A little over a week ago, DCLG announced the first payments under the New Homes Bonus: "Under the first cash payments for the scheme, 326 local authorities will receive a share of £200m for increasing the effective housing stock by almost 150,000 in 2010-11". In contrast, "in 2009 there were just 118,000 completions, the lowest level of house building in peacetime since 1924".
On first impressions this seems like good news. But, sadly, this is yet another of those occasions when first impressions are misleading. It took me a while to delve behind the numbers, but here is my understanding. An increase of 150,000 in the effective housing stocks may sound bigger than 118,000 completions but that first impression is misleading because those two numbers are calculated differently.
In 2010/11 the 150,000 increase in effective housing stock comprised 134,000 net additions and 16,000 empty homes brought back in to use. The government provides net additions data from 2004 onwards. They are calculated slightly differently from the figures used for the New Homes Bonus but the 129k figure for net addition in 2010/11 is close enough to the 134,000 figure reported by DCLG above to suggest the data are broadly comparable. Here is what those data show:
04/05: 186,930
05/06: 198,780
06/07: 207,370
08/09: 166,580
09/10: 128,690
So the 2010/11 figures represent the worst net addition figures for the last five years. I think the government could argue that given the recession things may have been even worse without the New Homes Bonus (although the 08/09 numbers already capture the impact of the recession) and I think it would be reasonable to see what the numbers look like next year. But certainly the picture is much more worrying than misleadingly comparing completions to net additions.
On first impressions this seems like good news. But, sadly, this is yet another of those occasions when first impressions are misleading. It took me a while to delve behind the numbers, but here is my understanding. An increase of 150,000 in the effective housing stocks may sound bigger than 118,000 completions but that first impression is misleading because those two numbers are calculated differently.
In 2010/11 the 150,000 increase in effective housing stock comprised 134,000 net additions and 16,000 empty homes brought back in to use. The government provides net additions data from 2004 onwards. They are calculated slightly differently from the figures used for the New Homes Bonus but the 129k figure for net addition in 2010/11 is close enough to the 134,000 figure reported by DCLG above to suggest the data are broadly comparable. Here is what those data show:
04/05: 186,930
05/06: 198,780
06/07: 207,370
08/09: 166,580
09/10: 128,690
So the 2010/11 figures represent the worst net addition figures for the last five years. I think the government could argue that given the recession things may have been even worse without the New Homes Bonus (although the 08/09 numbers already capture the impact of the recession) and I think it would be reasonable to see what the numbers look like next year. But certainly the picture is much more worrying than misleadingly comparing completions to net additions.
Subscribe to:
Posts (Atom)