With the coalition’s term nearly up, and an end to Boris Johnson’s mayoralty not far behind, it’s fair to conclude that Londoners in search of an affordable home have little to thank them for.
Alongside building new council homes, local authorities like Islington, where I’m a Labour councillor, have spent recent years using our planning powers to get affordable housing in new developments. But we’ve been fighting against a mayor and government who have chosen to methodically dismantle affordable housing in the planning system.
They’ve reversed a trend that began in 1992 when the government of the day, averse to the state building homes directly, used planning policy to get affordable homes from the private sector. An early legal challenge to this principle was defeated in the Court of Appeal, and the Labour government elected in 1997 strengthened it while in office. In the 2000s, London mayor Ken Livingstone put his London Plan to bold use by requiring 50 per cent of the capital’s new homes to be affordable.
But then Boris Johnson came to City Hall, and the coalition government came to Westminster. Not only have they been averse to greater public sector building; they also believe planning policies that interfere in the market should be sidelined. And their prime target, and the prime irritant to both them and many of their friends in the industry, was the requirement for affordable housing.
So it came as no surprise that, soon after Johnson was elected mayor in 2008, he scrapped Livingstone’s 50 per cent target. Two years later, the new Conservative Chancellor undermined the essence of affordable housing by allowing “affordable rents” to be up to 80 per cent of the market rate. (By comparison, social rents in my borough average around 30%).
In 2012, the new National Planning Policy Framework sidelined affordable housing still further, not least by putting financial viability centre-stage in development. Viability wizardry, that is often complex but rarely transparent, is now routinely used to justify reducing affordable housing numbers: by underestimating sales values, say, or overstating costs like land.
We saw these changes to the planning system exploited at full-throttle by landowner Royal Mail at Mount Pleasant. It applied to us speculatively (there was no developer) with an application that at one point offered as little as 12 per cent affordable housing, alongside “affordable” rents reportedly up to £2,800 per month. To justify this, it used viability trickery that skewed numbers including an overstated land value.
Just to be clear about the implication of that last point: Royal Mail, as planning applicant, was justifying less affordable housing partly on the basis of Royal Mail, as landowner, receiving more money for the land. Seriously. We fought them tooth and nail, but at the request of Royal Mail, Boris Johnson took the application out of our hands and waved it through.
Even as Mount Pleasant was making its way through the planning system, yet more changes were hacking away at councils’ ability to insist on affordable housing. Since 2013, the government has allowed developers who already have planning permission to go back to councils to renegotiate the affordable housing requirements downwards on viability grounds. Meanwhile, they have allowed offices to be converted into flats with no need for planning permission at all – and thus with no affordable housing.
In boroughs like Islington, this change to office conversion rules has spurred developers chasing soaring residential values to evict businesses and charities to make way for private flats. We threatened legal action and won protection for some of the offices in my borough – yet the government now wants to extend this policy to all industrial buildings. And whilst the very centre of London (including the City and West End) has so far had an exemption, the government intends to scrap this next year: even the Gherkin and Cheesegrater could be flipped to flats with no planning permission (and no affordable housing, of course).
Most recently, as 2014 drew to a close, the government said it would stop councils claiming money towards affordable housing from small developments. That would a policy through which Islington has accumulated over £8m in just two years, with only a handful of quibbles from developers.
Ministers also brought in a new wheeze – “vacant building credits” – which seem to allow developers to skip affordable housing on new floorspace, so long as it’s equivalent to vacant floorspace that already exists on their site. It’s really not clear how this last policy will work; but however the cards fall, it will mean fewer affordable homes.
All these changes have conspired to make it far harder for willing politicians in London to secure affordable housing through the planning system. We’ve come a long way from the relatively halcyon days of a decade ago, when councils and developers both largely knew what affordable housing was, when there were clear targets, and when exceptions were limited.
With political support, the pendulum has truly swung in the developers’ and landowners’ favour – putting profits and land values ahead of genuinely-affordable homes. Even when local councils stick to their guns, developers can be confident of a sympathetic hearing if they ask the mayor to call their planning application in, or if they appeal a locally-refused application to the Secretary of State’s permissive planning inspectorate.
We must swing the pendulum back. A new government and Mayor should help councils build. The historical record shows we need an active public sector if we’re going to build enough new and affordable homes – but it should also reset the terms for dealing with developers, through clear affordable housing requirements that are robustly enforced.
An approach like this will adjust land values down, which of course will lead some to complain. But if we can’t accept land values falling, then we could never introduce any planning obligations. At the moment, landowners know they can pitch for a huge windfall on their land; and the developer who buys it can be confident they will meet this cost and still make their profit by aggressively squeezing affordable housing out.
If we’re going to build the homes that Londoners actually need, a public home-building programme needs to sit alongside an approach to development that is radically different from where we are now. That means we’re going to have to be clear what homes we want, clear how we’re going to get them – and clear when to stare our opponents down.
Cllr James Murray is Islington Council’s executive member for housing and development, and a member of the Labour party.
