Penfold Associates

You have to ask the question.  There are too many examples of policy initiatives that either fail to achieve their objective or have unforeseen consequences.

One very obvious example is the bedroom tax.  Its proponents argued that it would release larger properties for households that need them and would be “fairer” in relation to the way private tenants are treated.  Whether there is a grain of truth in those theories or not, it is obvious that nobody bothered to consider whether the smaller properties actually existed for under-occupiers to move into.  We know that there is not a surplus of small unit accommodation in the social housing stock so people are either stuck and pay more from limited resources or are being driven into the private sector.  Another unforeseen consequence is that some landlords are reporting it difficult to let normally attractive larger units.  The political theorisers also failed to consider the fact that many divorced or separated parents occupy property with a spare room so that their children can visit them.  The same politicians will often be the ones who extoll the virtues of family values.

Another example is direct payment of housing benefit to tenants – whether they want it or not.  This is supposed to make people more self-reliant and push back the boundaries of the “nanny state”.  In reality it will drive up rent arrears, weakening balance sheets and the ability of housing associations to raise money on preferential terms and will therefore reduce their ability to invest in the extra housing that is needed.  Looked at realistically, it will make the financial circumstances of poorer people more precarious rather than have some character-building impact.  I know that if I was struggling to exist on a very low income I would prefer my housing benefit to go straight to the landlord because it would just deal with one of the many problems confronting me.

My third example is the relaxation of permitted development rights on house extensions.  This is supposed to cut through “red tape” and boost construction activity.  In reality, this idea will have very little impact on the number of extensions built.  Reducing VAT would have that desirable impact but the Government has consistently ignored this suggestion.  The biggest impact of the relaxation of permitted development rights has been to annoy the (often) Conservative-voting neighbours of the worst sorts of house extension.  Did the Planning Minister and DCLG seriously intend this outcome?

I suppose the biggest and most notorious example is Help to Buy.  How a scheme that supports the purchase of £600,000 properties can be anything but inflationary escapes me.  The RICS and even elements of the financial services sector have issued warnings.  While the Bank of England cannot jump in and put up the base rate, it is monitoring the situation and promises to use other tools.  David Cameron has said it gives a boost to the high loan to value end of the market – but wasn’t that one of the causes of the last housing bubble?  The PM and Chancellor have dug themselves in so deep on this that they just can’t stop digging!

I could give more examples.  And if any Labour supporters reading this are feeling smug let me assure you that there is every reason to suspect that a Labour administration would produce similar examples of policy nonsense.  It is not just the Coalition parties that are capable of this. But why is it happening?

One reason is the backgrounds of the politicians themselves.  Today we have more career politicians who lack experience in the real world.  They go straight from University into policy jobs supporting politicians and lack the grounding in business, not-for-profit organizations or local government that new MPs tended to have in the past.  They get an idea and view it in political terms without considering the practical implications – some of which may be perverse.  This situation is made worse by the fact that they spend most of their time talking to other people like themselves.

That leads to the second cause – the reliance they place on ideologically based think tanks.  These are often populated again by researchers with little real world experience.  And where do they go after working in a think tank?  Too often it is straight into Parliament.  The present Planning Minister (see permitted development example above) is a case in point.

In the past the civil service used to ask the difficult questions.  I am not sure whether they still do.  While there have been attempts to bring people in with experience from outside, I suspect that scaling down their regional presence has reduced their connection to reality.  And it does not really help the rest of the country if they only have an acute perception of the issues facing London.  There has also always been a tendency to move people when they show dangerous signs of understanding their subject!

So what can be done?  I would urge politicians to listen to practitioners more and to their professional and trade bodies.  I would also urge them to commission more research before taking giant leaps of faith.  It would be unrealistic, however, to expect them to do either if left to their own devices.  It is therefore imperative that in the period running up to the 2015 General Election people who really understand planning and housing issues put every effort into supporting the efforts of the NHF, CIH, HBF, RTPI, RICS, and others to get some realism and proper thought into the policy ideas that the main parties are developing.  In particular, they should keep asking: “But what would happen if you did that?”

Kim Penfold
January 2014