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Does your Water Come from the Cayman Islands?

30 September 2014

This month I was privileged to attend a talk at the London Review Bookshop by James Meek. James is a novelist who has recently come to new public attention through a series of articles in the London Review of Books on the implications of the UK’s privatisation programme since 1980 which has now been published as Private Island by Verso. As a novelist, James has made the usually techy subjects of sewage works, power stations and indeed housing benefit into human stories of powerful emotion. In the words of John Lanchester, ‘some of it will make you sad, some of it will make you furious, but you are guaranteed to be left feeling that you understand this country much better.’

The irony is that privatisation was supposed to make us all owners of the commanding heights of the industry of our country, and yet Meek makes the point that now a lot of our key services are in foreign hands, including foreign governments’.

But that’s enough politics you might say, and you might be right. This is a planning blog, and it deals with planning. As it happens, James Meek also has a thing or two to say about that as well, as a consequence of his interest in privatisation. Writing in the Financial Times he says “In the real world, when you strip the state of its duty to make long-term plans, or denigrate the practice, you don’t liberate citizens from planning. You make them subject to the private plans of others.”

Writing in the Financial Times James Meek says “In the real world, when you strip the state of its duty to make long-term plans, or denigrate the practice, you don’t liberate citizens from planning. You make them subject to the private plans of others.”

A key conclusion from the RTPI’s paper on Large Scale Housing is that it is shortage of infrastructure which is holding housing supply back in the UK. This infrastructure was once upon a time provided by local authorities, or local companies. The new headquarters of the Department for Communities in London was originally the site of the Gas, Light and Coke Company which provided London with town gas (from coal).

The RTPI asks for local authorities and infrastructure providers to pool resources to get housing moving. But the terms under which privatised utilities and transport undertakings operate militate against housing delivery. Regulators set binding arrangements for private companies whose main (nay, pretty much sole) purpose is to keep prices down. This means that it is not in providers’ interests to provide any infrastructure in advance, unless the regulator has agreed it. Prices are set by the regulator nationally to take account of (only) that investment to increase capacity that the regulator thinks is bound to be necessary within the next five years. Regulators are very reluctant to agree this for fear it might raise prices. And sometimes the evidence used by regulators is restricted. For example they will take account of planning permissions and – maybe – allocations in development plans which are certain to be implemented soon. Yet the problem is that you cannot grant a planning permission unless agreement has been made on how infrastructure will be provided. Someone has to make the first move on this, and the regulated industries are determined it will not be them.

This arguably rather technical planning question has political consequences. The CBI has identified shortage of housing where it is needed to support job creation as one of the most serious threats to the UK economy. Housing is not being supplied partly due to privatization and the way it is being regulated.

James Meek calls privatization a new poll tax on the grounds that utility and transport bills fall disproportionately on poor people. I am not qualified to asses this claim. But there is another dimension. Infrastructure providers (and by extension regulators) argue that the full cost of additional investment should be borne by developers of housing, not by themselves. This means the viability of sites is threatened and may lead to cuts to affordable housing, or even schemes (with permission) being stalled altogether. But why should those who need new homes be the ones required to pay for infrastructure investment? Under a public planned system such as operated in most rich countries we all contribute: under the regulated system in the UK those in housing need ultimately pay the price. Is this a case of intergenerational injustice?

Richard Blyth is Head of Policy Practice and Research at the RTPI.