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Housing lessons for London from Scotland

01 February 2016 Author:

Few stones have been left unturned in the search for explanations for the high cost of housing in London. The greenbelt, land banking, housing being used as an investment rather than a home, shortage of land, building regulations – the list goes on. A recent report from the Resolution Foundation comparing London and Scotland makes prompts the question of what we could learn from a bit of Caledonian policy tourism.

Perhaps unsurprisingly, the Resolution Foundation report, State of Working Scotland: Living Standards, Jobs and Pay, finds that Scottish workers have more disposable income than London earners. Scotland still have a significant problem with low pay, but more affordable housing and a slower increase in housing costs means typical Scottish households have higher after housing cost incomes than their London counterparts. In short, the high cost of housing in London is decimating (many) pay checks. This is not to say that everything is rosy north of the border – home ownership has fallen in Scotland among low and middle income families as house prices have risen – but compared to London, Scotland’s housing affordability problems are far less acute.

Obviously there are a range of social, economic, and geographical factors in this which can’t be reduced just to public policy, nevertheless policy is what we do, so it is worth briefly comparing policy approaches to see whether there are lessons that London could learn from Scotland.

Edinburgh -London2

Scotland has a population around a third less than London, but as with London the population is clustered in high-density urban areas such as Glasgow and Edinburgh and Scotland’s city regions are suffering from housing shortages. London may be exceptional in its cost of living, but some of the challenges are similar.

Housing and planning are devolved issues of course, and gearing up for the Scottish election activity is centring on the Planning Review and how to deliver more housing. The RTPI Scotland manifesto, Planning in the Next Parliament, suggests that a future Scottish Government could increase the number of quality homes by establishing special purpose vehicles to work with local partners to coordinate and provide infrastructure, deliver development and assemble land across Scotland.

But there may already be a number of ways in which policy in Scotland provides a better environment for delivery. For example in terms of strategic planning The Planning (Scotland) Act 2006 provides for Strategic Development Planning Areas designated by ministers and committees of councillors who determine production of plans for the country’s four city regions. This is important in linking power and resources, in particular for housing and infrastructure delivery.

Another example is the National Housing Trust initiative (NHT), through which Scottish local authorities can increase the supply of homes at affordable rent. Crucially, this gives mid-market renters a chance to live in an affordable property for 5-10 years, after which the units are sold. More than 1,000 affordable quality homes have been built since the initiative was introduced in 2011.

In contrast there is no governance structure for the planning of the London metropolitan region. Although Greater London is unique in England in that the London Plan sets out strategic planning arrangements between London boroughs, city economies are porous and don’t stop at administrative boundaries. For instance, a large proportion of London’s commuters travel into the city from outside the Greater London area. This underlines the need for London’s wider spatial footprint to be subject to planning in the same way that city regions are in Scotland.

Unfortunately, the Duty to Cooperate provisions of the Localism Act have proved to be largely ineffective in encouraging outer London authorities to plan collectively with their neighbouring home counties. An alternative mechanism to prompt strategic planning suggested by the RTPI in our Strategic Planning paper is for local authorities to form voluntary groupings at city-region scale to undertake strategic decision-making. These groups could come together to decide on housing numbers and other matters of strategic importance (transport investment, key employment locations, and environmental management). In order to facilitate this cooperative work, government could offer effective community level infrastructural incentives to local authorities to plan properly for the long term and to plan collectively.

Equally, the devolved approach to social housing in Scotland contrasts to the policies that are being imposed on London authorities. The UK Government’s Housing and Planning Bill states that local planning authorities must include starter homes (capped at £450,000, and £250,000 outside London) in certain planning permissions. Up to now local planning authorities could ask for a proportion of homes to be ‘affordable’ in schemes across a whole district (though the actual reality was always open to negotiation). This new measure is remarkable in bypassing of LPAs’ authority. The RTPI is urging the Westminster Government against undue prescription to enable LPAs to negotiate to ensure both delivery on specific sites and a social mix of homes.

In Scotland, a resource planning approach has been adopted, enabling each council to exercise its strategic role more flexibly and to put forward to Scottish Government strategic local proposals for social and affordable housing developments based on local housing strategy. In London the need to ensure that schemes are ‘viable’ means there is a high risk that making provision for starter homes a priority will drive out other forms of affordable housing such as rent and shared ownership.

Despite important differences in context then, there are planning principles in Scotland that may have lessons for London, among them the importance of strategic planning and a faith in local planning authorities to make decisions around housing types and tenures.