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New residential development - are incentives the answer?

07 March 2014

The scale of national housing need has prompted a cross party willingness to consider a range of options for high quantity housing delivery. Any cross party agreement on the need to deal with a major social need is
Bermondsey Spa _Balconies On Frean Street With St . James Church Beyondencouraging, particularly on the eve of the 2014 budget. The (England) Government announced in the 2013 Autumn statement:

The government wants to ensure that households benefit from development in their local area. Building on the measures the government has already put in place at the local authority and community level (including the neighbourhood funding element of the Community Infrastructure Levy and the New Homes Bonus), the government will work with industry, local authorities and other interested parties to develop a pilot passing a share of the benefits of development directly to individual households. (bold added, para 1.220)

The proposal is to provide existing residents close to new residential developments with financial incentives. Would such a scheme work?

Informing the public

In the midst of a housing crisis public acceptance and understanding of the need to increase substantially the number of homes being built is crucial. As the RTPI pointed out in its policy paper on Delivering Large Scale Housing, ensuring that local communities know about the long term benefits of new housing for their area is crucial to a meaningful public acceptance of residential development. A crucial question is whether the generation of additional local transport and infrastructure services, and the increase in value of existing homes associated with new residential development would be enough to convince communities to accept new houses without the need for incentives.

The potential problem with using incentives to convince residents to accept new development could be that it bypasses the need – and opportunity – to inform communities of these benefits, and could result in a weak (grudging) ‘agreement’ arrived at by inducement rather than reason.

Perceptions of other people

At a time when constructing new towns is high on the policy agenda it is important that a sense of cooperation and solidarity exists among and between communities, including new developments. However, does a policy that some might say involves ‘paying off’ residents to ‘tolerate’ other people living in their neighbourhood portray other people as something to mitigate against? Policies have an effect on public opinion in so far as they express the state’s view of a public good, which is to say, what is in the broader public interest. It might then be unhelpful to put other people in the same category as wind turbines or motorways as apparent obstacles to the enjoyment of the good life, especially during a period of increased residential development. An incentive-based approach, by framing other people as a ‘negative’, could have the unintended consequence of stoking so-called NIMBYISM rather than dampening it by reinforcing rather than challenging what might be un-informed views. In an ideal world, we wouldn’t need incentives.

Strategic planning

Of course, we don’t live in an ideal world. Nevertheless, would an incentives led approach have a negative impact on the need for more strategic planning when it comes to housing developments? Under an incentive led approach it might make more financial sense to develop where objections are less likely to be made, so that public money need not be spent on inducements. This could result in development taking place where people are less likely to object, rather than where it is actually needed – which is hardly strategic in relation to where pressures are greatest, and which, if it is the case, questions the need for incentives in the first place.

Under an approach which focuses on increasing public recognition of the need for more housing, where communities are more hospitable towards housing development government could plan more strategically about where to put residential development, as informed communities are less likely to object to development.

Building on consensus

Given that there is cross party consensus that we need to embark on a new era of house building, it is important that we have an informed public which is also more likely to support development, in part because of the wider public good of large scale residential projects. Sacrificing strategic planning in favour of incentive led development might not be the way forward, and we need to consider whether this policy would  generate perverse incentives that undermine its  objective.  Ultimately, we might need to give the public more information – and therefore the opportunity to make ‘right decisions’ when properly informed about the benefits of housing development to their communities, and to the country.

We are monitoring this proposal with interest and the RTPI Policy, Practice and research committee will be discussing this issue when it next meets on 18th March. Obviously this proposal is still in its infancy and the budget on March 19th will hopefully elaborate what it will look like in policy terms.


About Joe Kilroy

Joe Kilroy is Policy Officer at the RTPI and is the policy lead within the areas of housing and decentralisation. His other interests include the third sector, health policy, and deliberative democracy.. Before joining the RTPI, Joe worked in Higher Education consultancy, in the policy team of a the third sector organisation, and on a community development project in Bolivia.