The Barker Review and London
Background Notes
The Barker Review and its Implications
Christine Whitehead and Tony Travers
LSE London
February 2006
The Barker Review and its Implications for London
Kate Barker’s independent review of housing supply was commissioned jointly by the
Chancellor of the Exchequer and the Deputy Prime Minister in April 2003 in the face
of declining housing output and rapidly rising house prices. Kate Barker presented
her Interim Report in December 2003. This put together the evidence base and
analysis on which the final report and recommendations were based. The final report
was published on Budget Day April 2004 and accepted in principle by the Chancellor
on that day.
The analysis showed that the UK had experienced real house price rises over a thirty
year period of some 2.4% per annum. Modelling supply response suggested that in
order to bring this rate of increase down to 1.8% it would be necessary to build
around 70,000 more homes per annum in England alone; to bring it down to the
European Union average of 1.1% would require a sustained increase in output of
120,000 per annum, not far short of an 80% increase on current rates of housing
completions.
The reasons identified for the increasingly limited response to house price increases –
and the need to change the environment to ensure higher levels of output were at least
fourfold. The majority of policy interest has been concentrated on the inadequacy of
the land use planning system in ensuring the required land is made available but the
inquiry also identified problems with the organisation of the construction industry,
patterns of land ownership and a lack of preparedness to bring land to the market; and
more general issues of the impact of uncertainty and expectations of further price
increases. These were seen as generating major problems for the UK economy
through the impact of poorly operating housing markets and lack of affordability on
competitiveness as well as more direct problems associated with inadequate housing
especially for those on lower incomes.
The recommendations of the Barker Review to central government included: ensuring
that the land use planning system was more responsive to market pressures; additional
investment in infrastructure and social housing; reorganising regional Planning and
Housing Boards into single entities, supported by a National Advice Unit; introducing
a Planning Gain Supplement to tax the profits from obtaining planning permission;
and reorganising developer contributions so that affordable housing became the main
beneficiary from Section 106 agreements.
The Government’s detailed response to the Review was published as part of the PreBudget Report in December 2005. It accepted that the problem should be seen as one
of affordability and access, arguing that if current trends continued, within twenty
years fewer than a third of all thirty something couples with two incomes would be
able to afford to purchase their first home without assistance. In the light of this crisis
they committed the Government to increasing output from the current levels of around
150,000 net additions to 200,000 per annum by 2016. This would be achieved through
among other policies:
 providing shallow subsidies to expand owner-occupation to 75%;
 reforming of the land use planning system to make it more responsive to local
housing market evidence;
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merging the regional planning and housing functions into single entities by
September 2006;
strategic delivery of local and regional infrastructure necessary to support the
additional housing required;
concentrating S106 far more tightly on supporting the provision of affordable
housing in mixed communities;
increasing social housing supply by new approaches to recycling public assets
and increasing grant allocations in the next Comprehensive Spending Review;
and
consulting on the introduction of a Planning Gain Supplement which would
provide at least as much to local authorities as they currently achieve through
the more broadly defined S106 arrangements.
London faces particularly difficulties in achieving the Barker agenda and the
Government’s now clearly specified objectives. Both affordability and housing
conditions are worse than in the country as a whole while the numbers of households
expected to form over the next twenty years is proportionately much higher.
Moreover the Mayor has stated that London should expect to house this increase
within London’s administrative borders – which has not proved possible in the last
two decades. On the supply side, almost all land in the capital is brownfield and
much of that land has other potentially high valued uses. Infrastructure is often
overused and there are major environmental issues in many of the areas where land is
available. The construction industry is under pressure and there are many other calls
on their resources. It is therefore costly to provide sustainable, mixed communities
especially in the Thames Gateway.
The current London governance structure with respect to housing involves London –
wide strategic planning by the Greater London Authority through the London Plan
(with its revision now out for consultation); local development plans (soon to be
frameworks) at the local authority level including the responsibility to identify land
and housing requirements in general and affordable housing needs in particular; local
authority housing responsibilities with respect to standards and ensuring
accommodation is made available for the homeless; a wide range of Housing
Associations and other agencies meeting front line needs; and grants for affordable
housing allocated by the Housing Corporation on the basis of sub-regional needs.
Government consultation on the future of London government and their
implications for housing
In its 2005 manifesto, the Labour Party promised to review the Greater London
Authority. It started a process of consultation during the autumn of 2005 and recently
published a document entitled The Greater London Authority: The Government’s
proposals for additional powers and responsibilities for the Mayor and Assembly.
The potential reforms outlined in this document go well beyond those that might
originally have been expected from the modest commitment in the 2005 Labour
manifesto.
The Office of the Deputy Prime Minister (ODPM) is undertaking the GLA review, led
by David Miliband (Minister of Communities and Local Government) and Jim
Fitzpatrick (Minister for London). The fact that a Cabinet minister – David Miliband
– is leading the process suggests it is considered important within government.
ODPM would like to use the London government experience to inform possible
changes to city government in other large cities.
ODPM is considering changes in a number of aspects of London’s government,
including housing and planning powers. First, it is proposed to transfer to the Mayor
the responsibilities of the London Housing Board to produce the London Housing
Strategy and to make proposals on the distribution of housing capital allocations. A
second possibility (though this is simply put forward for consideration) is that the
Mayor would in future allocate ‘affordable’ housing resources in the capital.
Three possible options for planning reform are outlined in the consultative document:
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to make the Mayor the development control authority for major classes of
strategic planning in London. The Mayor would replace boroughs in this
role; or
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that development control powers should remain with the boroughs as now,
but the Mayor would be able to direct refusal or approval for major classes
of planning application; or
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minimal change.
The first of these possibilities would represent a major shift of power from the
boroughs to the Mayor and, potentially, could lead to very different planning
decisions – compared with ones that might otherwise be made – where the Mayor’s
policy is significantly different from that of the borough. A number of major housing
schemes would fall within the category where, under the more radical of these
proposals, the Mayor would assume responsibility for development control.
In addition to the above proposals potentially to change the Mayor’s powers, the
government is also considering amendments to the Mayor and Assembly’s working
arrangements.
One of these proposals includes two options to strengthen the
Assembly’s role in policy-making. Either the Mayor could be required to ‘have
regard’ to the Assembly’s views in determining his policies/strategies, or, the
Assembly could be given the power to veto the Mayor’s policies by (for example) a
two-thirds majority. Once again, housing policy could be affected by such reforms.
The government has also put forward possible proposals to allow the Assembly to
scrutinise city-wide public services that are not accountable to the Mayor. The
operations of, say, the Housing Corporation could fall within such new powers.
Implications
The above proposals range from the radical (planning) to the modest (Assembly
scrutiny of non-mayoral services). The consultation process is likely to encourage
organisations and individuals to put forward more radical suggestions than those in
the consultative paper. Boroughs are likely to be concerned about proposals – such as
those for planning – that could take powers from the local to the metropolitan level.
The possibility of giving the Mayor control over housing resource allocations has also
caused concern in the boroughs.
The government does not appear enthusiastic about the possibility of transferring
much power from the centre to the Mayor. Moreover, there is no suggestion that the
Government Office for London would be substantially reduced in scale, nor that its
responsibilities might be transferred to the Mayor.
Nevertheless, the government is convinced the GLA has been a successful experiment
and is keen to encourage other ‘city regions’ to adopt a similar form of government.
The current consultative paper and any reforms adopted can probably be seen as being
part of a continuing process. That is, these reforms to London government are
unlikely to be definitive or final. The consultation period runs up to 22 February
2006 and the process is being handled by ODPM.