Why local authorities would be mad to grant planning permissions right now

Why local authorities would be mad to grant planning permissions right now

So a spate of local planning authorities decided to halt housing schemes following the move by the Communities Secretary Eric Pickles to abolish regional spatial strategies. 

No shock there then. 

I’d argue, as I do later, that it would be totally rational for a planning authority to halt or delay planning even if there was widespread desire for the new development among a local council and all its constituents.

What puzzles me is why this new government would wish to alienate so much of the housing world and appear to look like a bunch of bumbling idiots into the bargain so early in the lifetime of this administration.

If the open source planning system, over which the new housing minister Grant Shapps enthuses so much, is to stand a chance he will need all the friends he can muster. And it seems that so far he has miffed the Home Builders Federation and the National Housing Federation, plus a host of others.

What I don’t get is why pull apart the existing system before you have the new processes in place?

And, judging by his replies in a Q&A on the conservativehome blog early in 2008, Shapps perfectly understands the need for sensible transition and has done so for a long while.

He is asked by a correspondent named as powellite: “How are you going to reconcile the visceral nimbyism in our party with the housing shortage and desire for people to own their own homes?”

Enthusiasm abounds and then Shapps says reassuringly: “But if you’re thinking this will all take too long then you can be reassured in the knowledge that there would be a transition to this new world, with the existing structure only gradually being removed.”

Hell’s teeth, if gradualism is to pull the keystone from a planning structure within a month of taking office, one wonders what is being introduced to the morning coffee at the communities department.

So what happened between then and now? Well, he was warned by anyone with even half an interest in the housing business that the “transition” was critical.

Has Shapps ignored this advice and his own understanding or has he been over-ruled by his boss Pickles in some bid to appease the “visceral nimbyism” in the party?

Who knows, but by not dealing with the transition issue sensibly, Pickles and Shapps have created extra and unnecessary doubt about their planning policies as a whole.

Because even if a sensible transition policy was introduced there would almost certainly have been a drop in planning application approvals in the run up to the introduction of the promised new incentive scheme. And even more certainly with local authorities eager to secure better finances ahead of a period of austerity.

Here’s why.

In another life I studied payment and bonus systems and was impressed by how tricky it was to shape a bonus structure which was fair, created appropriate outcomes and was not open to unacceptable levels of abuse.

It was a fantastic study of cynical self interest at work, or “functional understanding” as I was encouraged to describe it. We were urged always to look for unintended consequences within payment structures.

Let’s start with a simple example of a bonus scheme aimed at boosting production of widgets where a worker gets extra cash on all his production over a set target. Simple? Yes. Effective? Well, probably not.

If we examine what happens if the worker knows he will most likely miss his basic bonus target by a smidgeon this month. What will he do? Well if he is looking to maximising income he will bank (hide) as much work as he can get away with from this month’s efforts (making suitable excuses for his awful performance) and feed it into next month’s tally.

Next month he will work like crazy and hopefully smash his target and take home a handsome bonus. Across the two months he will be mightily up on the deal.

He’d be mad not to do so.

But worse things happen if he knows a new bonus structure is to be introduced. The first thing he does is to slow down his apparent work rate to encourage the setting of a low benchmark. He does this by stashing away as many widgets as he can hide in the months preceding the introduction of the new system.

Then, when the new bonus structure is introduced, he feeds this banked work into his quota and boosts his apparent production. Everyone is happy. The firm and the poor misguided HR flunky see production rise month on month (success) and the worker takes home more pay and has also has managed to control down his expected baseline work rate (success). It’s apparently a win-win.

But surely it’s fiddling the system? Naturally. And imagine how much you can distort things with a more complex bonus system. On yes, you can bring the entire global banking system to its knees.

Anyway, what we know is that Mr Shapps is offering a simple bonus system for planning authorities to boost development. Nice.

He says he is going to give a few grand gratis for each home granted planning permission – details to be arranged.

What is the first thing a planning authority should do in anticipation of the new scheme, even if they know nothing of the detail?

Stop granting planning permissions as far as is possible and bank (i.e. delay) as many schemes as it can ready to be introduced when the new bonus scheme is introduced.

They’d be mad not to.

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