Grown-up conversation

9 Jan 2008

The Scottish Government has said that Scotland needs to build 35,000 new homes each year to meet contemporary demand. The level of house building is currently about 10,000 short of that figure. Penny Lewis talked to Andrew Mickel, the Vice Chair of Homes for Scotland and a director for Mactaggart and Mickel. Although he is encouraged by the new Planning Bill, he is not convinced that it will lead to a serious shift in attitudes amongst local authority planning departments

As both director of a private house building company and Vice Chairman for Homes for Scotland, Andrew Mickel lives and breathes housing and planning. Homes for Scotland (HFS) is the house builders’ umbrella organisation. Its members are responsible for about 95 per cent of all new homes built and include a range of businesses, from big companies like Stewart Milne, Barratt and Miller to smaller companies and associate members.

HFS is run by a secretariat of permanently employed group of staff (Jonathan Fairs, formerly of BRE, was recently appointed as Chief Executive). Mickel uses the expression ‘herding cats’ to describe the process of coordinating the collective interests of rival house builders. However, they all have a common interest in reform of the planning process. As a result, they have produced a detailed response to the Planning Bill and given evidence to the Communities Committee on Third Party Rights of Appeal, Planning Gain Supplement and other issues. Mickel talked to Prospect, in a personal capacity, about the barriers to raising quality and producing more new homes.

What’s the new government’s attitude to housing?

There is a bit of vacuum in Scotland. England is marching on in one direction and Yvette Cooper has a good profile and is often on news programmes. Although we keep reading about affordability issues in Edinburgh, housing still doesn’t get the same political profile in Scotland.

Just recently SNP ministers said we need 35,000 new homes each year by 2012. We will work with them on the detail of that and there is a Housing Task Force that has been set up. Generally the SNP government has stood up and said things must change. I think it’s particularly healthy that there is a new broom – local Labour politicians have just gone down the party line for far too long.

So can the industry deliver the numbers of new house completions that the government wants?

I think the new government is up for growth. At the moment the private sector builds about 20,000 of the 25,000 built, so it will have to be private sector led. The figures can be done – it needs a concerted, almost like a war footing from now. Some changes seem to be required now. Why not have fast tracking of planning consent. Should all council land be put up for sale right now? For big projects, where we are waiting, we need to ask why? And we need to start unblocking some of the blockages.

Are you optimistic about the impact of the Planning Bill?

There are very positive things in the Planning Bill; the system is going to be more open and transparent. I don’t want to be too downbeat and it’s early stage but … my worry is that despite the planning process being updated, in some areas there is still quite an anti-development culture, particularly in local authorities. Some of the young staff are keen on change and have a bit of spunk, but some of the older managers, some are good, are totally unwilling to change.

I got involved with the Planning Improvement Service, a Scottish Government initiative for training, but now the budget has now run out. They are not sure how much money they will get next year. And a lot of the local authorities have not taken up the training. I think pay is also an issue; people get siphoned off to the private sector. You can have a great system but it can only go as fast as the slowest parts.

How can planning negotiations be improved?   

I think it’s likely that it will be more locally based revenues that are going to develop. It’s a priority for us to find out if government is going to rework Section 75 agreements. Currently Section 75 agreements take forever and every local authority has different ideas on it. It would be good if they could be more open about what they expect, instead of what feels like ‘cloak and dagger’ negotiations. Somebody in the council says education is a priority and then someone else comes along and says ‘I want the roads improved’ and you end up being bounced all over the place.

We are currently working on a project in the South of Edinburgh, in Midlothian, in the South East wedge. We got consent for it a year ago. We’ve had a ‘minded to grant’ detailed consent for just over a year and we are still negotiating the Section 75.

There are several councils involved and more than one landowner. We’ve offered to pay for a Section 75 team to deal with the project, given that there are 4,000 units involved, but the council says it’s not possible. We are the only people that are involved that are both developer and house builder. It’s in our programme to start to keep our guys employed – so we are probably most hungry to start work. It’s absolutely agonising.

It’s frustrating because I know that down south, in some areas, you get development corporations with dedicated teams that can fast track trams and they get a coordinated response. Planning advice says that planning applications should all be one process; we are trying an exemplary process in Eaglesham with East Renfrewshire, coordinated by Sue Stirling at the Scottish Government.

Is the biggest challenge reform, or a culture shift in the planning process, or the release of new land?

There are areas that are hugely pressurised. Aberdeen, has failed to get an updated plan. There is huge inflation. In Edinburgh City and East Lothian there is pressure. In Fife they keep changing targets. Scottish Government needs to get the direction to say to local authorities “you need to get your house in order”.

On design issues, it is still quite a low level of conversation. I think the skill sets are not there. There are so many policies that people have to work with, on roads, back garden sizes etc. There is no opportunity for a planning officer to give a creative response or to support an unusual project. Planning policies are very negative and conservative. Officials don’t talk about growth or say “let’s give consent to this development because it has quality”. It’s only when you have a design champion or a councillor that is prepared to stand up and say “let’s do something different that things move forward”. The worry is that despite this new groovy planning process, there remains a question as to whether things are going to get any quicker, and the general answer seems to be no, it’s not.

Is the Scottish housing bubble about to burst?

Our company had our results last month, which were strong. The profits were up 25 per cent on the previous year. We think we are unusual because we don’t have a large number of flatted developments, so we are not competing in Leith and Glasgow Harbour.

With flats, there probably has been an element of oversupply in some of the market, that and the credit crunch in mid-August is slowing things down. In England, I know that bigger detached market values have been dropping. Over the coming year there is likely to be a slowing down, but it’s not likely to be as dramatic as in other parts of the UK.

What about the industry as a whole. Are there many house builders in Scotland that are overstretched?

The borrowing could be a problem for some companies. In the last few weeks the banks have suddenly become much stricter. We have a general overdraft with RBS, we don’t have some kind of equity stake. It could be difficult for companies with a lot of large projects on. There has been a slowdown in Ireland too.

Some lenders have now changed their loan to value; for one it’s now 75 per cent that you can borrow. The worry of that is that it might freeze out first-time buyers. That is the slightly conservative nature of banks, they may be thinking we have
lent too much and then they might pull the lever a
bit too strongly.

How can the private sector help to deliver more affordable housing?

To create more affordable homes we need more upfront planning and a more coordinated response. There will have to be more building in the greenbelt, but if you can plan for that there should be private developers that are able to fund affordable housing. Housing Needs Assessments never seem to run in tandem with Local Plans. So you have a Local Plan that says that there is no need for housing in the green belt, then you have a Housing Needs Assessment that says there is a need for an extra 2,000 houses in the area – all affordable. I think that is criminal on the part of the politicians or the housing bodies. What is the point of doing these studies if you are never going to do anything about them?

We are trying things like shared equity schemes. Councils don’t like them, because it is only affordable for the first-time buyer, not in perpetuity. My view is that at least somebody is getting on the housing ladder and there is no public money required.

Affordable housing guidance is welcome but I am frustrated that it is always about rented accommodation. It seems a shame when many families would like to own their own home, or get a share of their own home so they don’t feel that they have to be dependent for the rest of their lives.