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Deregulation is posing problems in many sectors. Recently it was announced that the House of Commons Business, Energy and Industrial Strategy Committee is to examine Thomas Cook’s ongoing corporate governance, accounting, auditing and regulatory failures, ‘while the gravy train for directors continued’ (Prem Sikka, September).
Advocates of deregulation – the reduction or elimination of government power (state rules) – say that it removes unnecessary bureaucracy and barriers to competition.
Prem Sikka (Professor of Accounting at University of Sheffield) now turns to the effect of deregulation on social housing. He focusses on the controversial ‘permitted development’ (PDR) system for the delivery of new homes which Labour has pledged to end – a decision commended by the Town and Country Planning Association. Reports last year highlighted the poor quality homes coming through the permitted development system and a get-out clause that exempts schemes from providing vital social and affordable housing.
The permitted development system has led to the delivery of homes as small as 13 square metres – smaller than the average living room. A BBC report about an office-to-residential permitted development conversion carried out by Caridon Property is quoted by Shelter. It has been used as temporary accommodation since 2018 and the homeless families with children crammed into tiny ‘studio flats’ have to ‘eat, drink and sleep in their beds’.
A London Assembly study also noted that many PD homes are smaller than the minimum space standards and exacerbate the already huge issue of overcrowding – and by avoiding the planning system, developers are no longer obliged to contribute to the provision of affordable housing.
Newbury House in Ilford offers flats that apparently measure as little as 3.6 metres by 3.6 metres (12ft x 12ft), with residents packed in “like sardines”, a busy six-lane highway just yards away, broken glass and rubbish strewn all around outside.
The Developer, which informs and connects professionals working in urban development and design, adds more detail and is campaigning for these potentially dangerous conversions to be stopped.
A study by the Royal Institute of Chartered Surveyors which examined the quality of PD in parts of Camden, Croydon, Leeds, Leicester and Reading, concluded that PD has allowed extremely poor-quality housing to be developed and PD residential quality was significantly worse than schemes which required planning permission – particularly in office-to-residential conversions. Of 568 buildings studied, another report found an inconsistency in the quality of developments, with only 30% of units delivered through permitted development meeting national space standards.
In 2013 – following pressure from ‘profit hungry’ property developers – the Conservative and Liberal Democrat coalition government deregulated and disempowered local councils, passing legislation enabling developers to convert office blocks, agricultural buildings and warehouses into residential properties without full planning permission.
Richer councils are sending people to poorer areas already facing acute economic problems as part of a social cleansing process. Families with children, senior citizens, low-paid, the unemployed, people with special needs and others, faced with the choice of long waiting lists for housing, temporary accommodation, dilapidated housing and high rents by private landlords, have been persuaded to relocate to another area.
As part of a recent research project, Sikka met council leaders from many of these poorer areas, struggling to cope with the problems caused by deregulation and the loss of central government funding to local councils since 2010 cut by 26% in real terms. He writes:
“The class nature of permitted developments (PD) is evident as there are more PDs in Harrow and Hounslow compared to wealthy Kensington and Chelsea. They have been a boon for housing developers. The chief executives of this country’s ten biggest developers received a combined £63.6m last year for building slums, called by some, ‘human warehousing’ “.
Poorer areas already struggling to cope with acute economic problems have to find new jobs, schools, transport, family doctors and hospitals, without prior planning or resources, while richer areas with lower numbers of people on benefits, lower unemployment rates and less pressure on local schools, hospitals and social infrastructure, embark on the process of gentrification.
Professor Sikka’s article may be read here.