Let's value our land

There are dramatically wide differences in the value and price of land in the UK.

Of course, some variations are bound to reflect geography, geology, access and demand. But the single biggest variable relates to the land’s development value. Can the land only be used for looking at or walking on or agriculture, or is there permission for development for industry, warehousing, retail units, offices or housing?

The English planning system had its roots in the agricultural and industrial revolutions of the 1700s.

In the nineteenth century, local authorities gradually took responsibility for providing clean water, securing the removal of sewage and refuse, and ensuring new and rebuilt housing had adequate drainage, toilet facilities and an ash pit.

Modern urban planning began when builders had to submit details of these provisions to the local authority before they started development.

The dramatic spread of urbanisation, with unplanned suburbs and the sprawl into countryside provoked much public debate, both about how it should be stopped and about how towns and cities could become better places in which to live.

The Garden City movement demonstrated how things might be done differently and provided the inspiration for the 1909 Housing and Town Planning Act.

In the 20 years after WW1, more than 4 million new homes were built – mainly on green fields – spawning legislation in the 1930s which recognised the need for countrywide rural planning and the need to stop unregulated urban sprawl.

After WW2, there was effectively a wide-ranging political consensus about the need for a pro-active planning system… addressing land use and development and a framework for securing permission.

Whilst the post-war Labour Government is credited with the founding of the National Health Service, I think that almost as important was the passing of the Town and Country Planning Act 1947.

Councils were required to complete a local plan, set out detailed policies and proposals for the development and use of land in a district.

The 1947 Act fundamentally remains the basis of today’s planning system, although legislation on the Green Belt, Structure Plans, the distinction between future planning and development control, regional spatial strategies and development frameworks, and the notion of sustainable development have all had an impact on the application of the original principles.

It is worth remembering that the 1947 Act provided that all development values (ie the increase in value arising from a change in planning permissions) were vested in the state, with £300 million set aside for the compensation of landowners. A subsequent Conservative government ditched these provisions and, although there have been other attempts to capture land values in this way since then, currently these are non-existent.

Since 2010, a rash of legislation – the Localism Act, the National Planning Policy Framework and more recent guidance, and the Growth and Infrastructure Act – have all changed the relative balances in the planning process.

And planning is all about balances. Balancing the various interests that need to be taken into account to develop vibrant, sustainably economic, social and environmental communities in the short-, medium- and long-term. Balancing the interests of neighbouring land-owners and -users. One person’s bright, airy home extension or boundary leylandii can often be a neighbour’s loss of light.

Although a number of commentators have suggested that the shortage of land with planning permission for development for housing is responsible for the housing crisis – despite housing developers having a record amount of land with planning permission – it is clearly the case that the increased price being paid for housing land is making its own contribution to housing price inflation.

What is also the case is that owners of land, whose development capability has changed, can have become very rich indeed, whilst developers and the community at large pick up the bill for the necessary infrastructure – from highways to schools – to turn the buildings in to a viable and functioning community.

It was in this context that the all-party Housing, Communities and Local government Select Committee, which I chair, set off earlier this year in our inquiry in to Land Values. We have received a large amount of written evidence and held oral evidence sessions.¹

Now, we have published our report and recommendations.²

This is a summary of what we said.

Land values increase for many reasons—not least from economic and demographic growth—but some of the most significant increases arise from public policy decisions, in particular the granting of planning permission and the provision of new infrastructure. While there is considerable variation in land value uplifts dependent upon location and previous land use, landowners currently retain a very large proportion of the increase in land value arising from the granting of planning permission.

History has shown that attempts to capture land value increases have had mixed success. Governments have struggled to strike the right balance between capturing fair values for the community, without undermining incentives for private sector participation in the market, and in a way that is politically acceptable to all major parties. There have also been tensions between central and local government as to how revenues are spent.

However, it is widely accepted that the first generations of New Towns had considerably more success. This was made possible by the ability of Development Corporations to acquire land at, or near to, existing use value. Uplifts in land value were then captured to fund the infrastructure needed for the new developments.

Political interest in land value capture has re-emerged in recent years. Our inquiry has sought to contribute to this renewed debate and consider how land value might be more fairly and efficiently captured in the future.

The key conclusions and recommendations from our report are as follows:

• There is scope for central and local government to claim a greater proportion of land value increases through reforms to existing taxes and charges, improvements to compulsory purchase powers, or through new mechanisms of land value capture.

Increases in the value of land arising from the granting of planning permission and the provision of new infrastructure are largely created by the state. It is fair, therefore, that a significant proportion of this uplift be available to national and local government to invest in new infrastructure and public services.

• Compulsory Purchase Order (CPO) powers can be especially important in enabling the development and provision of necessary infrastructure on large sites particularly where ownership is fragmented. This could facilitate completely new developments, extensions to existing communities, or the build out of large schemes within urban areas.
• The CPO process should be further simplified, to make it faster and less expensive for local authorities, whilst not losing safeguards for those affected.

The Government should build on its recent reforms to the CPO process. For example, we heard that the requirement for the Secretary of State to confirm CPO submissions causes unnecessary delays. Such decisions should be made locally.

• There is an urgent need for local planning authorities to agree up-to-date local plans.

A well-defined local plan with clear objectives and requirements for which the developer must pay, would inherently be reflected in, and would create, lower market land values.

• The Land Compensation Act 1961 requires reform so that local authorities have the power to compulsorily purchase land at a fairer price.

The present right of landowners to receive ‘hope value’—a value reflective of speculative future planning permissions—serves to distort land prices, encourage land speculation, and reduce revenues for affordable housing, infrastructure and local services. We do not believe that such an approach would be incompatible with human rights legislation, as there would be a clear public interest and proportionality case to do so.

• The compensation paid to landowners should reflect the costs of providing the affordable housing, infrastructure and services that would make a development viable, as well as capturing a proportion of the profit the landowner will have made.

Reform of the Land Compensation Act 1961 will provide a powerful tool for local authorities to build a new generation of New Towns, as well as extensions to, or significant developments within, existing settlements.

• Where public land is put forward for residential development, it is important to ensure that the maximum value is captured for new infrastructure and public services. This may not always equate to selling public land to the highest bidder.
• The compulsory purchase reforms we have recommended, such as reform of the Land Compensation Act 1961, would give greater powers to local authorities to assemble land and, in so doing, achieve a higher level of control over developments in their areas.

The Government and local authorities own tens of thousands of acres of land across the UK and there is much that can be learned from Germany and the Netherlands with regard to capturing increases in value from publicly-owned land.

• We believe that the Government has made several important changes through the revised National Planning Policy Framework (NPPF), in particularly around transparency in the viability process—something we have called for repeatedly in the past.

These changes, alongside recent court judgements, should give assurance to local authorities that developers cannot avoid their local plan obligations by claiming that the price they paid for the site means that this would not be viable. However, further reforms will be necessary if Section 106 is to provide the infrastructure and affordable housing that this country needs:

• The Government should work with the Local Government Association (LGA) to provide additional resources, training and advice to local planning authorities to ensure that they are able to negotiate robustly with developers and that local authorities are consistently able to contract for the appropriate level of planning obligations.
• Local authorities should consider using their existing CPO powers to enforce Local Plan policies, in particular in relation to affordable housing, where some developers seek to use viability assessments to avoid their obligations.
• The Government should give further consideration to the future implementation of a Local Infrastructure Tariff.
• If the Community Infrastructure Levy (CIL) is to become an effective mechanism for capturing development value for the provision of local infrastructure, it requires considerable reform.
• The Government is right to explore how Strategic Infrastructure Tariffs can be extended across the country.

CIL is far too complex and the extensive range of exceptions need to be removed. Importantly, there has to be greater certainty that the infrastructure associated with development is actually delivered at the appropriate time, sometimes in advance of development commencing.

• The Government should commission a cross-departmental project to consider how to capture land value increases on existing properties.

A truly efficient and equitable system of land value capture should not focus solely on new developments but should also address how existing properties benefit from development and particularly from public investments in local infrastructure.

I am sure that our recommendations are likely to spark a lively debate in the media and amongst various interested groups – from professionals to developers and land-owners. However, the really important test is how the implementation of proposals such as these will impact upon families who want homes and upon communities which want sustainable futures.

We await with interest to see how the government responds.

¹ You can find all the evidence and reports at https://www.parliament.uk/business/committees/committees-a-z/commons-select/communities-and-local-government-committee/inquiries/parliament-2017/land-value-capture-inquiry-17-19/publications/

² Land Value Capture https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/766/766.pdf

Trust me, it’s not down the back of the sofa

Search down the back of any chair or sofa and you’re almost certain to find a coin hiding amongst the dust. That is unless you’ve consciously gone searching for a coin, in which case you’ll only find a broken pencil and an unwrapped boiled sweet in the detritus.

However, it is estimated that there are more than a million children born between September 2002 and December 2010 who, with a little searching, might find more than a coin or two. But, it’s definitely not down the back of the sofa.

Cast your mind back to 2002. Gordon Brown, then Chancellor of the Exchequer, was determined to give an incentive to encourage parents to start saving for their children’s futures. Given the size of deposits to rent, let alone buy, a home, this seems to have been extremely prescient.

Every child received a £250 voucher (£500 if the family was in receipt of Child Tax Credit) to put in a Child Trust Fund. Even if parents – or other relatives and friends – have not added a single penny saving in the interim, those who received the higher amount, because of growth and interest, might find that their accounts are worth as much as £2000 today.

Gordon Brown was very keen that children would establish a savings habit and build up a financial cushion to help them manage their money in adult life. Taking stock today, you can see how important that initiative was and how foolish it was for the Coalition government to end the scheme.

The share of income UK households save is now at its lowest 2017 since records began, as expenditure outstripped inflation-eroded pay over recent years. Earlier this year, the Office for National Statistics reported that the full-year household “saving ratio” fell to just 4.9 per cent in the year, down from 7 per cent in 2016, the lowest since 1963.

Meanwhile, the total household debt-to-income ratio rose again to 133 per cent and is still rising. The ratio had fallen steadily in the wake of the financial crisis, after peaking at 150 per cent in 2007, but has been rising again since 2015.

The Joseph Rowntree Foundation reports that six in 10 of the poorest fifth of households had no savings at all, while a further one in nine had savings less than £1,500. In other words, a relatively small thing – like the washing-machine breaking down and needing to be replaced – could be the genesis of real financial difficulties for a family. Without a small financial cushion to fund the essential replacement, families would be forced to resort to ludicrous-interest ‘payday’ loans or in to the arms of retailers and catalogue companies charging exceptionally-high interest rates.

Back to Child Trust Funds (CTF). More than 6 million accounts were opened, but official figures show that almost a million accounts are now classed as ‘addressee gone away’, meaning they’ve been forgotten about.

The amount in each account varies from about £320 to more than £2000, but it is known that a high proportion of the forgotten accounts had the higher initial deposit.

Luckily, it is fairly easy to track down your CTF. You have to make a request to HMRC via the gov.uk website. This means you need a ‘government gateway’ ID, which can take a few days to set up, then you can submit your request. You should hear back within 15 days.

Once you’ve found your child’s CTF you have options, dependent on your child’s age. After 16, the child controls what happens, although they can’t withdraw it until they are 18. After 18, it is entirely up to the child to decide what to do.

Probably, the best advice you can give is for them not to go and blow it on a big party, although a small toast to Gordon might be appropriate.

Better to place it in a safe place - that’s not down the back of the sofa – providing the best return you can find and keep it there for use on that inevitable rainy day, preferably adding to it on a regular basis.

Boiling blood is not enough!

Every so often, like most people, I sit down to have a quiet read of my newspaper and, having scanned a court report on the prosecution of a serious crime, suddenly find myself outraged by what appears to be a let-off for the criminal. ‘Litter-picking’ instead of ‘locked-up’. ‘Fine’ instead of ‘fixed-term prison sentence’.

Somewhat surprisingly, it is now 30 years since the law was changed to allow the Attorney-General (the government’s chief legal adviser) to refer a case to the Court of Appeal if she or he thinks the criminal has been given an ‘unduly lenient sentence’. Less surprisingly, “it has made my blood boil” is not one of the legal reasons for referral, although it might provide the initiative to do something about it rather than just explode with exasperation.

There was considerable opposition to this legal change, mainly because the procedure offends against the principle of double jeopardy, the legal principle which says a person cannot be tried for the same crime twice.

It’s a widely adopted principle – for example, in the USA it is written into the Constitution as the Fifth Amendment - designed to protect against judicial tyranny in which citizens could be repeatedly prosecuted for the same offence however often a jury had found them innocent. But, as with many such principles, it is the ‘exceptions that prove the rule’.

There were clearly cases where "new, compelling, reliable and substantial evidence" had come to light and it would be outrageous for individuals to remain unprosecuted of very serious criminal offences just because they had been acquitted at a previous trial when that evidence had not been available.

I’m pleased to say that, in 2005, the Labour government – with prominent leadership of the initiative by my good friend David Blunkett – changed the law to allow the possibility of a second prosecution. Despite all the loud opposition, the sky has not fallen down and the sun has not stopped shining. I would be very surprised, if now, anyone would want to reverse the changes.

The highest profile example of the new law in practice was the renewed prosecution and successful conviction of two of the murderers of Stephen Lawrence, an innocent young man, with his whole life ahead of him, who was brutally attacked and stabbed to death just because he was black. There could have been no better example to illustrate why the change in the law was right.

When considering sentences after convictions for serious criminal offences, judges are required to pay regard to sentencing guidelines, determined by a Sentencing Council. Of course, there are many factors to be taken in to account in determining the proper sentence in respect of a particular crime and a particular criminal and, for the most part, the judges get it right.

But, it’s when they don’t that our hackles rise.

Only certain types of cases can be reviewed – they are ones like convictions for murder, rape, robbery, serious fraud or drugs-related, child cruelty, hate and terror crimes.

But, you may be surprised to learn that anyone can ask for a sentence to be reviewed. You don’t have to be involved in the case. Only one person needs to ask for the Attorney-General to act. But you have just 28 days after sentencing to make your complaint. [You can find out more at https://www.gov.uk/ask-crown-court-sentence-review.]

In fact, more people are making challenges under the Unduly Lenient Sentence scheme than ever before. Last year, 943 referrals were made to the Attorney-General’s Office, compared with 837 the year before. Just to put this in context, there were more than 80,000 cases in the Crown Courts last year.

Of these, the Attorney-General referred 173 cases to the Court of Appeal, compared with 190 in 2016. Of those, 137 sentences (79%) were increased compared with 141 (74%) the year before. A record number (58) of sentences for rape and sexual offences were increased by senior judges last year because they were too lenient.

The Court of Appeal will only act in relation to a sentence only where it is unduly lenient (not simply lenient), because it falls outside the range of the sentencing guidelines.

So, next time you find your hackles rising and your blood boiling because you think a criminal has got off far too easily, and with a sentence less than the guidelines suggest, don’t just explode in exasperation, write straightaway to the Attorney-General. You might make history.

Crime busting

In his latest book Fear: Trump in the White House, the veteran journalist and author Bob Woodward who, with Carl Bernstein at the Washington Post, exposed the Watergate scandal, which led to the resignation of US President Richard Nixon before he was impeached, reports that his lawyers warned President Trump that he might end up in prison if he testified to the special counsel investigating Russian meddling in the US elections.

Lawyer John Dowd is reported to have told Mr Trump: “Don’t testify. It’s either that or an orange jumpsuit.” Apparently, he told Mr Trump: “You are not a good witness. Mr President, I’m afraid I just can’t help you.”

Woodward then reports Dowd as saying of Trump “He just made something up. That’s his nature.” Unsurprisingly, Mr Dowd resigned from the White House team in March.

Today, Prime Minister Theresa May told us that two Russian men, officers in the GRU – the Russian military intelligence service – were prime suspects in the poisoning of Sergei and Yulia Skripal with Novichok in Salisbury, the subsequent death of Dawn Sturgess and the serious illness of her partner Charlie Rowley.

At one level, this story seems quite astounding, a work of fantasy fiction. You couldn’t make it up. But, without reservation, I’m prepared to say that I believe that what Mrs May has told us is true.

However, I am absolutely clear that President Trump is the pre-eminent purveyor of fake facts and that, in accordance with the statement of his lawyer John Dowd, what we perennially hear from President Trump is something that “He just made something up. That’s his nature.” Leaving aside his misogyny, Trump is a walking disaster for truth and democracy.

But, as Theresa May gave her statement to the House of Commons, a number of other things came to mind.

First, she told us that, because the Russian government had never responded positively to a request to extradite Russian nationals to stand trial for serious crimes committed in the UK, there was little point in making a request.

Wrong. If there is the evidence to make an extradition request, it should be made. If President Putin and the Russian government decide to say ‘No’, they should then be held to account for their actions for their decision. What sort of morality is it that puts ‘nationality’ above ‘justice’?

Secondly, Mrs May told us that a European Arrest Warrant had been issued for the arrest if the two suspects. It took years of negotiations before there was agreement on a European Arrest Warrant in 2004.

Since then, more than 8,000 people have been extradited from the UK to face trial or serve a sentence abroad; it has also resulted in many more than 1,000 people being returned to the UK to face justice. This includes Sheffield criminal Craig Allen, who was sentenced to 20 years’ imprisonment in 2014 for supplying Class A drugs in the UK – bringing death and destruction to many local communities – but orchestrating the criminality from Thailand and Holland. Allen was the first fugitive to be captured abroad after the launch of the National Crime Agency.

But, is there any deal on a European Arrest Warrant post-Brexit? No, of course not. More worryingly, many arch-Brexiteers are so anti-Europe that they don’t see the need for a deal. No wonder that international criminals look happier and rub their hands with glee each time that William Rees-Mogg pontificates on the TV.

The third thing that got me thinking was the report that, in trying to investigate the Novichok poisoning, police officers had viewed more than 11,000 hours of CCTV and taken more than 1,400 statements. It stands in dramatic contrast to other recent reports on policing in the UK.

• More than 800 police stations closed since 2010.
• There are 20,000 fewer police officers in England and Wales since 2010.
• According to the National Audit Office, police funding increased by 31% in real terms between 2000/01 and 2010/11 and has been cut by 18% since then. The cut would have been even bigger if the government hadn’t forced extra increases in council tax.
• Last year, there was a 22% increase in knife crime and an 11% rise in gun crime, according to the government’s own figures, and the increase hasn’t relented this year.
• Two-thirds of burglaries are not being properly investigated because of police shortages. Last year, 130,000 burglary investigations across England and Wales were closed by police without identifying any victims. That was a 40% increase on 2014.

I make no complaint about the resources that have been invested in trying to solve the Novichok poisoning case.

But, along with most constituents, and particularly those who have been the victims of serious crimes, I ask

“How many more serious crimes would have been solved and criminals brought to book if the Coalition and Conservative governments hadn’t slashed the resources for local policing?”

Lack of discretion

The government published its long-promised Green Paper on Social Housing in August to avoid parliamentary scrutiny.
What had been promised to “be the most substantial report of its kind for a generation” was best described by independent commentators as “underwhelming” and “pitiful”.
It’s perhaps worth recounting some key information about the scale of our housing challenge. The contrast between the first part of the last two decades and the second is dramatic.
Between 1997 and 2010, we built two million more homes, another million families became home-owners, and we saw the biggest investment in social housing in a generation, together with massive falls in rough sleeping.
And I had consistently called for an increase in new affordable house-building to buy and to rent throughout that period.
Since 2010, we have seen new-housebuilding figures still well below those achieved before the global financial crisis – whilst developers sit on record levels of land with planning permission for housing, and make record profits, home ownership for the under-45s fallen by more than one million and home ownership fallen for all to the lowest level in 30 years, seen the number of new social rented homes fallen to the lowest number since records began, and had a huge rise in homelessness and rough-sleeping.
And I have consistently called for an increase in new affordable house-building to buy and to rent throughout this period as well.
Despite new house-building being at record lows, this government has also managed to cut the number of shared ownership and other low-cost home ownership homes being built each year by half since 2010 to just 10,870 homes in 2017/18, whilst giving away millions of pounds to subsidise existing homeowners earning more than £100,000 a year to buy another house under Help-to-Buy, and almost doubling the amount of green-belt land being built on, from 290 hectares in 2013/14, to 565 hectares in 2016/17.
In real terms, Government funding for new affordable homes fell from over £4bn in 2009/10 to less than £500m last year. And this government now defines ‘affordable’ as ‘up to £450,000’. What world are these Conservatives living in?
It is a catalogue of shame, shambles and ideologically-driven incompetence, with every new-house-building promise made since 2010 being broken. And, I stand by my statement that there is more chance of Sheffield Wednesday winning the European Cup by 2022 than there is of the government keeping its latest promise.
The Conservative claim to be the ‘party of the family’ is just a sick joke.
Over 120,000 children are now living without a home in temporary accommodation in England, an increase of 65% since 2010. In addition, there are hundreds of thousands of children each year who are now living in insecure tenancies and losing that home at the end of each short-term tenancy, not because the rent hasn’t been paid or tenancy agreements broken but just because the landlord thinks he can achieve another rent hike in this housing crisis.
This week, all these children will be starting the new term at school not knowing whether they will get to the end of this term or this school-year in the same home or at the same school. What sort of family life is this? What are the prospects for children to reach their real educational potential if they are continually moving home and school?
Having shifted the private rented-sector to insecure short-term tenancies, the Conservative – Liberal Democrat Coalition government started to do the same thing to social housing, that is council and housing association tenancies.
Historically, council and housing association tenancies (with a few exceptions) were ‘life-time tenancies’. Housing associations were required to offer tenants the “most secure” form of tenancy, meaning the majority of tenants were offered ‘lifetime’ assured tenancies.
In other words, if you complied with your tenancy agreement (paying the rent on time, not harassing the neighbours, not keeping pets in forbidden tenancies etc), it could be your home for life. This meant that people could invest in their new homes – carpets, fitted furniture, decoration, their gardens – knowing that it wouldn’t be wasted. [Some 35 years ago, I implemented a policy, going well beyond the statutory position, which enabled Sheffield council tenants to be reimbursed for investing in new kitchens, bathrooms or conservatories if they subsequently decided to move.]
Life-time tenancies provided stability to families, and especially to children, and to communities. All the research shows the big negative impact on communities and on community safety where there is high mobility, and there is a significant correlation between high mobility and lower performance in schools.
In 2011, the Coalition Government introduced a power for councils to offer ‘flexible tenancies’ - secure fixed-term tenancies with a minimum term of two years - to new social tenants. It also allowed housing associations to offer fixed-term tenancies to all new tenants after 1 April 2012.
Ministers said the changes were intended to give local authorities and housing associations greater freedom to manage their housing stock, ensure that social housing is allocated to those who need it most, and that lifetime tenancies are not given to tenants irrespective of how their circumstances might change in the future.
Nonsense. This was all about an ideological commitment to the highest level of owner-occupation (however poor some of that accommodation might be), to the demise of social housing, and to a thriving, highly profitable private-rented sector for everyone who was not a home-owner.
Everyone knew that what was being sold to the media and to the public as ‘increasing discretion and choice’ was nothing of the sort. Rather like Henry Ford – “you can have any colour you like, as long as it is black.” – the Conservatives and Liberal Democrats were committed to non-owner-occupiers being private insecure tenants. This introduction was just the softening-up process.
There was limited take-up of fixed-term and flexible tenancies by councils and housing associations. By 2014/15, only 15% of social housing tenancies were being let on a fixed-term basis.
And, so it was that, in 2015, the Conservative Government announced that it would “review the use of lifetime tenancies in social housing to limit their use…and ensure the best use is made of the social housing stock.” This meant “doing away with lifetime tenancies”.
The Minister, Marcus Jones, introduced new clauses to the Housing and Planning Act 2016, explaining that “the new provisions would prevent local authorities in England from offering secure tenancies for life in most circumstances.” He noted that “social landlords had not taken advantage of the discretionary powers introduced by the Localism Act 2011” and that “continuing to offer social tenancies on a lifetime basis did not represent an efficient use of scarce social housing.”
What discretion? What choice? What localism? What devolution?
New regulations were promised…and promised…and, like all housing promises of this government, were never delivered.
But, on publication of the Green Paper on 14 August 2018, A new deal for social housing, the Housing Minister announced that the government “will not implement these provisions at this time”.
There’s certainly a lack of discretion, but what the future holds is anyone’s guess.

MANORIAL RIGHTS

For most people, their housing worries and concerns focus on whether they can save enough to get on the property ladder or earn enough to pay the rent or the mortgage, or finance necessary repairs and maintenance.

Over the last couple of years, there have been some shock-horror stories about the nature of new leasehold properties, especially houses, where the leases contained provisions for ground-rents to double every decade. Either the conveyancing solicitors didn’t do their jobs or new home owners were too starry-eyed to take notice of the real financial implications to halt the purchase process. The government may stop new leaseholds with such onerous terms but, with the exception of exhortation to the developers to reimburse the purchasers – which most will not do because they’ve already sold the freeholds, booked the super-profits and distributed them to shareholders – the government still doesn’t know what to do with existing leaseholders whose homes are devaluing by the minute or unable to be sold, except at a big loss.

The appalling fire at Grenfell Tower has shone a huge spotlight on the complexities of who pays the bill, and when, for removing and replacing the cladding on multi-storey buildings and for paying for 24/7 on-site fire wardens until the work is complete. Obviously, the responsibilities will vary from building to building, dependent on the facts of the situation. But, it is already clear that there are some leaseholders who are stuck in their flats until the situation is resolved and others who potentially face bills significantly higher that the value of their homes.

I well remember how I learned for the first time about some of the complexities of UK property law when Right-to-Buy council tenancies were introduced. Just try getting your head around the concept and reality of ‘flying freeholds’ – where one freehold underlies or overhangs another freehold. At a simple level, they are quite common in our area – for example, where a ground-floor shared passage to the front and rear doors of terraced homes has the bedroom area for both properties on the first-floor. Of course, they become much more complex with properties which were built with no thought ever being given to splitting the ownership rights – for example, flats above shops above underground car-parking areas.

It was at about the same time that I learned about some of the legal and financial challenges to repairing and improving nineteenth century private homes which had been built on Sheffield’s hills. Houses were beginning to crumble, but so too were huge retaining walls. Too often the obligation to repair and maintain the walls rested with impecunious home-owners and the remediations costs would be many times the value of the property, but failure to maintain threatened the very existence of other homes and they, in turn, also became un-mortgageable, un-insurable and un-saleable. It often took considerable investment - of professional expertise, creativity and commitment, as well as cash - by the local authority, to find solutions to these problems.

When I was grappling with the demise of the South Yorkshire County Council, I learned about the importance of the mining archives in relation to negotiations about financial responsibilities for dealing with subsidence and settlement affecting many thousands of homes which had arisen from (particularly) coal-mining, perhaps more than a century ago.

But all these complex property issues can pale in to insignificance when you start asking questions about what your home-ownership rights might actually mean. For instance, have you ever asked yourself how far beneath the surface of your home and garden do you own? Is it to the centre of the earth? Do you own the gas in the rock a hundred metres below your house – particularly relevant as the Conservative government is pushing ahead with fracking in a quite reckless fashion? Could the National Grid erect a huge electricity cable a hundred metres above your house without your permission? They’re all good questions which, being well above my expertise-grade, I have no intention of trying to answer here.

This is all just a foreword to the latest position on addressing ‘manorial rights’ in English law. Fortunately, this will not affect most of us. However, these things have a tendency to rise up and bite us when we are not looking or expecting them.

At its simplest, much of our property law originated in Norman times. There was a feudal and medieval system of tenure. Basically, the Lords of the Manor owned the land and they decided who could do what and when with it. Some of these rights - including the rights to mine, extract minerals, hunt and fish - were very valuable. Together with other things, these were called ‘manorial rights’.

When landowners sold land, they often did so whilst retaining rights to the land below the surface and even rights to particular activities (for example, fishing) on the surface.

At the same time, there were sometimes obligations passed from the Lord of the Manor to new freeholders or leaseholders. Some residents of village cottages have been shocked to discover that they are affected by corresponding ‘chancel repair’ obligations and are legally required to pay their share of repairing the tower of the local church!

Manorial rights were specifically preserved when most remnants of the manorial system were abolished in 1926. These manorial rights over-rode other rights on property held by the Land Registry.

In an attempt to stop ancient manorial rights suddenly being brought forward to create chaos in land transactions, there was all-party support for the 2002 Land Registration Act. This required landowners to register their manorial rights by 13 October 2013 or lose them forever. In consequence, 73,000 applications were made claiming specific manorial rights on properties in England and Wales.

Many of these were known to relevant home-owners or businesses, but others were shocked to learn about the rights that others held over their land and about obligations they might owe to others in certain circumstances. Unsurprisingly, those affected made quite a fuss although it also has to be said that much of the fuss seemed to have come from solicitors who didn’t understand the law or its real implications.

Why not just abolish these manorial rights, many asked? Well, there’s no difference between manorial rights and other property rights; removal would require compensation to be paid. In this case, abolition would transfer an asset from one property owner (the claimant to the manorial rights) to another (the landowner). Thus, any attempt at abolition would almost certainly result in a legal challenge under Article 1 of the European Convention on Human Rights (ECHR), related to deprivation of possessions and property.

As a result of the large number of representations made about the Act, the all-party Justice Committee investigated and reported in January 2015. As well as examining arguments for and against the abolition of the protection of manorial rights in law, it recommended changes for more efficient operation of the Act.

Last month, the Law Commission published a report on updating the Act to make further improvements. Their recommendations were particularly targeted at sorting out rights and obligations claimed by ‘manorial rights’ owners who appeared to be trying it on and whose claims wouldn’t succeed but, in the meantime, were adding complications and costs to property transactions.

The excellent House of Commons Library has now published a summary on the Registration of Memorial Rights at https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN07072.

If you are interested in these things, or have trouble getting to sleep, it’s a great read!

There’s no accounting for it

The recent financial crashes of, amongst others, British Home Stores, Carillion and House of Fraser have rightly raised public concerns about the actions and responsibilities of company directors, their accountants and auditors.

On the face of it, all three companies appear to have been publishing accounts which did not reflect the financial reality, trading whilst they were insolvent, and been carrying huge pension deficits.

Working backwards, it is absolutely clear that the Pensions Regulator – who is meant to be acting on our behalf to ensure that companies comply with their legal obligations – has been asleep on the job and has simply failed to intervene to protect pensioners and the public purse.

19,000 workers fearing for their retirement incomes following the sale of the store by retail tycoon Sir Philip Green to former bankrupt Dominic Chappell for £1. It was only after intense parliamentary and media scrutiny that Philip Green paid £363 million into the pension fund to fill part of the gap. But not even that will happen in the case of Carillion and House of Fraser.

Further, It is quite extraordinary that, it is only in the last 6 months, for the first time, the Regulator has used its enforcement powers under the 1995 Pensions Act to deal with issues such as pension scams, scheme valuations and automatic enrolment and, in an investigation into pension fraud, secured production orders under the Proceeds of Crime Act 2002.

Incidentally, councils used to be required to keep their pension provision 100% funded at all times. However, when Mrs Thatcher was implementing the poll tax, she was so desperate to keep the level down that she changed the law and then told councils to cut their funding to 75%. So much for financial prudence!

It is quite clear that companies should not be allowed to seriously underfund their pension schemes. Not only does it put the pensioners at risk of seriously reduced pensions and add millions to public expenditure to compensate, but underfunding companies are also enjoying an unfair competitive advantage and disadvantaging companies which do the right thing.

Trading whilst insolvent can be a criminal offence (fraudulent trading) or a civil offence (wrongful trading). Basically, a company is insolvent when it can’t pay its debts, either because it can’t pay its bills when they become due, or it owes more than it has assets on its balance sheet. Company directors may be able to take some actions that allow the company to continue trading.

The law says that It is incumbent on a director to be aware of their company’s financial position at all times; saying “I didn’t realise guv’ is not a defence. Failing to realise that a company is in financial difficulties should be regarded as negligent, irresponsible, or a clear indication of being unfit to be a director.

Hard-working low-waged workers - struggling to keep their heads above water, and who would undoubtedly face disciplinary action, even dismissal, if they didn’t do their jobs properly – are fully entitled to ask why the same standards aren’t being applied to company directors who are often paid exceptionally well and then walk away from company car-crashes without a scratch.

Given the low numbers of investigations in to director failure, let alone action to pursue civil or criminal action for obvious failure, people are entitled to believe that the law is implemented unfairly. In 2017, 1214 directors were banned for periods of up to 5 years, but these were nearly all directors of small companies. To misquote John Maynard Keynes, “If you owe the bank £100 they will pursue you to the end of the world; if you owe the bank £100 million, it will make you a director.”

Finally, very serious questions are now being asked about the performance of auditors in their responsibility to verify that a company’s accounts are true and fair, in accordance with accounting standards. In a survey of chief financial officers in 2012, nearly 50% of them said that “massaging the accounts” (for example, by taking very optimistic views on the value of stock or the ability to get money from debtors) would be justified to help a company survive an economic downturn. It is in that context that auditors ought to be questioning and challenging the information they are given.

Audit has a community governance function. It isn’t just to protect shareholders. It’s also to provide transparency to employees, pensioners, suppliers, customers and the public at large.

Of course, accounting and audit scandals are not new. Older readers will remember Robert Maxwell and Mirror Group Newspapers, Asil Nadir and Polly Peck, and the Bank of Credit and Commercial International (BCCI). The 2001 collapse of Enron, the US energy giant, provided the spectacular example of large-scale accounting fraud. More recently, Bernie Madoff tricked investors out of almost $65 billion, the biggest Ponzi scheme in history.

A decade ago, the global financial collapse demonstrated that the auditors as well as the bank directors hadn’t the faintest idea about the real values (and risks) of many complex financial products, like derivatives.

American Upton Sinclair had written presciently in 1935 “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” And economist JK Galbraith concluded his history of the 1929 Great Crash by warning of the reluctance of men of business to speak up “if it means disturbance of orderly business and convenience in the present”.

Just four major global firms – Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY) and KPMG – audit 97% of US public companies and all the UK’s top 100 corporations. They don’t have any real competition for the audit of global corporations or the largest national companies. Just eight of the FTSE 350 companies are not audited by the Big Four. It’s an effective cartel in a guaranteed market – companies are legally required to be audited. In what is now taken for shareholder protection and a proxy for competition, the big four companies now exchange clients every 10 years.

Despite the cartel and the lack of effective fee-competition, the auditors know that their most profitable income comes from advice and consultancy services. If ever there was an opportunity to persuade auditors to be generous, if not compliant, in their assessments of the business’s financial status, this is it.

And, despite the high fees, the quality isn’t as high as it should be. Currently, none of the Big Four audit firms meet the 2018/19 target of no more than 10% of FTSE 350 audits requiring improvements.

Finally, some companies are playing fast and loose with accounting standards. Simply changing the way in which work in progress is valued (say, on long contracts) can make dramatic differences to the accounts and to the perception of the company’s health. For example, in its 2016 accounts, Capita stated that it had equity of £483 million at the year-end; but, in its 2017 accounts, Capita stated that, on the same date of 31^st December 2016, it had negative equity of £553 million. A £1+ biliion difference, just by changing the way revenue was booked.

Similarly, Carillion directors failed to review and reflect the real value of ‘goodwill’ in its accounts. It kept the same value of goodwill in the accounts for five years, despite the evidence being that it was virtually worthless. And then the auditors simply failed to properly challenge the directors’ value.

So, what is to be done?

We need:

• a Pensions Regulator who takes the job seriously and is intervening early to ensure appropriate amounts of contributions are being paid in to funds and deficits are not being allowed to build up, who is using all the existing powers to take action on pension scams, scheme valuations and automatic enrolment and get money back from fraudsters;
• fearless investigations into the performance of company directors, not just where they have been clearly acting against the law, but also where they have failed to do their job by being negligent or irresponsible for failing to understand the company’s real financial position and taking the appropriate action;
• bigger fines and stronger sanctions on audit firms and partners who are failing to challenge the accounts in accordance with the expected standards and are not clarifying or qualifying the accounts where there are significant issues relating to pension fund deficits, and the valuation of goodwill, work-in-progress and assets; and
• action to increase the number of practices and firms which have the capacity to audit big global and national companies. As part of this strategy, there is a very strong case that accountancy firms should simply be banned from providing any non-audit services to their audit client.

Royal Mail

Let’s start by being clear that this isn’t a tabloid article or blog about William or Harry. We’re talking letters and parcels.

And, to reinforce that, why not a relevant quiz question next?

Which government minister led the privatisation of the Royal Mail? Was it

1. Labour’s Peter Mandelson, or
2. Conservative Michael Fallon, or
3. Liberal Democrat Vince Cable, or
4. UKIP’s Nigel Farage?

Still thinking? Let’s make it a little easier.

We can exclude d) Nigel Farage on two grounds. First, he was never a government minister. Secondly, Nigel Farage is never the answer to a serious question.

Give in? Well, it was c) Liberal Democrat Vince Cable…although he was supported by b) Conservative Michael Fallon.

Given the under-valuation of the shares in every previous privatisation (gas, water, electricity, telecoms), when the Royal Mail was privatised in 2013, it was not surprising that applications were made to buy seven, yes 7, times more shares than were available. In fact, the shares rose 38% on the first day of trading and were 58% higher just 6 months later. At one point, they were trading at an 87% premium.

When the all-party Business (BIS) Committee investigated, it concluded, with classic understatement, “…it appears that the taxpayer has missed out on significant value”. To put it another way, we – the taxpayers – could have received an extra £1 billion for the shares if they’d been priced at the value they traded on the first day, and a lot more just a few months’ later.

You’d think Messrs Cable and Fallon would have been embarrassed? No way. They told the Committee “We don’t apologise and we don’t regret it.”

So, why am I writing today about these events of 5 years ago? Well, it’s because they paint an important backcloth for a number of recent issues about the Royal Mail, its executives and its performance.

Let’s start with executive pay. The former chief executive was extremely well-paid but, recently, the Royal Mail board appointed a new chief executive, Rico Back. He was to be welcomed with a golden hello of £6 million and then be paid up to £2.7 million per annum. And, he would remain living in Switzerland whilst commuting occasionally to London.

No wonder, when shareholders got the chance to consider this in July, in one of the biggest revolts in shareholder history, more than 70% opposed it but could not stop it going ahead. So, 34% of shareholders opposed the re-appointment of the chair of the board, Peter Long. [Incidentally, last week, the shareholders at another company, Countrywide, where Mr Long is also the chair of the board, successfully revolted against a £20 million pay package for executives. Mr Long is also board chair at a number of other companies. He doesn’t have a zero hours contract; he seems to have a series of contracts which commit him to working more days every week than there are days.]

Then, last week, the Royal Mail was fined £50 million for breaking competition law. At its simplest, it had been found guilty of unlawfully blocking competitors for parts of its commercial services.

And, this week, it has been revealed that complaints about lost mail and parcels have reached record levels, topping more than 1 million last year. More than 250,000 people lodged formal complaints about lost parcels. There was a 58% increase in reports from customers complaining that they had never received their parcels, despite the Royal Mail saying they had been delivered.

That’s bad enough, but have you noticed what has been happening to the Royal Mail’s performance in delivering our letters.

Well, on the face of it, not much. Royal Mail claims that more than 99% of first-class letters are delivered the following day and more than 98% of second class letters are delivered within three working days. OK, it’s not quite as good as 150 years ago, when you could post a letter in the morning and have it delivered to the other side of town later that day, but it seems acceptable.

But, have you noticed the changes that the Royal Mail has been making to the collection times at post-boxes across the city? Until two years ago, most post-boxes in the city had ‘last collection’ times between 15.30 and 17.30. This was both appropriate and convenient. Businesses knew that as long as letters produced during that day’s work got in to the post-box on time, 99% were expected to be delivered the following day. Most workers were familiar with that call ‘Anything else for the post?” which rang around the office around 5pm each day.

However, the Royal Mail has been changing the ‘last collection’ times to post-boxes across the city and across the country and bringing them forward to 09.00. So now, post generated and posted during the day isn’t collected until the following day. [Unless you are prepared to take the post to the minority of post-boxes which have later collection times.]

This means that, effectively, the Royal Mail has given itself two days to deliver first-class post, and four-days to deliver second-class post, and yet can still claim that it delivers more than 99% on the following day. What a fiddle!

I’m just waiting to see some honest advertising from our privatised Royal Mail: “Prices up. Executive pay up. Lost letters up. Lost parcels up. Service down.” But, I expect I’ll be waiting some time.

Whatever, it is now time for all of us to keep our wits about us. The universal service obligation – in other words, the same price and target delivery times, including a requirement for daily deliveries Monday to Friday, to apply for mail throughout the UK – is only enshrined in law until 2021.

Just watch. There will be enormous pressure and lobbying from a number of companies over the next three years to end the universal service obligation for domestic mail. The sharks are circling.

Have your say about buses

100 years’ ago today, there was a strike on the buses.¹

The strike arose out of a demand from women conductors that they should also receive the bonus of five-shillings a week that had recently been awarded to male conductors. Of course, nowadays, no-one – perhaps other than UKIP representatives and supporters who seem to think that equality is some strange form of political correctness – would contemplate discriminating so blatantly as this. However, it is clear that there is still considerable gender discrimination in pay in all employment sectors.

But, how often do you see a bus conductor of any gender nowadays? They are almost as rare as hen’s teeth. In fact, their demise correlates strongly with the demise of local public transport since Margaret Thatcher’s deregulation of the bus services some thirty years ago, since when there has been a 40%+ reduction in the number of passenger journeys in South Yorkshire. Is it any surprise that that correlates strongly with the rise in road congestion, which has added so much to journey times and business costs?

I have long argued that we need to take back local public control over transport services so that buses, trams and trains are run for the benefit of passengers – and in support of local economic, environmental and social regeneration policies – rather than for the profits of the shareholders of transport companies.

In recent weeks, there have been a large number of articles and reports in the local media - including the views of local users, operators and politicians (including myself) - about our local bus services.

Now, the all-party House of Commons Transport Committee has launched an inquiry into people’s experiences of and expectations about bus services throughout the UK. It is important that the voices of Sheffield and South Yorkshire people are heard in this consultation.

The Committee specifically wants to know:

• What are some of the factors that might be affecting bus use in our local area?
• How reliable is the bus service in our local area?
• Does congestion affect bus use in our local area? If so, what measures have bus companies taken to improve this?
• How dependent are people on bus services in our local area?

You can find out more about the inquiry and how to make your views known at

https://www.parliament.uk/business/committees/committees-a-z/commons-select/transport-committee/news-parliament-2017/health-of-bus-market-inquiry-launch-17-19/?utm_source=CWC-Transport-Bus+services&utm_campaign=62384b788d-EMAIL_CAMPAIGN_2018_08_15_08_38_COPY_01&utm_medium=email&utm_term=0_3005bc3c8f-62384b788d-99886639&mc_cid=62384b788d&mc_eid=04f1d8f500

I invite everyone who is interested in trying to improve our local bus services to contribute. Do it now.

¹ https://www.thetimes.co.uk/edition/register/the-omnibus-strike-p2zlgml5b

Warm words only, so the housing crisis continues

In the last week, the government has made, what it purported to be, three major announcements about housing policy.

Let’s not be in any doubt about the timing. There is no reason why these announcements couldn’t have been made a month ago. They have been made now, in the peak mid-August holiday period, to avoid parliamentary and professional scrutiny. And, when we see the content, we can understand why.

The first announcement was, effectively, a ‘no change’ decision about funding for supported housing.

Supported housing is mainly for the elderly, people with mental, physical and learning disabilities who require personal care, support or supervision. It includes sheltered housing, group homes, hostels, refuges, and supported living complexes. About 270,000 people live in supported homes.

In 2011, the coalition government made proposals to fundamentally change housing benefit (as it introduced universal credit). This was followed, in 2015, by a bizarre decision to force rent cuts on social landlords – with the effect of cutting the number of new social homes for rent that would be built – and, in 2016, by the imposition of local housing allowance caps.

After a consultation in late 2016, which produced nearly 600 major responses by February 2017, Theresa May announced another set of policy changes for sheltered and supported housing in October 2017. This included a proposal that funding for short-term and transitional supported housing – typically homeless hostels, refuges for those at risk of domestic violence and those receiving support for drug/alcohol abuse – would be through a ring-fenced grant administered by local authorities.

Everyone with any knowledge about this specialist housing sector said this would be an absolute disaster. In response to the fierce criticism, the government announced another consultation which ended in January this year. It has then taken another seven months for the government to announce that it has climbed down and that housing benefit will continue to fund short-term housing.

It’s a welcome announcement, if only because it was the only logical decision. But, a listening government wouldn’t have got itself in to this mess in the first place and created a year of unnecessary turmoil. As it’s a no-change announcement, there is no new money involved.

The second announcement was by Secretary of State James Brokenshire about ‘a new £100 million programme to eradicate rough sleeping within a decade’.

Only under determined questioning did Mr Brokenshire admit that there was no new money involved at all. £50m was already part of the rough sleeping budget and £50m had been taken from elsewhere in the housing budget. 

The incoming Labour government in 1997 inherited a high and rising level of rough sleeping. In 1999, Louise Casey was made Head of a national Rough Sleepers’ Unit, backed with resources which then resulted in year-on-year reductions in the number of rough sleepers. But the incoming coalition government in 2010 abandoned those policies, with the inevitable result of a near tripling of the number of people sleeping on the streets.

It’s an absolute scandal that it has taken the government so long to acknowledge the disastrous impact of its policies on individuals, families and on communities. There was no need to wait until August to do something. And the attempt to portray the announcement as an extra £100 million to tackle rough sleeping, when it is nothing of the sort, was just disgraceful.

The final announcement was the long-promised Green Paper on Social Housing.

Last September, the then Secretary of State Sajid Javid announced “a wide-ranging, top-to-bottom review of the issues facing” the social housing sector. He said it would “be the most substantial report of its kind for a generation”.

Let me tell you that it is nothing of the kind. It’s hardly worthy of the epithet Green – it’s Pale Pistachio at best. It’s full of warm words, but is most optimistically described as “tinkering at the edges.”

I will write more comprehensively about the Green Paper in due course. Suffice it to say that on the single most important issue for individuals and families throughout England – how many new affordable homes are going to be built – the Housing Minister has confirmed that, last year, just 5,900 social rented homes were built, the lowest number since records began and that, next year, just 6,000 will be built, when everyone agrees we need to be building 80,000 a year.

There are more than one million people on housing waiting lists…and the government is not committing a single extra pound towards building the new affordable homes for rent that are required.

It is not surprising that I have been unable to find a single organisation or informed commentator who has given the Green Paper a warm welcome. I leave you to choose between ‘underwhelming’ and ‘pitiful’. It simply fails to rise to the challenge and so the housing crisis continues.