Thursday, 29 May 2008

"Revolt grows over planning bill"

Let's look at some different takes on what is essentially the same topic:

1. From the BBC: "A Labour revolt is growing over a bill to take away ministers' and councils' planning powers on major projects like airports and nuclear power stations [and hand these powers to] an independent commission".

2. EUReferendum reckon that power cuts will be become ever-more frequent - this is due to  increasing demand; failure to replace and maintain stuff; Greenie opposition to power stations; the EU Large Combustion Plants Directive and restrictive planning laws. Rather unfairly, the list misses off "NIMBY opposition" alongside "Greenie opposition", but apart from that, fair summary.

3. David Starckie's new book "Aviation Markets", "... the book tackles subjects such as ... how airport slots should be allocated (answer: price)."

4. Lord Howell's energy policy, which amounts to "let the markets decide (not the Greenies)". This has been officially adopted as MW policy - don't tax it any higher than other businesses and for Heaven's sake, don't subsidise it. Sensible gummint oversight, sure, that's a different topic.

As ever, the MW manifesto - which is based on understanding and welcoming free markets and building policies around them - has ready answers to this:

a. As many powers as possible (apart from defence, immigration and the voting age at national elections, basically everything) should be delegated down to local councils. So if, for example, Medway Council decides to allow a local power station to be replaced/upgraded, that will be the end of the matter.

b. Local councils will obtain the bulk of their income from licence fees and user charges and Land Value Tax. And rents from social housing, different topic.

i) If there is demand for an airport, of course the Greenies and NIMBYs will be dead set against it, but as councils in the areas affected by the airport will be able to charge, via auction, around £12,000 per take-off/landing slot, there will be plenty of money coming in. Air travel will still be profitable (if not, the price will drop until it is), and if the receipts are more than enough to pay for the transport infrastructure, install secondary double glazing in homes in the flight path, etc, with a bit left over for other local amenities (to buy off the local electorate), then the airport will be built. Else not.

ii) Of course, some homes will still fall in value if they are in the flight path. At least the NIMBYs will have the consolation that their Land Value Tax bill has fallen. Conversely, with more jobs in the area (Heathrow employs 70,000 people), and remembering that house prices are largely a function of local wages, Land Value Tax receipts might even increase.

iii) Greenies and NIMBYs will object to other things that are essential but that nobody wants near them - for example power stations or waste incinerators and landfill sites. Again, local councils have to make the trade-off; if the potential income from charging fees for allowing sites to be used for landfill (EU-imposed landfill tax is a ludicrous £1m-plus per acre!) or for a waste incineration plant is greater than the potential net fall in Land Value Tax receipts (more local jobs, boosting land values, but they can whiff a bit, depressing land values), then the local council will grant permission for that landfill site or waste incineration plant. Else not.

c. When I say "no subsidies", this includes explicit subsidies (e.g. for wind turbines) and implicit ones. Nuclear power only works because of explicit and implicit subsidies - the most iniquitous being what amounts to a taxpayer funded bail-out for decomissioning and the fact that nuclear power stations do not have to insure themselves against 'worst case scenarios'.

d. As to sensible regulation and oversight, the problem with electricity generation is that we need overcapacity (which the market has no reason to provide) to cope with unforeseen power outages. Part of this can be dealt with by chucking more cables in the North Sea so that we can buy and sell capacity from the Dutch and the Belgians (who are an hour ahead of us - so we can fire up our generators an hour earlier and sell it to them in the morning). Altho' the MW manifesto does not recommend State provision of goods and services, there can be no harm in the State buying up old marginal, barely profitable power stations to provide that 5% of spare capacity that we need as a cushion and only firing them up when all else fails.

e. As a final thought, what about the long-mooted Severn Barrage? As an aside, it's nice to see this being proposed as a source of 'clean energy' (to pacify the Greenies) but being opposed by 'environmentalists', but that's not the main point.

The main point is that I, as a non-scientist, have no idea whether it will 'work'. Not the faintest. In much the same way, the Victorians who first proposed the Channel Tunnel had no idea whether it was really viable. But Thatcher (basically) flogged off the rights to build it to private companies, so for the taxpayer it was win-win. If it works, it'll compete against cross-channel ferries and air transport, if it doesn't, tough, private investors lose money. Either way, at least HM Treasury has banked some money. With the benefit of 20/20 hindsight, in economic terms it probably wasn't worth it. But so what? It's there now, so we might as well use it, and we all benefit from more competition on cross-channel routes.

The same applies to the Severn Barrage. An MW-led gummint will steamroller local opposition* and auction off a thirty year lease on permission to build and operate it (to be shared between all the county councils on either side of the estuary). If it works, great. Even if it doesn't, so what? Part of the lease agreement will be that if it doesn't, the winning bidder has to demolish it again. And if it works (in terms of 'it generates electricity') but fails (in terms of 'it doesn't cover its interest costs'), then so what? Once it's built, it will provide us with plenty of electricity at negligible marginal cost.

* Of course, something will be built to compensate local surfers for the loss of The Severn Bore.


DBC Reed said...

If you really want to get the bit between your teeth you want to look up the Marinair private sector project to build an artifical island airport in the Thames estuary years ago Never got anywhere (though artifial island airports are common) but it raises the intriguing HG Wells type possibilities of a Thames Barrage with road/ rail along the top linking the airport island with the shore line both sides.This might dispose of a lot of land-fill in the process.It would create its own land values which could be paid for by landing fees.

Anonymous said...

Anyone who advocates any type of 'planning' should be taken outside and shot. Compare towns that have grown organically, with planned towns such as Hatfield, etc. Even Milton Keynes was a dire place until they abandoned the original 'plans' and let people build warehouses and people houses just about where ever they wanted. Now it is a place that is alive and vibrant.

The problem with your plan, which is in the main great, is local councils. They are corrput ~ full stop. Not far from my country mansion / unabomber style shack, the local council want to build an 'eco town'. In the middle of the countryside. Nowhere near (at least 25 miles from) any jobs. Very eco friendly, not.
They claim that this is because there is a shortage of affordable housing. There may well be. That is because they have refused planning permission for just about every single house that has been proposed in the last 20 years.

So instead of local communities growing organically as the populations needs dictate (which would result in houses being built actually where people needed them, by definition), we have a technocrats dream ~ a planned 'society'. That will fail, and be the local shit hole in 10 years time.

Scrap planning ~ all planning. Settle disputes using property rights and compensation. Scupper the NIMBY's and the corrupt councils and technocratic planners in one swoop.

Anonymous said...

Oh, and I think 'social housing', if it is needed at all, should be provided by the private sector, not the freaking council (who will only fuck it up and use it to feather the nest of their developer mates).

Leave it to the market!

Otherwise, great post.

Mark Wadsworth said...

HH, ultimately you are right, but one step at a time! With LVT, nobody in his right mind would build an 'eco-town' in the middle of nowhere - the biggest uplift in land values (and if councils want to raise more money, this is the only way they can do it) is by increasing densities in towns and expanding ever so slightly into The Hallowed Greenbelt.