How to build a city with Shiv Malik

Shiv Malik on Forest City 1, and what the way you would actually build a new city reveals about why Britain builds so few homes.

Britain has not built enough homes for the better part of a century. The shortfall now runs to something like four million against comparable European countries, a backlog built over decades in which housebuilding fell from its post-war peak and never recovered. A run of governments has hand-waved at fixing it, with the current one trying to go further than most: a target of 1.5 million homes this parliament, mandatory local targets and another round of planning reform. Delivery is already well behind the pace the target needs - effectively just business as usual for British housing.

Any argument about housing delivery soon reaches the NIMBYs. Planning in England is discretionary, with plenty of room for an effective veto along the way, so a small and dispersed group of local objectors can hold up a great deal at little cost to themselves. Ranged against them, more recently, is a looser movement of so-called YIMBYs. It is from that movement that Forest City 1 has emerged.

Forest City 1 is a proposal for a new city of 400,000 homes east of Cambridge, set out in a 295-page feasibility study now sitting with the Ministry of Housing, Communities and Local Government. It would be Britain's first new city in more than half a century. Behind it is Shiv Malik, a former Guardian investigative journalist and co-author of Jilted Generation, the 2010 book on housing and the generational settlement. He is still making much the same argument that book did, only now in practical terms, by trying to build an actual city.

Below, we take a tour of how Malik and the Albion City Development Corporation propose to deliver Forest City 1, and of what each design choice tells us about the way Britain builds, or fails to build, homes and the infrastructure around them.

Build the vehicle first

Before any spades go into the ground, you need an organisation capable of digging. A project on this scale can only be delivered through a development corporation. These bodies gather the planning, land and infrastructure powers that are normally scattered across dozens of organisations into a single accountable vehicle, which is what allows one scheme to handle housing, transport, water and commercial space together. Only government can create one.

Malik's Albion City Development Corporation is not one yet. It is a private company named for what it hopes to become - ministers have to be persuaded to designate the real thing. As such, the first product the organisation is building is a proposition and an evidence base complete enough for a minister to say yes to it.

Getting to that point means master planning, technical studies and optioning land. That work is expensive, it might come to nothing and Forest City is doing it privately, ahead of any public commitment. The aim, in Malik's words, was:

"To take the risk out of the public sector of doing the master planning, and bring this whole project to a point where someone in government could then sign off on the development corporation, which is a necessary tool to getting anything done at this scale."

He likens the organisation, as it stands, to the body that won the London Olympics:

"Going around saying we should get the Olympics to London, but also creating an organisation that can deliver the evidence base to win the bid."

The route from a good idea to a designated development corporation has been walked before, but it is not a well-marked path. That a journalist and a campaigner have got this far down it suggests the option is open to anyone willing to try.

Find the right ground

With a vehicle in mind, the next question is where to build, and the choice involves a trade-off. You want land cheap enough to build affordable homes on, in a place useful enough that people and businesses actually want to be there.

Most large development in Britain gets added to the edge of an established settlement or squeezed into the middle of one. Even the new towns programme broadly fits that pattern. Of the twelve sites the Government's taskforce recommended last year, only three are genuinely new settlements; the rest are extensions or regeneration of existing towns and cities.

Forest City proposes something less common: a new population centre on greenfield land near Cambridge, tied to the city by rail. Cambridge is one of the densest concentrations of research and innovation in the world, and its capacity is severely constrained. Left to its own devices, given the value of the economic activity there, it would have grown far past its current size and added a great deal more to the national economy on the way. Building beside it promises homes and an unusually large economic return at the same time.

The deliberate barrier to expanding Cambridge is the green belt, which runs to about six and a half times the footprint of the city itself. It was drawn to spare Cambridge the sprawl that overtook Oxford, and on that measure it worked.

"It has restrained growth. Well done. It succeeded, to the point where no one can afford to live in the city anymore, because it's so expensive." It is, Malik says, "less a belt and more a giant corset."

This is all very familiar, but the green belt isn’t the only barrier to development in the area. Cambridge is close to the limit of what its infrastructure can carry, with a single-track railway to Newmarket and a region that has not built a reservoir in the whole life of its water company. Threading modern infrastructure through an old city is another matter again.

"You can't reinvent your sewer system. I mean, you can, but that's tens and tens of billions for a minor efficiency upgrade."

Building on open ground sidesteps most of this. Farmland nearby changes hands at around £9,000 an acre, against £10 to £15 million for an acre in central Cambridge. Buying at agricultural prices, before the city exists to lift their value, is what makes genuinely cheap homes possible. And a fresh site can take modern water, power and transport laid from scratch, rather than retrofitted into Victorian foundations at ruinous cost.

Make it pay for itself

Homes sold at prices people can actually afford will not cover the cost of building a city. Something else has to, and in this model it is the commercial centre.

Malik draws a firm line between the commercial space most schemes tack on at the end, a supermarket or a retail park to serve the residents, and a proper commercial centre built around high-value anchor tenants. Get the second kind right and you create a genuine cluster of economic activity, which is what drives up the value of the land underneath it.

"When that power dynamic shifts, the land is worth a hell of a lot more suddenly."

The second move is to keep hold of that land. Rather than sell the commercial estate, the city would lease it and draw rents over decades. Malik points to the City of London Corporation, which has lived off its own estates for centuries, and to Singapore, where the state owns most of the land and uses the rents to hold down other costs.

"What's behind their success is that they own land and draw rents over the long term."

That rental income is what pays for the housing, allowing homes to sell for well below what the market would otherwise demand. The chain runs from cheap agricultural land, to a commercial district valuable enough to generate real rents, to housing subsidised by those rents. It only works if you own the ground before its value is made, which is another reason to start on farmland.

This is essentially how the garden cities and the post-war new towns were funded. Malik traces it back further, to the Victorian firms that bought land and built the railways and gasworks on the proceeds.

"This is how this country was built. A bunch of businessmen getting together saying, if we can buy the land, then we can do what we want... build railways, build infrastructure. So it's a return to norm, if anything."

It was, in other words, an ordinary way to build, which Britain stopped doing "until nationalisation," as he puts it.

Build the infrastructure first

There is an order to it, too. Forest City would put in the infrastructure first, power, water and rail before the houses, for the plain reason that "no one is going to live in this place if there's no way to commute there." The usual order is the reverse, with homes approved first and the roads, schools and services are bargained for afterwards, scheme by scheme, through section 106 deals and the community infrastructure levy. Those are modest tools, handled by parties none of whom answers for the place as a whole.

Forest City can run the order the right way round because one body is coordinating housing, transport, water and commerce at once, which also takes the pressure off a local authority that would otherwise be negotiating each piece separately. That coordinating role used to sit in the public sector, and much of it was lost when regional and strategic planning were scrapped in 2011, leaving the local plan to carry more than it was built for. It is now returning through regional mayors, which Malik counts among the more hopeful recent shifts.

The other reason the sequence works is that all of this is going into a new settlement. Laying a sewer or a station across open country is a different proposition from digging one into Cambridge and doing it first, before anything is built on top, is part of what keeps the cost manageable. A decent rail link is also worth having, even if Forest City is never built. Better connectivity between Cambridge and the towns to its east would be useful even if the city were never built.

Price against wages

The last choice is about price, and it rejects the system's own definition of the word affordable. In planning, "affordable" means 80 per cent of market rate, which in a place like Cambridge Malik calls "just rubbish. No one can afford it." A new four-bedroom house there runs to £600,000 or more, and taking a fifth off it helps almost nobody.

A local market can only absorb so many expensive homes at once, and a builder who floods it has to cut prices on everything still to sell. So large sites are built out slowly, at whatever rate protects the price, which is a large part of why big permissions take decades to turn into houses.

Forest City sets its prices against earnings instead, aiming for a home that costs around five times income, the historic norm, against ten or eleven today. On Malik's account that is roughly half the going rate. The homes themselves would sit in a civic trust, held apart from the commercial estate, which is what keeps them out of the speculative market and affordable after their first sale. Without it, the discount would be a one-off gift to whoever bought first.

Politics

Assemble all of it, the vehicle, the ground, the commercial engine, the leases, the order of works and the price, and you still do not have a city. You have a proposition, and the decision rests with government. The numbers can be made to work on paper. Whether a minister backs it turns on values and nerve.

Everything ACDC is doing is designed to make that decision as easy as possible: taking on the expensive early work, carrying the risk privately, and building a model that could pay for its own infrastructure and perhaps return a profit to the Treasury. Malik thinks it ought to sit comfortably across the parties, with a Tory who remembers Noel Skelton's property-owning democracy on one side and Labour wanting rents down on the other.

"My job is to ensure that becomes the easiest decision in the world to make."

Even so, it stays a discretionary call. The figures behind the model, that it covers its costs, perhaps returns a profit, and pays off its infrastructure across thirty or forty years, are by the project's own admission still waiting on a rigorous business plan, and are best read as intentions rather than findings.

Malik is unsentimental about why the project gets a hearing at all.

"The hard factors count the most. If there was no housing crisis, you wouldn't need Forest City."

The shortage is real and getting worse, which is why he expects the question to keep coming back, with or without this particular city. His own summary is borrowed, fittingly, from Jurassic Park. Nature finds a way; "this is human beings finding a way."