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Sharing the windfall – how to make green energy work for the UK

7 min read

Sam Dumitriu, head of policy at Britain Remade, argues that if we want onshore wind, we need to both empower and properly compensate our local communities

Britain desperately needs more homes, more wind farms, and more electricity grid connections, but we seem unable to build them, or at least, build enough of them. Extensive paperwork requirements – Norfolk Boreas wind farm required an environmental statement almost twice as long as the complete works of Tolstoy – do not help. But even when developers have dotted the “i”s and crossed the “t”s, projects frequently get rejected. Think of all that ink spilled for nothing.

The problem is that Britain has a planning system which gives people every possible incentive to say no and almost none to say yes. Homeowners, who both outnumber renters and are more likely to vote, bear the costs of new development but do not share in the benefits. Local residents bear the burden of more disruption from construction, congested roads, and changes in their neighbourhoods’ characters. Meanwhile the benefit of more affordable housing is diffuse – barely perceptible on a project-by-project basis. This is a classic problem in political economy. When the benefits of change are spread thin, but the costs are concentrated, it is a recipe for sclerosis.

It doesn’t have to be this way. The housing shortage in Britain’s towns and cities is often so acute that land with planning permission attached is worth many multiples of an identical plot of land without it. For example, housing expert Professor Paul Cheshire has observed that the value of agricultural land close to Reading’s urban fringe is worth around £2,500 per acre, while residential land nearby is worth around £2m per acre. In fact, research from the now defunct Ministry for Housing, Local Government, and Communities found that just the prospect of land being allocated in a local plan can lead to its value increasing more than 10-fold.

Identifying ways to split some of this windfall with people who otherwise would lose out is the key to getting stuff built. There are multiple examples across the globe of this approach working to deliver new homes. More than a third of all new homes built in Tel Aviv are the result of a nifty rule called TAMA 38 designed to improve earthquake resistance. Residents of tower blocks built before 1981 can agree by an 80 per cent majority to knock down and redevelop a building, or a 66 per cent majority to extend it.

What is in it for the existing residents? Not only does their building get a major safety upgrade; they also get to live in larger apartments. Look at Seoul, where a policy allows redevelopment in designated neighbourhoods if 75 per cent of homeowners vote in favour. At one point, 52 per cent of new condo projects in Seoul were delivered through the policy. Homeowners voted in favour for a simple reason – their properties would become more valuable. The scheme ultimately was discontinued due to a lack of protection for renters but it shows what is possible when incentives are aligned.

Street votes, a policy which adopts a similar split the windfall approach in a British context, is currently working its way through Parliament. This policy could allow a qualified majority of local residents to vote themselves permission to gently intensify their neighbourhoods such as by adding new floorspace. Most streets will not take up the offer and some, such as those in historic areas, would not be allowed to even if they wanted, but there are enough streets where homeowners would see such large windfalls that street votes could soon be delivering significant numbers of new homes.

In a recent interview, Ben Southwood, who co-authored the paper on street votes which Michael Gove “shamelessly ripped off”, set out why voting yes would be hard to resist on some streets. Imagine a semi-detached house worth £500,000 on a street in Cambridge could be redeveloped into a two-storey terrace with a mansard. In that case, he noted “they could triple the property’s floor space, creating three houses, each of the same floor space, worth perhaps £400,000 each”. After accounting for building costs, the homeowner could be £400,000 better off for little to no work.

nuclear power plant

Would something similar work for onshore wind? Over the past months, Britain Remade, the campaign group I work for, have been conducting focus groups on what should replace England’s unpopular ban on new onshore wind farms.

Since 2015, any onshore wind project in England can only proceed if it has unanimous support. Just one or two objections are sufficient to sink a project altogether. As a consequence, only two onshore wind turbines have been built in England in the last three years.

When this system was explained to our focus groups, there was ironically unanimous support for removing the ban. The people we spoke to did not want a free for all by any means – they still believed people had a right to object. But the idea that one person could block a project that a community otherwise supports was seen as outrageously unfair.

Opposition only grew when the prospect of energy companies offering locals benefits, such as bill discounts and community investment, was raised. It is often thought that people prefer investment in local community projects over direct cash payments. But some of the voters we spoke to were cold on the idea for one key reason: trust.

Many did not believe new playgrounds or community centres would be delivered. Worse still, some expected the projects to be ruined by anti-social behaviour. Bill discounts or direct cash payments were much more attractive – though the size of the payment available was as important as the form it took.

The problem is that Britain has a planning system which gives people every possible incentive to say no and almost none to say yes

This matters not just for onshore wind, but for almost all development. If local residents do not believe that affordable housing requirements or payments to councils will be delivered, then development will continue to be opposed.

Some MPs on the backbenches of the Conservative Party have advocated allowing locals to opt-in to new onshore wind, solar, and fracking developments via a referendum in return for bill discounts. This proposal is unlikely to succeed for fracking where opposition is far from limited to NIMBYs and would make it harder for solar projects to succeed. But it is worth considering for onshore wind. Or at least a version of it might be.

The approach of the 1922 Backbench Committee on Business, Energy and Industrial Strategy is highly prescriptive. It mandates the exact size of the bill discounts developers can offer and is designed to push developments away from populated areas, which creates issues with grid transmission.

It is also not clear that referendums are always necessary. In no part of England except London are more than a quarter of residents opposed to building onshore wind in their local area. In most cases, referendums for onshore wind would become pointless red tape.

Referendums might still have utility but as a last resort. Imagine instead a two-step process where if a sufficient number of local residents (say 20 per cent) object, the project is put to a vote. This would give developers an incentive to compensate communities without delaying widely popular initiatives.

It may be tempting to appeal to the better nature of homeowners or even to pick a fight with NIMBYs. But if the aim is to get things built then we should learn from those who have actually got things built against tough opposition. When former health secretary Nye Bevan was asked how he built the National Health Service in the face of opposition from GPs, he replied: “I stuffed their mouths with gold.”

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