Alex Morton is Policy Exchange's Senior Research Fellow for Housing and Planning.
The current planning system has utterly failed. Even after recent falls, the current system has seen house prices triple since the mid 1990s, and rents have soared with them.
At the same time as prices have gone up, housing construction has fallen back, because market forces do not really operate in housing. Analysts like the McKinsey Institute and the London School of Economics say that our creaking planning system puts us at a huge competitive disadvantage compared to our international competitors. On top of this the planning system lowers our quality of life.
Planning affects everything else in the country. The current system leads to so many bad consequences, that it’s difficult to know where to start. But amongst other things it means:
- A housing benefit bill heading to £25 billion.
- Around half of all areas now ‘unaffordable’ for private renters.
- A social housing waiting list of over 5 million people, almost 2 million households.
- Falling home ownership for the first time since the first world war.
- Ever smaller and unattractive housing.
- A destabilising housing bubble (which areas outside the Euro with more liberal planning avoided).
- The massive diversion of bank funds from small business investment into property speculation (75% of lending was for mortgages by 2007 and mortgage lending is rising while SME lending falls).
- The practice of ‘land-banking’, a necessary part of risk management in our slow and unwieldy system. This makes developers unable to cope with land prices falling and creates a cyclical trend of fewer and fewer homes.
- Destruction of green urban space, London lost greenery at 1.5% a year, while only 10% of England is developed. 67% of green belt is intensive farming or already used.
- Six of the top 50 most expensive cities in the World for office space (there simply isn’t that much derelict brownfield to convert and our system is bad at doing it).
- Destruction of manufacturing as no new sites can be built and old ones are converted (Brownfield first and the collapse of manufacturing as a share of GDP both begin in 1995).
- Land with planning permission costs over £1 million a hectare across England, versus £20,000 a hectare for intensive farming, meaning nothing left for quality construction.
- A quasi-cartel of housebuilders, creating high profit for large developers and less competition over time.
Almost all the attractive development, parks and homes that exist in this country were created well before 1947, whether Georgian terraces or Victorian villas, whether Hampstead Heath in London or Heaton Park in Manchester. We can all think of buildings created at the peak of the current system in the 1960s that are terrible. And we know that people prefer older buildings (and always did) through opinion polls.
Yet the current system, based as it is on the complete overriding of private property by council planners, is somehow seen as good and worthy by some Conservatives.
Concerns about development are not new. The green belt was first proposed in 1875 around London. There would be no Fulham, little of Hampstead and Highgate, Clapham and other areas. Eight million people would be crammed into an area around a third of London now. It would be a triumph of protecting countryside but a disaster for quality of life.
Support for the existing system on the right is largely explained by two factors. Firstly, there is a lot of misinformation around. Around 10% of England is developed. Even in the South East it is less than 20%. Secondly and more importantly, new development imposes a cost on local people, particularly if it is mediocre. Councils gain and at the peak of the last bubble collected £5 billion in 2007 under something called Section 106 agreements. Council incentives in the UK don’t work both because they are too small per council and because those affected by new homes gain nothing from them. We need to stop insulting NIMBYs and instead understand their concerns. We need to reform the system to force developers to build better homes and places.
Our report Cities for Growth argued for new Garden Cities but also for fundamental planning reform based on four principles:
- Less interference on brownfield sites. If an office wants to change to a home or someone wants to build a small extension this would be automatic unless a) neighbours are clearly affected b) a majority of those affected complain.
- Compensation for those near new development, and a levy on green field development to pay for new parks and open public spaces around our cities.
- Direct quality control over new development by those who live nearby.
- Ultimate yes/no on new development going to local people.
We must break the vicious cycle of the current system which has produced ugly, small, cramped, expensive development. The tragedy is that the less we build, the more land costs, the more land costs, the less green and attractive new development is. An ever worsening cycle.
We need a planning system that creates more high quality homes and open and attractive public green spaces. Thatcher argued “If a Tory does not believe that private property is one of the main bulwarks of individual freedom, then he had better become a socialist and have done with it.” We need a planning system that is designed to work with private property rights – not based on 1940s style utopian economic and social planning where government knows best.
Will the government’s proposals break us free from the old, failed system?
The reforms represent some progress, but not enough. The vested interests from the big developers to National Trust support the NPPF because it changes nothing. While much of the national level guidance is simplified, local authority planning and town hall bureaucrats remain at the centre of the system. The attempt to move away from top town targets to local incentives is broadly right too. But the incentives that are now being set up still aren’t targeted enough on those who are most affected by development – money still flows to the council, not local people. The government needs to go much further in breaking from the old way of doing things. Allowing people to change the use of empty buildings could help – but that idea is facing resistance from town hall planners. New garden cities would have big advantages too – but will the government succeed in pushing them through, or will they go the way of Gordon Brown’s flopped “Eco Towns”?
> Earlier today Greg Clark MP and John Howell MP wrote in defence of the NPPF.