This week brought two pieces of news on planning.
First, we now know that the consultation on ‘brownfield passports’ will be delayed. The Government’s intention is that these passports will make it easier to build more homes on previously developed land. They were included in the election manifesto.
Second, the Government announced a compromise with environmental charities about its proposals to provide national schemes for environmental mitigation, known as ‘Environmental Delivery Plans’. Developers will pay money into these schemes instead of the current system of designing mitigation for the environmental effects of development on a site-by-site basis. The goal is to (1) do more to improve the environment because a strategic approach can do better than with a site-by-site method, and (2) make it easier to build things: a ‘win-win’.
Debate rages on over the exact effects of the amendments, but they will clearly at least significantly reduce the boost to construction that the current Bill would have produced.
The Government has set an ambitious housing target for London, 88,000 homes a year, but this will not be in force until 2028. In fact, it recently emerged that London might be on track to start fewer than 10,000 homes this year – even before the full impact of delays at the new Building Safety Regulator have been felt.
Improving the planning system is one of the few ways to noticeably cut the cost of living, improve public services and boost growth without needing to spend much more money; in fact, it will raise tax revenues without increasing tax rates.
And London is the epicentre of the housing crisis. The economic evidence is clear that building homes for workers in London is a powerful way to reduce the cost of living, create new jobs and boost GDP. The housing shortfall in London is one of the biggest challenges, and opportunities, for the Government.
So it seems clear that the Government will need to do more to achieve its growth mission and its stated goal of 1.5 million homes this Parliament. Luckily, it still has plenty of options.
Different reforms, different results
Different planning reforms have radically different costs and benefits to each successive Government. Some reforms can produce more homes with good transport links to good jobs, without affecting a Government’s chances of re-election. Others produce homes in car-dependent locations far from well-paid jobs, and may upset groups of swing voters in key marginals, leading to losses of seats at the next election.
We can see this with the Government’s powerful ‘grey belt’ planning reforms, allowing more homes outside urban areas in ‘grey belt’. Originally the grey belt was described as ‘car parks and disused quarries’. As implemented, the policy now allows new homes on vast swathes of land around Britain’s urban areas.
Not all those homes will have the same economic, social, or electoral benefit.
We can measure the shortage of market housing by looking at the difference between the cost of building a home (material, labour and other economic costs) and prices for which they sell in a given area. In a well-functioning market, generous supply ensures that homes sell for a price not much more than the cost of building them.
Let’s compare two places: a fictional Red Wall marginal constituency with house prices below the actual cost of building homes from scratch, and an expensive Home Counties rural area with a train station that has fast links into London.
Forcing a local council to allow a developer to build a new market home in the Red Wall will provide employment for building trades for a while. But if the price of housing is already around construction cost, the new home will add little to GDP. And it may affect some of the semi-rural swing voters enough to move the seat to another party.
On the other hand, forcing another local council to allow a new market home with fast access to jobs in London will create large amounts of social and economic value, because each new home can be sold for far more than it costs to build. Some of that value can be captured for public services and social housing investment. And a Labour Government might note that if the home is built in a seat that is a fight between two other parties, which Labour would never hope to win, then it can’t possibly cost anything at the next election.
The decision for the Government
So the economic and social benefit of forcing locals to allow more homes, divided by any potential electoral costs to the current Government, is clearly far higher for the non-Labour seat with high house prices. Which means that for a Labour Government the ‘electoral efficiency’ of higher housing targets in the Red Wall is much lower than imposing more homes in, say, parts of Berkshire.
Can we use this to predict what planning reforms the Government might do next? There are three things to consider:
- How much social and economic benefit will each reform produce?
- How popular, or unpopular, will each reform be?
- How much will that translate into losses in future elections?
On the first, we already know that the most powerful reforms focus on planning to allow more homes with good transport links to productive firms and well-paid jobs in the most unaffordable areas.
As for 2, we can get hints about the likely impact by seeing how focus groups react. ‘Estate renewal’ involves building replacement homes for current tenants on social housing estates, funded by the sale of new market homes on the same estate. With careful safeguards to check that the tenants and other residents are themselves in favour and to make sure that promises are kept, such schemes are by definition popular with the residents and are also surprisingly popular with people who live outside the estate. In fact, it is the most popular method of urban densification that we have tested. Of course, it takes time to deliver these schemes. This is not the fastest way to deliver new homes, but it can be very powerful over time.
Some other reforms, such as allowing private developers to knock down several suburban semi-detached homes and replace them with a block of flats while leaving semis on either side, are very poorly received by focus groups, especially in marginal constituencies in the South East.
Encouraging homeowners to build ‘granny cottages’ and ‘granny flats’ otherwise known as ‘accessory dwelling units’, recently proposed in Ireland with a potential to deliver some 350,000 additional homes, falls somewhere between those two extremes. That’s also true of allowing more upward extensions, which the Government has already taken a gentle step to encourage.
And then there are reforms which don’t affect the neighbours much at all. Take, for example, former industrial land at Park Royal, which by the mid-2030s will be one of the best connected sites in Europe – surrounded by 11 Tube and Overground lines and on the Elizabeth Line, HS2 and the main line to Bristol. That area has the potential to deliver ten times more homes than the development corporation is currently aiming for, with very little effect on neighbours outside the area because of natural boundaries around the site.
Others, like expanding Cambridge, Oxford and the Oxford-Cambridge growth corridor affect few marginal constituencies, and could deliver huge economic and social value.
What about question 3? We are a non-partisan campaign, not Labour HQ. But we can speculate on what might attract a cunning Labour political strategist, focused on improving what one commentator has rather unkindly called the Government’s current ‘all pain, no gain’ strategy.
Two thoughts might strike that strategist. First, safe Conservative and Lib Dem seats, or marginals that are a contest between those two parties, are an appealing place to put new homes, especially in areas where the growth benefits are largest.
Second, going for a sheaf of reforms with low electoral cost that don’t require primary legislation seems an attractive way to get as much growth for as little political capital as possible.
Here are some options they might consider.
- Funding for more MHCLG staff specifically working on planning reform
- Restoring the power to update EIA regulations, which was short-sightedly removed by the LURA
- Taking more rapid steps to fix problems with the new Building Safety Regulator regime, which otherwise risks bringing construction of buildings over six storeys almost to a halt
- Accelerating the Greater London Authority proposals on improving the London Plan. The Government could do this by creating new National Development Management Policies, setting national standards that have less impact to block social and market homes. Those could cover various matters like ventilation/dual aspect, cycle storage and maximum homes per lift/staircase core – perhaps even the distant background of protected views.
- Completing the ‘street votes’ reforms
- Strengthening the new language on upward extension in the National Planning Policy Framework (NPPF), while tightening the language on design
- Strengthening the level of support given by the NPPF to estate renewal
- Most ambitiously and controversially: more forceful national policy in favour of homes in expensive areas near to rural and semi-rural train stations with good access to high-wage jobs.
We don’t know exactly what the Government will do. But the urgency of doing more has just increased. And time is getting shorter; we may already be one quarter of the way through this Parliament. It can take years to get a site prepared and homes built. There is no time to waste.
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