Prime Minister Boris Johnson unveiled “once in a generation” planning reforms last week that would restrict the power of local councils to nix building developments and instead introduce a US-style zoning system intended to give developers more certainty and a faster process. It seems Johnson and his housing minister, Robert Jenrick, are taking a wrecking ball to the post-war planning system – which in effect nationalised development rights by giving power to local councils – in order to simplify the system and increase supply.
“The time has come to do what too many have for too long lacked the courage to do – tear it down and start again,” wrote Johnson in his introduction to the white paper. And for once, the PM’s turn of phrase does not seem extravagant. “This is the end of the planning system as we know it,” agreed Hugh Ellis of the Town and Country Planning Association.
What does the white paper propose?
A radical overhaul. Instead of councils assessing applications on a case-by-case basis, all land in England would be categorised into one of three zones. “Growth” areas would be earmarked for major development, with new homes, hospitals, schools, shops and offices given automatic permission, subject to quality and design controls.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
“Renewal” areas – largely on urban and brownfield sites – would be set for “gentle densification”, with a presumption of planning permission subject to checks. Third, areas such as the greenbelt (and national parks and so on) would be designated “for protection”. At the same time, the system whereby developers contribute to affordable housing and community amenities via “section 106” agreements and the community infrastructure levy would be scrapped.
What else is new?
There’d be a nationally set tax on a fixed proportion of a development’s value, above a threshold. Again, the idea would be to simplify – but at the expense of local control.
In addition, the white paper stipulates a centrally imposed target on councils of 300,000 new houses a year (241,000 were built last year) intended to force land onto the market. There’s also a national design code setting out clear rules for developers nationally. And there’s a new “first homes” scheme offering a 30% discount on new-builds for local people, key workers and first-time buyers.
Have the plans been welcomed?
The plans are broadly approved by big housebuilders. But an array of critics – from architects to politicians of all stripes – are worried that the plans reduce local oversight while clearing a path for poor-quality “slum” housing. The plans would likely lower the delivery of affordable housing, since they raise the exemption level from developments of ten units to those of 40.
Nor is it clear smaller housebuilders would benefit from the new system, one of the stated goals. In sum, the proposals are both a democratic outrage and a national disaster in waiting, says Simon Jenkins in The Guardian. They will give rise to the unsightly sprawl seen across much of mainland Europe, with owners able to build at will – houses, sheds, advertising hoardings, car parks – and set off “frantic land speculation in the south-east”, thus further accelerating the “race to the south”.
But would more houses get built?
Not necessarily, say critics. Already, about 90% of planning applications are approved, and there are currently more than a million houses granted planning permission over the past decade that haven’t yet been built. Oddly, the white paper gives no evidence that the existing planning system holds up building and the government has not done an assessment of how its reforms would improve things.
Moreover, in 2018 the government’s own Letwin review found that the main driver of lack of supply and slow construction rates isn’t the planning system, but the “market absorption rate” – that is, the rate at which new houses can be built and sold without bringing down local prices, and thus reducing the incentive for builders to build. “Housebuilders build homes at the rate they can sell them,” housing analyst Neal Hudson told the Financial Times. “There doesn’t appear to be anything in these proposals that breaks that relationship.”
What would the alternative be?
The plans have all but nothing to say about the “repurposing” of offices and shops into homes, says the FT. And while the attempts to set standards for design and build quality are “to be welcomed, the onus will fall on local councils to enforce them” – a big ask following years of funding cuts.
Crucially, the government’s plans “fail to recognise the extent to which the country’s housing problems are concentrated in London and its environs”. To help solve the UK’s housing crisis, the government should consider greater protections for tenants, reforming the mortgage market and scrapping its own “distorting incentives designed to foster property ownership”.
What will happen next?
Strikingly, shares in Britain’s biggest listed housebuilders didn’t jump for joy in response to the white paper; they fell 4%. The market sniffs shaky foundations and years of uncertainty around planning policy while the measures make their way through consultations and Parliament. The government has a big majority of 80, but there are loud rumblings from Tory MPs that the plan is not exactly conservative.
In the first instance, a 12-week consultation period will be followed by primary legislation and local councils will then have 30 months to draw up local guidelines. But MPs say they expect Tory councillors to be furious at a new regime that removes much of their control over planning and imposes a binding centrally imposed target on them to deliver a set number of houses. When Labour’s deputy PM, John Prescott, proposed a similar model in 2002, senior Conservatives attacked it as “Stalinist”.
Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.
Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.
Nvidia becomes the fourth biggest company in the world - should you invest?
Chipmaker Nvidia is riding the AI wave, and has overtaken Alphabet and Amazon in terms of market capitalisation. Have new investors missed the boat, or will the share price soar higher?
By Ruth Emery Published
Savings market heats up as providers boost rates - should you switch now for a better return?
In a surprising twist, more and more banks are now hiking their savings rates. Is it a good time to move your money and grab a better rate?
By Vaishali Varu Published
What's the secret of Manolo Blahnik's success?
Fashion maestro Manolo Blahnik shows little sign of slowing down at 81, and his company notched up a record financial year in 2022. What is the secret of his success?
By Jane Lewis Published
Michelle Mone's "tough year of pain"
Michelle Mone liked to portray herself as a working-class heroine who worked her way to the top through grit and determination. But her pedestal is built on sand.
By Jane Lewis Published
Trevor Milton, the Elon Musk wannabe, is jailed for fraud
The former CEO of Nikola, Trevor Milton, has been found guilty of lying about the development of the company's electric trucks.
By Jane Lewis Published
Directors should think twice before waiving limited liability
Should small-business directors ever provide a personal guarantee in return for bank finance?
By David Prosser Published
Why Russia's economy is doing better than predicted
Sanctions were supposed to strangle Russia’s economy, but it seems to be thriving. What’s going on?
By Simon Wilson Published
When will the general election be?
The general election is likely to be sometime in 2024 and Keir Starmer is the favourite to win.
By Emily Hohler Published
India's stock market success looks set to continue
India has been the world's fastest-growing major economy for two years running.
By Alex Rankine Published
Javier Milei is cutting the deadwood
As promised, Argentina’s new president is taking a chainsaw to the state, and it's exciting to see, says Bill Bonner.
By Bill Bonner Published