Headlines: January 22nd, 2007



The planning system has created an artificial reduction of land supply and this has produced severe consequences for society, the environment and the economy. This claim has been made in a report ‘Best Laid Plans’ published by the Policy Exchange. The authors of the report argue that most of the problems with the housing market, such as low supply, high prices, and overcrowding can be attributed to the planning system.

Political support for the policy of constraint is based on an exaggerated view of the degree of urbanisation in the UK which is about 10% urbanised. Germany has a comparable population density, but uses a higher percentage of land for development than the UK

The authors argue that the planning system in the UK has been intended to restrict physical development, reducing economic growth as a result. In particular, the Government has made it a matter of policy that 60% of any new housing should be built on ‘brown field sites’. This policy depends on, and results in, both high house prices and higher land prices.

The social consequences of artificially high land prices are that planning and high land prices have become one of the main obstacles to social mobility in the UK. This policy sees development as a problem to be prevented, rather than encouraged as an engine of growth and wealth creation. Rising land prices have benefited some but harmed most. They have favoured land and property owners while others have had to pay the price through higher rents and higher retail prices. They have favoured wealth over wealth creation, property over enterprise, old over the young.

The authors make a series of recommendations for addressing the problems they describe. The national green belt policy should be abolished and replaced by local communities making their own decisions about their environment. Projects of national importance should be decided through Acts of Parliament to speed up the development of vital infrastructure, such as new airports, power stations and high speed rail routes. They also recommend the reintroduction of simplified planning zones to reduce delay and speed up the planning system, the introduction of a Social Cost Tariff on the redeployment of green land for development and fiscal incentives for local authorities to allow development.