07What does this mean for housebuilding today?

Housing conditions in Britain have improved since the Second World War and enormous resources and efforts have been dedicated to doing so. But conditions have not improved as much as they should have relative to European peers, and the efforts to improve conditions have been undermined by the planning system’s increasingly tight rationing of land.

The analysis provided by this paper presents lessons for housebuilding today and the changes needed to increase it.

Lessons

Britain has not allocated enough land for development for decades

Postwar Britain relied on council housing to deliver improvements in the standard of living. The decline of council housebuilding was part of the reason total housebuilding has fallen since the Second World War, but the decline predates the conventional dating of 1980 and Right to Buy by at least a decade.

Despite Britain’s successes in public housebuilding, other European countries, like the Netherlands and Austria, show that alternative approaches could have provided more social housing and achieved better outcomes.⁶² These examples also built much more private housing than the UK, and other countries such as Finland and Switzerland show that the UK could have built far more with no council housebuilding at all.

The root cause of the housing crisis is the decline in the supply of land, not the decline in subsidy. Whatever choices the UK makes about housing tenure and whichever countries it learns lessons from, allowing more development on more land is the only way the housing shortage will end.

More housebuilding is crucial for avoiding relative economic decline

Relative decline is at the centre of debates on British post-war economic history, yet Britain’s loss of an initial post-war head-start on housing rarely features in them. Although Right to Buy and the decline of council housebuilding are recognised as important domestic changes, the longer-term deterioration in housing outcomes relative to Europe is not.

As political debate has recently returned to post-war relative decline due to the British economy’s poor recent record and bleak immediate prospects,⁶³ housing and planning should be an area of focus both for economic historians and for policymakers trying to improve the economy’s performance. The lack of housing in modern Britain means an increase in housebuilding would increase economic growth, just as it did in 1932 to 1934 when it accounted for a third of the increase in GDP after the Great Depression, during the interwar period when Britain reached its highest ever rate of housebuilding.⁶⁴

What needs to change

The 300,000 new home target for England must be increased

Housing targets have once again become a divisive issue in Parliament, and expectations that the Government can now fulfil its ambition to build 300,000 homes every year in England are now low. Yet even building 300,000 homes a year – a housebuilding rate of just over 1 per cent growth a year in England – would take more than half a century to reach European average housing outcomes.

England needs a higher target to end the housing crisis in the foreseeable future. Meeting the average outcome within twenty-five and ten years would require achieving a housing target of between 442,000 and 654,000 additional homes a year in England.

There is no path to delivering the number of extra homes needed without a significant increase in private housebuilding. The UK is unique by European standards in never having had a proper boom in private housebuilding after the Second World War. New social and council housing can be part of the solution, but achieving a large increase in the number of new homes built every year is more important than a small improvement in the distribution of an insufficient number of new homes.

The UK needs planning reform to end the housing crisis

Politicians, civil servants, and commentators need to recognise the scale of the challenge. The shortage of homes is so great that merely redistributing the number of new or existing homes will make little difference to outcomes.

The scale of the housing challenge means that tinkering with little reforms will make little difference to housing conditions and the British economy. A big problem requires a big reform.

Fixing the design of the planning system, fundamentally untouched since 1947, is that big reform.

As a long-term goal, replacing the current Town and Country 1947 planning system of England (and the devolved nations) with a new flexible zoning system would increase housebuilding and end the housing shortage, if it had the following features:

• A flexible zoning code designed by national and devolved governments for local governments to use in local plans, with a small number of different mixed-use zones corresponding to different types of neighbourhood. For example, skyscrapers would be suitable in a city centre zone and polluting industrial activity in industrial zones, but neither would be allowed alongside homes and light commercial uses in a suburban living zone.
• Rules stating that planning proposals which comply with a zone-based local plan and building regulations must be granted planning permission.
• Local Plans and Local Transport Plans – which are currently different documents – should be merged into the same document, so that planning for development requires planning for infrastructure and vice versa.
• Better organised and frontloaded public consultation in the creation of the local plan, rather than individual proposals.
• Phasing of non-developed land into zoned areas, depending on local population growth, affordability, and vacancy rates.
• Zoning of land in walkable distances around train stations in the green belt for suburban living and with protected green space, which would provide 1.8 to 2.1 million homes.⁶⁵
• Replacing negotiated ‘developer contributions’ towards local government with a flat levy on a development’s value for infrastructure and new social housing.
• Maintaining opt outs and special designations where case-by-case decisions continue, such as conservation areas, listed buildings, national parks, and wildlife reserves to protect environmentally or architecturally precious land.
• Creating ‘safety-valves’ in the system that allow alternative pathways for development, such as the Street Votes or Builder’s Remedy proposals.

The effect of these reforms would be that instead of development being prohibited on all land unless a site is granted a permit (planning permission) by a local authority, development would be allowed on more urban land and undeveloped land near cities unless it was specifically prohibited.

Some zoning systems in other parts of the world, such as Ireland and New York City, result in similar outcomes to the English planning system. These are inflexible zoning systems with either “single-use” zones that heavily restrict how land can be used, and/or retain discretionary review of permits. It is crucial that England avoid these outcomes by creating a flexible zoning system. ⁶⁶

Many good examples exist to learn lessons from. Planning systems in other parts of the world, such as those of Finland, Japan, and Houston in Texas, or reforms, such as New Zealand’s recent planning reforms, can provide inspiration for Britain.

Reforms in adjacent policy areas, such as local government reorganisation and fiscal devolution, would help enable the boldest improvements to the planning system, and should be on the table for any Government serious about achieving the best possible housing and economic outcomes.⁶⁷

Immediate priorities

At present, there is an ongoing consultation to the National Planning Policy Framework (NPPF) in England alongside the procession of the Levelling Up and Regeneration Bill (LURB) through Parliament. While flexible zoning and the kind of bold changes needed to end the crisis are not on the table, two specific ideas matter a great deal for planning reform over the long term.

First, the ‘wrecking amendments’ proposed should not progress into national policy. Ideas such as ‘no longer requiring local authorities to review green belts if it is the only way to meet housing need’, ‘blocking development at densities different to the surrounding area’, and ‘weakening the requirement to establish a Five Year Land Supply in the event of an oversupply’ will damage housebuilding and housing outcomes.⁶⁸

Second, the LURB will introduce National Development Management Policies (NDMPs) in England. The NDMPs have the potential to substantially improve housebuilding rates in England while reducing the political conflict caused by the planning system’s uncertainty by establishing more consistency between Local Planning Authorities on when applications should or should not be consented, making Local Plans simpler to agree and less contentious.⁶⁹ The Government should seize the chance to leave a positive legacy in planning terms and be bold, using the NDMPs to establish a more rules-based planning system with greater certainty for developers, councils, and residents in England.