Osborne’s planning revolution

“Britain has been incapable of building enough homes”.

We often criticise the politicians of all parties on this blog, but on this point we strongly agree with George Osborne. But will he have the measures necessary to tackle this chronic problem? The Chancellor has announced some striking planning reforms to get more homes built:

  • A “zonal” approach to brownfield land, with the assumption of planning permission.
  • A tougher approach to councils who drag their feet agreeing a Local Plan. Osborne says government will impose a Local Plan on them.
  • Reform to compulsory purchase will be brought forward in the autumn. This will make it easier for councils to bring derelict land into use where it has been held empty for years. The site next to Bristol Temple Meads station was derelict for 17 years before the council was able to bring it into use this year.
  • Allowing large housing developments within the Nationally Significant Infrastructure Projects (NSIP) regime – which allows faster planning. This could potentially use rising land values to part-fund infrastructure or affordable housing.

All of these reforms sound positive on face-value and were included in some form in the comprehensive plan we developed with KPMG for the current Parliament to build the homes we need. The Chancellor also announced more powers for the Mayors of London and Manchester and an interesting (for another blog!) plan to let Londoners extend their homes upwards.

But there are some big gaps in Osborne’s planning revolution which need to be filled.

First, it’s really important not just how many homes we build, but what sort of homes. The best evidence suggests we need 250,000 new homes per year of which 125,000 should be in ‘affordable’ tenures, like Social Rent, Shared Ownership and Rent to Buy. This is not just because that’s what is needed to provide safe, secure and affordable homes for the next generation. To deliver housebuilding to the scale of 250,000 homes it will require both the public and private sectors building together.

But today’s announcement has flagged that in the spending review, funding for house building will be focussed on ‘supporting low cost home ownership for first time buyers’. We support making homes more affordable for first time buyers, but if it comes at the expense of affordable housing across all tenures then it’s a clear step backwards. You don’t solve a housing affordability crisis by cutting funding for genuinely affordable homes.

Second: will allowing building on all this brownfield land benefit local communities or will it just benefit landowners? Giving planning permission for house building on a piece of industrial land in England raises its value by 1,240% (for farmland it’s 28,652%). That huge change in land value is because of the housing shortage.

It exists because house prices are so wildly expensive compared to other ways you can use land. So we face a choice when giving planning permission to landowners to build homes on their land. The extra value could all go to the landowner as a massive lottery-style windfall from the government. Or, some of it could be invested in the local community by using it to fund affordable housing, better homes and more infrastructure to relieve local pressure.

This is where zoning can come into its own. Councils could use zones to force developers to compete with one another on quality or affordability, rather than on land price. A council would zone a piece of brownfield land for development and then welcome bids for how it could be developed, ensuring that affordable housing and infrastructure are also included. The winning bid would be the best for the local area – not the one that can pay the most to the landowner. This would be best value for the government and drive competition in the market towards quality outcomes for consumers.

Third, forcing Local Plans on slow councils runs against the grain of localism. A better approach in some cases might be to allow city-regions (or county regions) to put together a strategic plan for the whole economic area, as is the case already with the London Plan. If a council drags its feet in taking on its share of the house building, then the government could intervene to force it to sign up to the plan agreed across the rest of the region. That way, the imposed plan is local – not dreamed up in Whitehall.

Overall, this plan represents some significant opportunities – but also risks. If it simply becomes a way to give huge sums of money to landowners and doesn’t get more affordable homes built, then Osborne’s planning revolution will fail to build enough of the type of homes we really need. We’ll be campaigning to make this plan as good as it can be.