Anthony Breach is a Senior Analyst at Centre for Cities, where he leads on housing and planning.
As the prospect of major reform has drawn closer, the past couple of weeks have seen the English planning system come under more and more pressure. The Levelling Up and Regeneration Bill’s journey through Parliament has been met by a number of amendments that would induce serious problems in the planning system.
A proposal to abolish housing targets has received the most attention, and follows commentary by Theresa Villiers MP and Damian Green MP in these pages and criticism of targets from both candidates in the summer leadership campaign.
Calls to change housing targets are a distraction. Reforms that aim to solve housing’s political problems must try to improve the planning system as a whole, instead of just tearing lumps out of the least popular parts of it. Scrapping targets without thinking about their role is a road to unintended consequences.
The reason housing targets exist is that England’s dysfunctional planning system makes them necessary. English town planning makes it difficult to build, both explicitly with policy such as the green belt or conservation areas, and implicitly with its uncertain and case-by-case process of granting planning permissions.
Left to its own devices, the planning system will inevitably undersupply new homes. Central government is therefore obliged to the entire country to ensure that all local authorities use the planning system to secure that the local supply of homes meets local demand, especially the least affordable areas with the greatest potential for growth.
If housing targets were abolished tomorrow and councils that opposed new homes were allowed to mark their own homework by planning for minimal growth, the country would face clear economic and political costs.
As local plans were abandoned and housebuilding fell, construction would be unable to play a major role in leading the economic recovery from the oncoming recession, just as it did after the Great Depression. ‘Land banking’ would likely increase as developers were forced to hedge planning permissions in a less certain system.
As Robert Colvile has said, young people would face an even deeper housing crisis in cities, with ever more of their income gobbled up by rents instead of circulating in the real economy, or being secured as savings or a deposit and homeownership.
And this is separate from any effect of immigration on housing demand, as our current housing problems emerge from a backlog of homes that have never been built for our current population. For instance, if England, which has 25 million homes, decided to aim for similar housing outcomes as France, then England would still need to build over six million more homes to get to the same ratio of persons per dwelling, even if net immigration dropped to zero tomorrow.
One thing that abolishing housing targets will not do though is detoxify the politics of planning. Residents who currently oppose new homes are not suddenly going to support new construction just because the targets have been abolished. Reformers who want to address the concerns of voters who are sceptical of development while also improving the country’s dire housing situation will need to look elsewhere.
Assuming that the Government is aiming for a successful housing policy, there are only two possible choices here. Either the planning system’s current targets need to much tougher than they are today, or the planning system needs to be reformed so that targets are no longer necessary or can at least be softened safely.
If anything, England’s planning system as-is requires stronger targets and enforcement. Housing outcomes have continued to deteriorate over the past decade, and while the Government has a notional aspiration of building 300,000 new homes a year in England, housebuilding has stagnated at around 240,000 since 2018, and is likely to slip further soon.
Underpinning this is that the English planning system continues to suppress construction as its primary legislation has not been reformed, while Whitehall has in practice adopted a softly-softly approach towards targets. The ‘targets’ themselves can be (and are) negotiated with Whitehall, and there is a sliding scale of relatively light penalties for councils that fail to hit them.
Accordingly, councils in practice feel little pressure to use the planning system to plan for growth. Only 42 per cent of English Local Planning Authorities had up-to-date local plans earlier this year.
Options are on the table for tougher targets. At one extreme, California has recently brought a ‘Builder’s Remedy’ into play, where developers are automatically allowed to build whatever homes they like if a council fails to agree a compliant local plan within the deadline. The idea is not to unleash a free-for-all everywhere, but rather to force places to use the planning system for its intended purpose rather than to block homes, with local control protected if councils follow the law.
Nevertheless, tighter targets and even more confrontation between councils and Whitehall is unlikely to be a stable settlement. In the long-run, the best bet for success in housing policy is planning reform to shift away from England’s uncertain discretionary planning system, where proposals that comply with the local plan can be rejected, towards a new flexible zoning system, where proposals that follow the rules must be given planning permission.
Planning reform would reduce the need for targets, as the supply of new homes would be determined more by demand from homebuyers and renters rather than by the rationing of land and barriers to new homes erected by local authorities.
Crucially, planning reform would cool down the political conflict generated by housebuilding. The current system’s politicised and uncertain nature means that construction is not just far more confrontational than it should be, but also means it struggles to join up infrastructure and services to new homes.
This is a big job, but the Government can secure a win in the short-term by getting the Levelling Up and Regeneration Bill through Parliament. Most important are Clauses 83 and 84 (also known as the National Development Management Policies), which will make the planning process substantially more certain and less confrontational.
Accordingly, this reform of primary legislation would create the space for Government to relax housing targets with the proposals to remove the requirement to establish a Five Year Land Supply for local authorities that agree local plans.
Unfortunately, some of the biggest opponents of the targets are also major opponents of planning reform, including Villiers and Green.
This is inconsistent: if opponents of planning reform want the planning system we have to work as well as it can, then the system’s current failures require either tougher housing targets and enforcement, or an acceptance of worse housing conditions with higher rents, worse inequality, and a damaged economy.
Housing targets are a means, not an end. Attacks on targets are criticising the problem’s symptom rather than its cause – that the English planning system is not currently designed to solve the country’s housing problems. Tackling this root issue with planning reform should be the focus of the new Prime Minister’s efforts on housing, with tougher targets as a last resort.