The planning reform that wasn’t: the coalition surrenders to the NIMBYs

Every government retreats on some issue or other eventually, realising that the political cost outweighs the benefit. But for this coalition, retreat has become a way of life. Whether it is on the privatisation of forest land, on injecting a dose of competition into the health system, on workfare sanctions, and now planning reform, the pattern is always the same:

1. The coalition comes up with a fairly sensible, if imperfect proposal.
2. Some activist and/or interest group then makes a lot of noise, attacking the proposals with vaguely anti-capitalist rhetoric, making copious use of misrepresentation and fear mongering.
3. The coalition confronts the protesters head-on for a day or two, calling them something like ‘Trotskyites’ or ‘semi-hysterical nihilists’.
4. The protests continue unabated.
5. The coalition prepares its retreat by announcing a ‘listening exercise’ or a ‘stakeholder consultation’.
6. The coalition guts the reform, leaving an empty shell.

The latest episode in this series is the retreat on planning reform. The draft version of the National Planning Policy Framework (NPPF) had a reformist edge, but the final version shows that the government has now fully surrendered to the NIMBY lobby. The implications of leaving the planning system unchanged are spelt out in Abundance of Land, Shortage of Housing.

I started writing the paper after the publication of the draft NPPF, when NIMBY representatives were suddenly all over the media. One of their favourite claims was that there was no evidence whatsoever that the planning system was responsible for the increase in housing costs. I found that hard to believe, but did not know for sure; so initially the paper was simply meant to be a literature review, documenting the state of the empirical debate. There are lots of studies which model housing costs as a function of some indicator of planning restrictiveness, controlled for other factors. The results differ a lot in emphasis and magnitude, but contrary to the claim of the NIMBY lobby, planning restrictions are consistently identified as a key determinant, if not the key determinant, of house prices.

That, in turn, threw up a different question: if there is such robust evidence, why are the NIMBYs getting away so easily with their strategy of denial? Why are the media and the public giving them such an easy ride? So the paper turned into a discussion of the state of the housing debate itself.

Essentially, the debate on housing is like a debate on inflation in the era before monetarism came along. Economic commentators would blame all sorts of factors: OPEC, trade unions, oligopolies, imports, consumer credit and so on. Some of these claims were a little bit true, others were complete red herrings, but they all had one thing in common: they were insignificant. The real issue was money-printing. 

The same thing happens in the housing debate today: commentators blame population density, a lack of public housing, property speculation, demographics, vacant properties and other things more. I argue in the paper that none of these explain more than a trivial share of the housing cost explosion, and some explain nothing at all. It is the planning system, plain and simple.

So is there any chance of future reform, given that opposition is so entrenched and emotive? Yes. It is a matter of changing the dynamics. If local authorities had to fund their expenditure through their own, locally raised taxes, they would have an incentive to broaden their tax base, for example through permitting development. After all, it is easy to be a NIMBY if it’s costless. Let’s put a price tag on NIMBYism and see how many NIMBYs put their money where their mouth is.