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.  

Can we please drop the NIMBY label Kristian? I think that you would struggle to find people living or even renting property in nice bits of green belt who would actively support 500 house estates being developed in their back yard so we are all NIMBYs to some extent. The contention that this is a case of home owners preventing others being likewise to protect their investment may well apply in some cases, but does not hold true in most cases. Many people oppose developments because they genuinely want to protect their local environment and like it or not, that is a pretty dominant theme across the UK. The idea that it is purely a question of planning restrictions is unduly simplistic. As a father of two teenagers I am acutely aware of the need for more affordable housing but I do not believe that free for all that gives the same developers that have given us 60 years of junk housing and conflict is the solution. Part of the problem is the lack of trust between developers, planners and communities. The developers always want the easiest and most profitable solution, communities want the minimum environmental impact and planners are usually trying to please everyone. The result tends to be that developers go for large scale green field projects that local communities object to and where the developers succeed there is resentment that impacts future planning proposals. In short, the large scale uncaring approach of the big builders encourages opposition to all development. Perhaps we should look at ways to deal with these conflicts before we start deregulating? Development seems to be better accepted when we allow communities to evolve rather than be overshadowed so perhaps a version of localism that encouraged communities to provide adequate housing for local needs might be a good idea. If it also encouraged local employment that might be a good thing as big building companies with no local ties tend to erect and forget. In addition, development projects might be better accepted if based on transparent calculations of projected local needs. Local housing needs currently seem to depend on the viewpoint of whoever is doing the talking. I think that we also need to recognize regional differences. The approach that suits London and the South East might not suit other parts of the UK. Where I live, vasts swathes of green belt are currently owned by developers hoping for a change in law. There is more land involved than we will need for even the most ambitious housing projections but nobody else can use this "dead" space. We also have very significant areas already earmarked for home building with planning permission but as yet undeveloped so there is significant evidence that something other than planning regulations is affecting provision of housing in my area. As for empty houses, one local village objecting to a 500 house development found 370 empty houses in the immediate area. I am not unsympathetic but your argument might win more support if it did not alienate so many ordinary people who want a say in their local environment and took into account regional variations.
Chris - "I am acutely aware of the need for more affordable housing but I do not believe that free for all that gives the same developers that have given us 60 years of junk housing" Interesting, isn't it, that you date the start of 'junk housing' at just after the end of the development free for all stopped and when central planning started? Fancy that!
I agree that the nimby label perhaps does not help move debate on. In fact, the paper recognises this implicitly. Environmental amenities have a value. Development has a value. A system that used the price mechanism would get us closer to ensuring that the smallest environmental cost was incurred for the biggest value added for a development. Everybody is going to be a nimby if it is proposed that environmental amenities are going to be lost for no gain - so it should not be used as a term of criticism. I would disagree, Chris, though, that the problem is necessarily largescale development on greenfields. In fact, environmental amenities may be most highly valued where they are most scarce (Hyde Park versus Crawley Down, the village green versus the open Kent Weald) and current planning law encourages infill or the use of the green land where it is already scarce. With the price and compensation mechanism working properly, we could have much more large-scale development with proper infrastructure, I think, which would have minimal impact on the environmental amenities of most people.
Chris Oakley - the existence of the 'big developers' is largely a result of the existence of planning laws and regulations. This is the same phenomenon we see in other areas of economic activity that are regulated. For instance, banking or energy. Government intervention prevents new, smaller market entrants from entering a sector so it enables large, inefficient firms to dominate markets. Compliance costs prevent entrants and encourages consolidation of firms. These large firms develop a symbiotic relationship with government - you will actually find many developers favour certain planning restrictions as they play into their hands, preventing building taking place on a small, local scale which is exactly what you are arguing for. Prior to the introduction of planning regimes, most builders were local, small and lived in the communities, very often the dwellings that they built. Such development will never take place under any sort of planning regime because government can only deal with large scale enterprises. Of course, given that large firms have emerged and dominated the market, any moves towards deregulation are fraught because they will very often favour the large firms who are well placed to make excessive profits as a result of prior state intervention, unless very careful steps are taken. NIMBY groups are incentivised to oppose any development because they do not receive any compensation for such development taking place. Ultimately, however, we must aim towards the establishment of a free market in land use - one with no or very little government intervention except the protection of property rights. Only under such a regime could we develop a market for land that reflects supply and demand and rationing by price, not by the arbitrary preferences of lobby groups, big firms and bureaucrats.

Despite the government's rhetoric about liberalising the planning system, its actual policies are likely to make the situation far worse. Any marginal improvement on the planning side will be more than outweighed by stringent new building regulations in the pipeline that will mandate low-carbon homes. There are also proposals to force homeowners to gain council approval for minor improvements such as replacing a boiler or fitting new windows. All these regulations will further favour large developers over small firms and self-builders. The Conservative Party seems to have forgotten the meaning and importance of private property.

Having now read the report properly I accept that it addresses some of the issues that I raised based on the blog post. However, I still believe that there are pitfalls in standalone deregulation without additional measures to offset potential negatives. It will always be easier to develop the village green rather than a remote open space and what incentive will there be to regenerate our cities if it is cheaper and easier to build on greenbelt? A more empowering form of localism may well hold some of the answers as highlighted by this report but I still feel that the lack of trust between the majority of the population and the developers is a big obstacle. Do completed dwelling statistics give us any information on the type of dwelling? I have noticed that our European neighbours seem a lot less averse to flat dwelling than we are in the UK and while I am not advocating high rise solutions, it is worth pointing out that there are differences in approach that may influence both the numbers and the planning process. It would also be interesting to compare UK affordability data with that for other EU countries. I admit that my view may be influenced by living in one of the UK areas least blighted by house price inflation and accept that people in other parts of the country are less fortunate than I am in this respect.
Chris, as Whig mentioned, the planning system is precisely what has led to the concentrated market structure. It raises the fixed cost of development, transforming it into an industry prone to be dominated by big players. We need to get away from this Monbiot-storyline, which sees planning disputes as a Lord of the Rings-style clash between cuddly little shire-Hobbits and environment-hating development corporations run by Lord Sauron. The developers are very much part of that system.
Kristian's argument is too simplistic and pays scant recognition to the fact that vast numbers of people care, passionately, about where they live and the countryside around them. True the planning system adds cost and time to just about any building project you can think of - and this obviously includes house building. Yet the reason why the number of new houses being built is at its current level is primarily a reflection of finance. The state has largely retreated from its post-war position as a mass builder of social housing. At the same time private developers/house-builders will think twice about building in circumstances where both they and their customers are finding it so difficult to raise finance. All 'systems' are capable of improvement and no one would argue that the planning system we have is perfect. Inevitably there will be competing visions for how land is used. Yet disappointment and frustration with the planning system and the decisions it reaches does not amount to evidence that it has somehow failed. Indeed, on a crowded island, a robust planning system is even more important to arbitrate between the (perfectly legitimate) short-term interest of developers and those who live in an area and care about where and how development takes place and its long-term sustainability. Greece and Ireland are not great adverts for a more laissez faire approach to planning. The Government should be applauded for having the confidence to reconsider its original proposals.

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