Yesterday, I set out the indictment of our current land-use planning system, which has created a housing crisis, is stifling our economy and leading to damaging environmental outcomes. That’s fairly widely acknowledged. It is far less simple to propose an alternative, but below I hope to outline some possible principles as mechanisms for a better planning system that empowers individuals and communities rather than bureaucrats and politicians.
The first thing we need to do is to restore the principle that those who suffer the secondary effects of development are compensated. The original Town and Country Planning Act (1947) did contain provision for compensation, but this was deleted by the Conservatives in the 1950s, and when Labour got back into power compensation had morphed into a way of channelling money to local authorities, rather than those who actually lose out.
This is an anomaly, because the compensation of those hurt by one’s actions is a general principle of law: if a factory emits pollution that damages your property, you are entitled to compensation; why should the same not take place when the factory is built and it impacts upon the amenity of your home?
The effect of removing the requirement to compensate third parties is that it makes NIMBYism rational. If one has nothing to gain from a neighbouring development, even the smallest loss is reason to fight. Once neighbours can expect compensation, it becomes possible for a price to be set on amenity: if the benefit to the developer is greater than the perceived loss among the neighbours, the developer can buy the right to develop from them.
Creating a market in development rights is crucial to enable us to weigh the subjective values that people place on various goods: for example, the extent to which we value green space, more housing, better infrastructure, new places of work etc. This would not do away with planning, but it would devolve planning to local people and create an efficient land use planning system.
I discuss a number of possibilities in the report. One is to give much more discretion to local authorities, encouraging the use of zoning and tradable development rights rather than councillors taking executive decisions. However, I think we should go further – the bureaucracy of Whitehall should not merely be replaced with – the bureaucracy of the Town Hall. One alternative is devolution to individuals and small communities by the creation of Proprietary Communities, which are able to restrict, permit, buy and sell development rights based on the priorities of local people.
This will undoubtedly lead to more development, but it will also lead to the right balance of development and conservation. Indeed, conservationists may be among the great beneficiaries of this system. Firstly, conservation groups could buy development rights for the express purpose of preventing development, enabling their subjective values to be weighed against those who wish to see land developed. Secondly, local systems could be designed so that development in environmentally sensitive areas is explicitly linked to promoting conservation (as has happened in the US in Kern County and the New Jersey Pinelands, for example). Thirdly, conservationists would retain the ability to take out covenants on pieces of land to prevent future development – a practice that has waned since the nationalisation of development rights in 1947. In fact, developers themselves may take out covenants on neighbouring land, so that buyers could be confident that amenity will be protected once they’ve moved in.
The key lesson, however, as that what we need is pluralism, experimentation and competition. It would be hubris to assume that we know which approach to land-use planning is the best – or even to assume that what is best in London is best in Leeds, or Leamington, or Little Haven. The best solution to the planning problem is not to deliberately design a land-use planning system but to allow various systems to develop and to explore which ones yield the best outcomes. For this we need to remove government from the equation and let an entrepreneurial process of experimentation and discovery take place.
Planning is essential if we are to enjoy a bright future. The question is not whether we plan, the question is who plans, and how. As ever, individualism and pluralism – those two core features of liberalism – are the key to finding the best solutions.
Tom Papworth is Leader of the Liberal Democrat Group on the London Borough of Bromley, and sits on two plans committees. The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, other Liberal Democrats, the party generally or the Bromley Council Group.
* Tom Papworth is a member of Waltham Forest Liberal Democrats
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13 Comments
The proposals are a classic libertarian approach – all you need to do is redefine property rights, internalise externalities, and marketise the process and the world will be a better place (as long as you assume away transaction costs, power differentials, etc). But it isn’t really fair to label the resulting process “planning”. In many respects it is the antithesis of planning – let the market decide.
@ Tom “Yesterday, I set out the indictment of our current land-use planning system, which has created a housing crisis, is stifling our economy and leading to damaging environmental outcomes. That’s fairly widely acknowledged.”
er, no, it isn’t. that we have a housing crisis is certainly widely acknowledged, but that the cause of this is planning system, certainly isn’t. House prices rocketed partly because of a lack of supply, and partly because of far too easily available credit. why was there a lack of supply? well, it could have something to do with the state essentially stopping building any homes and an (as i say elsewhere) oligopolistic construction sector that places margin over volume. as we have discussed elsewhere, the planning system allows for lots of homes to be built, if locla people wish it, but democracy doesn’t incentivise that to happen. so it’s not planning, it’s people that are the problem. ripping upt he planning system and essentially saying build anything anywhere, as the NPPF signals, isn’t a clever solution to the problem.
having said that, proper incentives to local people to accept new deleopment, and community land auctions, seem liek good ways forward.
Doesn’t much of the activity of planning happen BEFORE you get to a market for development rights? Put another way, to create tradeable development right in the first place, don’t you have to have a plan of what the right is to be? Or are you suggesting that a tradeable right to develop should not place any restriction on what can be developed?
Would the right mean that local people will no longer have a say in what I can do? Can I buy a general right to develop in an area, then develop a factory pig farm whose odours and ethics enrage the nearby housing estate? Would I be allowed to build what peope consider to be an eyesore, if I have a development right?
@London Liberal
With folks such as you still in the party then there is hope for it in the medium term.
I’m afraid that the short term impact on the party of the next few May local elections and the next general election is going to be down to neoliberals such as Tom. For Tom and co read Tony and co in the Labour party circa 1980-1985.
It all sounds so logical: but on closer inspection (and smelling) you know what they are offering you !
Thanks, everybody, for your comments.
@Alex Marsh: “it isn’t really fair to label the resulting process “planning”. In many respects it is the antithesis of planning – let the market decide.”
A couple of points. Firstly, we need to distinguish between central planning and other types of planning. The question is not whether we plan, but who plans, and how. To suggest that the choice is between an all powerful government planning agency and a total free-for-all is to create a straw man. What we need is to find a way to decentralise planning, to make it more responsive to individuals, and to enable experimentation with different methods.
“s long as you assume away transaction costs” – nothing is “assumed away”, and transaction costs exist in the present system. The question here is whether the transaction costs are lower than the costs of the current planning system. That is unlikely. In the report I do discuss this, though space prevented me from going into greater detail.
@London Liberal: “that we have a housing crisis is certainly widely acknowledged, but that the cause of this is planning system, certainly isn’t” – That’s simply not true, LL. I don’t claim that it is universally accepted, but it is by far and away the consensus within the academic literature, and is even acknowledged by (both this and previous) governments.
“House prices rocketed partly because of a lack of supply, and partly because of far too easily available credit” – That is true, and I certainly don’t deny it (hell, I’ve made that point many times) but there has been substantial work on this and it is clear that a significant proportion of the cost is due to the limiting of supply. Note, for example, how the credit has dried up, house prices have fallen, but they are still extremely high by international standards, widely considered to be over-priced, and still unaffordable for many would-be home-owners. Effectively, existing home-owners enjoy monopoly rents, which we as liberals should be seeking to combat.
I agree too about the “oligopolistic construction sector that places margin over volume”, but again, the way to combat oligopoly is to stimulate competition, which would happen if Proprietary Communities could issue development rights or even develop land themselves. In fact, if you think developers are hoarding land and you want to make them release/use it and/or punish them, just watch them panic when a new Planning Bill is put to parliament proposing real reform!
“it’s not planning, it’s people that are the problem” – But that ignores the fact that it is the system that shapes the outcomes. I’ve mentioned before that the winner-takes-all planning system where no compensation is paid to ‘losers’ is the cause of nimbyism and in fact <imakes nimbyism rational. There is also a significant amount of work looking at planning in the context of Public Choice Theory that explains why the planning process is the cause of the poor outcomes.
“ripping put he planning system and essentially saying build anything anywhere” is not, btw, what I am saying. I realise you were referring to the NPPF (which I think you are also misjudging, but that’s an argument for another time). I would hope you would not caricature my position in that way, because it would mean creating a straw man.
@Richard Dean: Yes, that activity would happen in advance. Whatever mechanism the local communities adopt will have planning regimes and regulations. Local Authority schemes might include zoning. Proprietary communities might develop local plans. Plans would exist but they would differ from locality to locality, be far more localised, and empower citizens rather than politicians.
In answer to your questions, again it would depend on the local system, but you could only build the “eyesore” if you were sold a right to develop it, just as in the current system you can only do so if you are given the right to develop it. One crucial difference (though not the only one) is that the neighbours who sold you the right would therefore get the financial compensation. Under the present system, “compensation” is arrogated by the local authority, which then provides “public goods” that benefit wide communities and do not really compensate those directly harmed. I can cite examples but I imagine you are more than familiar with this problem.
@Rob Sheffield: Classical Liberal, Rob. Neo-Liberals are something else.
How would I assign a monetary value to a development right if I did not know in advance what compensation I would need to pay for exercising it? Perhaps some fixed scale of compensation might need to come as part of the right?
@Richard Dean: That is one possible solution, and the local planning agency might set a price schedule. Another means would be through negotiation and mediation. This happens in other spheres, after all.
@ Tom
Thanks for your detailed responses. There are some facts which i hope we can agree on.
1. The lack of a planning system in the 19th century and early 20th century did not produce decent housing, in sufficient quantity, for the populatin. One only has to look at the (now largely disappeared) slums of our cities to see how unsuccessfully housed we were as a nation.
2. The housing boom of the 1920s and 30s – part of which was of course council housing – did produce large numbers of homes in often suburban settings at very cheap prices, and these were popular because people liked both these things.
3. These ‘ribbon’ developments came at great cost to the environment, as their very low density required a relatively large area to be given over to them and their lack of critical mass meant heavy reliance on cars and a relative absence of street life.
4. The TCPA in 1947 was partly motivated by the worry of the loss of all this land, partly because of lost agricultural output, and partly because of concerns of endless urban sprawl.
5. Since the passing of the TCPA, our housing problems were not solved, and some old slums buildings were swept away only to creat new slums in modern buildings. With the best will in the world, a lot of new housing, mainly public but also some private, was of very low quality, design and social policy.
6. These problems of quality, design and social poolicy were not a result of the planning system.
7. We have never built enough homes, of sufficient quality and quantity, to house our population, pre- or post the 1947 TCPA. This suggests that it is not the TCPA that is the problem.
oops, 5 is meant to end: “With the best will in the world, a lot of new housing, mainly public but also some private, was of very low quality and design, and social policy made it worse.”
Having read through all the comments on both Tom’s pieces, I think its worth emphasising that the key challenge isn’t the volume of housing per se, it’s how to get the system to deliver all the elements needed to support that housing.
One of my biggest frustrations as a planning committee member is the way developments are treated as black boxes, so that huge amounts of effort are spent, for example, ensuring that cars can get from the houses to the edge of the development, but absolutely no thought can be given to what on Earth those cars are going to do when they pile headlong into the traffic jams that already exist, let alone the one the new development will help generate.
Granted, local plans are meant to do some of that, but communities need the security that development won’t happen without the infrastructure being delivered and we aren’t at that stage yet.
In the (southern) town where I live – there will shortly be a hosepipe ban. The big plot of land behind my house is owned by Glasgow city council pension fund, who will build a big office block on it. The town is full of empty office blocks, many built in the last 10 years, many owned by pension funds where trustees and fund managers presumeably have a tenuous grasp on what investments will produce returns.
We need to actively create more jobs up north, where there is a surplus of water and housing. We need to encourage some pension money to flow into job creation and housing rather than empty office blocks. We need to build more housing specifically suitable for an aging population and for young workers.
Alistair, a valuable point, a town of empty office blocks and they build another.. along with all those empty warehouses on the edge of most towns. .. and the investors and bankers want us to similarly build loads of spare houses for the same reason.
There is a confusion here, this idea of supply and demand, greater supply bringing down the price, might work with some commodities, but with property it certainly doesn’t. The price of property is related to the availability of finance, not the availability of property. Values rocketed when people could borrow 120% of value.. Owners of commercial property can borrow against the value of the property, even if it is standing empty, as they rely on the increase in values to get a return on their investment. An audit of vacant property in any town or city will show a truly shocking rate of vacancy in all sectors.
Part of the answer to the homes crisis is to charge council tax on all residential property, no exemptions. If it has a roof on it the owner pays council tax, (any relief or subsidy required should be left to the benefit system to deal with) then owners of vacant property would be encouraged to either let or sell.
Alistair, a valuable point, a town of empty office blocks and they build another.. along with all those empty warehouses on the edge of most towns. .. and the investors and bankers want us to similarly build loads of spare houses for the same reason.
There is a confusion here, this idea of supply and demand, greater supply bringing down the price, might work with some commodities, but with property it certainly doesn’t. The price of property is related to the availability of finance, not the availability of property. Values rocketed when people could borrow 120% of value.. Owners of commercial property can borrow against the value of the property, even if it is standing empty, as they rely on the increase in values to get a return on their investment. An audit of vacant property in any town or city will show a truly shocking rate of vacancy in all sectors.
Part of the answer to the homes crisis is to charge council tax on all residential property, no exemptions. If it has a roof on it the owner pays council tax, (any relief or subsidy required should be left to the benefit system to deal with) then owners of vacant property would be encouraged to either let or sell.