Land use planning: the Corn Laws of our times


Tax and Fiscal Policy

When the Daily Telegraph and the Guardian sound almost exactly alike on an issue, something is fishy. And when dozens of special interest groups queue up to defend the ‘common good’ with heavily emotive language, it gets über-fishy. If you thought the campaign of fearmongering, misrepresentation and myth-building which brought down the NHS reform was pressure-group politics at its ugliest, think again. The current crusade against housing is worse by a mile.

First, a few words about the scope of the problem. Housing affordability can be measured by the Median Multiple, which is the ratio of a region’s median house price to its median gross income. On this measure, almost all UK regions (never mind Greater London) fall within a range between 4.5 and 7. This means that if a household in the middle of the regional income distribution wants to buy a house in the middle of the regional price distribution, they need between 54 and 84 monthly gross household salaries. That covers only the face value price of the house, not interest payments or transaction costs. These figures are extremely high by historic as well as international standards, and they would be dramatically worse if adjusted by space: newly built dwellings in the UK are the smallest in Europe.

For households in the bottom two deciles of the income distribution, housing costs represent about a quarter of their total budget. The belief that excessive housing costs benefit the poor, while curbing them would benefit the ‘rich and powerful’ is so grotesque that only George Monbiot could have made it up.

It is risible to suggest more social housing, or easier access to housing benefits, as an alternative. Social housing already accounts for almost a fifth of the housing stock – easily one of the highest rates in the OECD. Meanwhile, 18% of all households in the country receive housing benefit payments, a figure which rises to above 30% in Inner London. Of course we could house even more people publicly, and/or enrol even more on the Housing Benefit registry. But this would not lower the cost of housing; it would merely make it less visible.

So much for the status quo. But how about the claims made by organisations like the National Trust, the Campaign for the Protection of Rural England (CPRE), English Heritage or Hands Off Our Land that a less prohibitive approach to planning means bulldozing rural England?

There is a reason why these groups are so keen on emotionalising the debate by appealing to our affinity to natural beauty: in truth, the beautiful landscapes we see pictured on their websites are in no danger whatsoever. Only a tenth of the English surface area (let’s ignore the less densely populated parts of the UK) is developed at all. If there is one thing which England has in abundance, it is developable land.

Greenspace and water 90.1%
Domestic gardens 4.3%
Transport routes 2.5%
Buildings 1.8%
Other/unclassified 1.4%
Total 100%

(Based on ONS Land Use Statistics)

If we had a market-based system of land use planning, a debate like the present one would never have been necessary: the price mechanism would automatically guide developers to those sites which local residents value least, while keeping them away from sites which residents truly cherish. But given the present system, the coalition’s proposals constitute a big step in the right direction. Land use planning has become the modern version of the Corn Laws. The coalition has U-turned too many times already; for a change, it should stand its ground this time.

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

4 thoughts on “Land use planning: the Corn Laws of our times”

  1. Posted 07/09/2011 at 14:15 | Permalink

    Councils are currrently required to identify land for five years’ worth of housing supply.

    Housebuilders are sitting on planning permissions for hundreds of thousands of houses.

    Is the planning system really the problem?

    Q.Where is the evidence that planning is strangling supply?
    A.None exists.

  2. Posted 07/09/2011 at 14:55 | Permalink

    Clive, post your e-mail address and I will bombard you with evidence.

  3. Posted 07/09/2011 at 17:42 | Permalink

    Why don’t we set up a simple system. If the people want to keep their areas development-free, they can purchase the land. If they choose to not purchase the land, the government can sell the land to developers

  4. Posted 08/09/2011 at 08:48 | Permalink

    Felix – I assume you mean that the owners can sell the land to developers not that the government should be handed all development land. In fact, the community would not have to go that far they could simply purchase (say) a 50 year covenant on the land that restricted development without some form of agreement with those purchasing the covenant. This, of course, assumes that the right to develop is an absolute property right and nobody has property rights in the envionmental amenities that come from empty fields and so on. You can turn this round and say that the developers should compensate the neighbours. Either way it is possible to use the price mechanism here.

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