Regulation

Planning and licensing rules impose heavy costs on businesses and consumers


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Economic Theory
Tax and Fiscal Policy
Planning controls constitute a significant denial of private property rights, with serious economic consequences. The most obvious is the severe housing crisis. However, businesses also suffer as they are forced to negotiate a complex and costly web of regulation and politicised decision-making. The additional costs are reflected in higher prices and reduced choice for consumers.

For example, a restauranteur will need permission to have a restaurant on the site he wants, will need permission for its appearance, then be told what time he is allowed to operate, whether alcohol may be served and even if music and dancing can take place. While the restauranteur owns the business and is liable for its losses, in important ways he doesn’t really run it.

To give a more specific case study, in one of my last planning committee meetings as a local councillor, we were presented with a change-of-use application to turn a retail unit on a high street into a dental practice. The planning officers recommended refusal as there already existed a dental practice on the street, and to lose a retail unit would be to reduce the percentage of such units from about 56 per cent to 50 per cent. The fact that the retail unit had been empty and unused for several months did not seem to concern them, and more importantly, nor did the fact that it was a private individual using his own money who wished to make this change. Essentially, the planning department and committee were allocating quotas for what belongs on a high street.

On top of that, in a system where one should presume in favour of the applicant, it is frequently the case that councillors attend such meetings thinking ‘how do I refuse this?’ The reasons are varied. An oft cited one, especially in the case of restaurants, is that there already exist several in the area (imagine if we applied this silliness to consumer products!), although frequently the real motive is fear that an approval could be electorally damaging.

Would it be so bad to simply abolish planning and licensing laws altogether and move to a system based on voluntary agreements? This would mean high street units could change and adapt rapidly, that private property owners could do as they pleased with their own property and help deliver the kind of environment residents and businesses actually want, not what planners and councillors think they should want. It would also mean people with a little bit of power could not penalise certain businesses out of personal distaste or electoral self interest, and better still it would end the legalised corruption that is S106 money. Any serious disputes would be much better settled through a compensatory system of arbitration based on common law, private contract and precedent than under the present arrangements where self interested local officials make decisions, influenced by the NIMBY instincts of local residents.

The planning and licensing system in this country is one of the most serious hindrances to wealth creation, as well as making a mockery of the idea that we believe in private property. Liberalisation should be an urgent priority.


1 thought on “Planning and licensing rules impose heavy costs on businesses and consumers”

  1. Posted 12/09/2014 at 10:23 | Permalink

    As a one time Chartered Town Planner, I couldn’t agree more with the sentiments expressed by Andreas Strongolou. There are a lot of sacred cows in need of slaughter, but to mix metaphors, don’t throw the baby out with the bathwater! There are (largely) accepted communal goals in the rural & built enviroment we inhabit and these are well reflected & continue to work well…National Parks, AONB’s Conservation area, Listed Buildings & TPO’s. However where use zoning has been implemented via local & structure plans as well as nimby development control it really has been the disaster described…strangling greenbelts, tightly drawn town centre boundaries, village envelopes, etc etc. The key to successful deregulation must be in compensation for externalised costs….wind & solar farm developers meet devaluation of property & noise nuisance liabilities as an example. Such works well in major public sector infrastructure developments…motorways, rail etc., lets bring such forward to all develpments in tandem with largescale deregulation.

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