Liberalising planning rules would help the economy adjust to changing business patterns

Milton Friedman once said that “Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless”. Other amazing achievements of the turning wine into water variety include presiding over a planning system that simultaneously has empty high streets and unaffordable housing.

In the post-Covid world, there could be radical changes in business and employment patterns. Whole industries such as travel, events, hospitality and retail could change radically or shrink. Currently, nearly all the debate in relation to development and land-use planning revolves round housing. However, the high price of land for development also affects productivity and costs in a range of other industries such as retail, restaurants and childcare. In addition, it inhibits the building of facilities for education or for voluntary organisations at a reasonable price. They then often have to rely on “handouts” from Section 106 agreements.

To facilitate the necessary economic dynamism post-Covid we need to liberalise the planning system. We should reduce the burden of red tape in order to ensure that existing property can easily be transferred to higher value uses.

Currently, there are a range of classes for buildings and developers have to apply for any change of use. Instead of being driven by the market, with rents for one use being compared with those for another, local authorities plan property use according to their own idea of how a town or city centre should look. This can lead to the desertification of town centres as businesses leave and are not replaced by residents who may wish to live in a town centre. Of course, an increase in residential development in a town centre will lead to changing business demand patterns within the centre with the possible revival of new types of business.

In the future, there may also be a market-led demand for shopping centres to be turned into other uses. Again this must be permitted. We should also allow more new development – both for residential and commercial use.

It is widely believed that development is damaging for the environment. This is not necessarily so. The conversion of farmland into housing can bring significant environmental benefits. A major study conducted by Dr. Ken Williams of Sheffield University nine years ago found that a typical garden contains thousands of worms, invertebrates, spiders, and around 250 different varieties of plants. By contrast, farms often contain just one plant (wheat, corn or maize), pollinated by the wind rather than by insects. Since 1970, the number of birds on British farmland has fallen by one-half and butterflies by one-third. Recent research on hedgehog proliferation undertaken by Nottingham Trent University and Reading University suggests that gardens in urban areas are becoming increasingly important as the rural environment becomes more ecologically sterile. In relation to environmental sustainability more generally, modern housing is far more energy efficient than older housing stock and generally allows families to live in a greater degree of comfort at lower cost.

As well as deregulation of the planning system to ensure easy change of use, we need to allow constructive engagement between developers and local authorities. All development rights should be privatised again. The assumption should be that development is allowed. However, developers should be able to negotiate compensation for the loss of environmental amenities with local communities. This compensation might well be the provision of enhanced environmental features and trust funds for their management. This would ensure that development takes place where there is the right balance of a high value from the prospective development, a low value put on existing environmental amenities and a high value put on the environmental amenities arising from the development.


Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs. He is also Director of the Vinson Centre and Professor of Economics at the University of Buckingham and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement and Dean of the Faculty of Education, Humanities and Social Sciences. From 2002-2016, Philip was Academic and Research Director (previously, Editorial and Programme Director) at the IEA. From 2002-2015 he was Professor of Insurance and Risk Management at Cass Business School. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. Previously, Philip Booth worked for the Bank of England as an adviser on financial stability issues and he was also Associate Dean of Cass Business School and held various other academic positions at City University. He has written widely, including a number of books, on investment, finance, social insurance and pensions as well as on the relationship between Catholic social teaching and economics. He is Deputy Editor of Economic Affairs. Philip is a Fellow of the Royal Statistical Society, a Fellow of the Institute of Actuaries and an honorary member of the Society of Actuaries of Poland. He has previously worked in the investment department of Axa Equity and Law and was been involved in a number of projects to help develop actuarial professions and actuarial, finance and investment professional teaching programmes in Central and Eastern Europe. Philip has a BA in Economics from the University of Durham and a PhD from City University.

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