The political economy of planning for housing: six barriers in the planning system

Planning matters

Our award winning blog gives a fresh perspective on the latest trends in planning and development.

The political economy of planning for housing: six barriers in the planning system holding back the supply of the homes we need

The political economy of planning for housing: six barriers in the planning system holding back the supply of the homes we need

Matthew Spry 22 Mar 2023
This blog is reproduced from an article included in the Fabian Policy Report - Homes For Britain: Planning For Growth – launched at an event in Parliament on 21st March
For the past 30 years, Governments responsible for steering the English planning system have grappled with how to address the growing shortage of housing.
Barely a year goes by without a review, White Paper, primary legislation or a change in national policy. But the worsening housing crisis shows we have not yet settled on the right formula.
Over the past decade, a more strident focus on meeting housing needs in the 2012 National Planning Policy Framework (NPPF) and a relaxation of permitted development rights has seen net additions rise to around 230-240,000 annually.
But this is below credible estimates of what is needed (over 2 million adults are currently unable to form their own household). And progress has plateaued - with just 40% of local planning authorities with an up-to-date local plan – and appears to be heading backwards.
Housing permissions are down 10% since 2017, and in December 2022, Conservative Party backbenchers instigated a change in national policy that Lichfields estimates could cut annual housing growth by 77,000 homes.
Few would say that planning bears sole responsibility for England’s housing woes, but nor can we say it is doing the best it can to address them.
The political economy associated with the supply of sufficient land for housing in our plan-led system is dysfunctional and needs reform. Current arrangements present at least six barriers to securing the right homes in the right places.

Leadership and resetting the political culture of planning

First, culture eats strategy for breakfast, so the saying goes, and the political culture of planning is not in a good place. There is motivation to solve the housing crisis in many local authorities, but sadly it is not universal.
The 2017 White Paper[1] said some Councils “duck the difficult decisions” but, worse than that, too many actively look for reasons to reduce the number of new homes for which they plan.
A debate on planning in a Council chamber will often characterise house building as something done under duress, at the behest of central Government. This attitude delays the preparation of local plans and leads to refusal of otherwise acceptable planning applications.
We thus have a slow, contested and costly system. The culture is not new; many Councils actively resisted various forms of regional planning during the 1990s and 2000s[2]. These behaviours – albeit not ubiquitous - are deep rooted, flowing from: a lack of incentive to accommodate growth (linked to the fiscal centralisation of local government); adverse (not always unfair) perceptions over design, placemaking and infrastructure; and the personal outlook of some elected members.
That public participation in planning is skewed towards those local residents resisting development does not help[3].

A smart approach to setting housing targets

Second, the setting of housing targets. The number of homes that can be built will reflect the land realistically available for development and in most places this is rationed by Councils to an amount judged necessary to meet a homes requirement figure in a local plan[4].
The aggregation of annual requirements has typically been around 230,000 in recent years (based on figures applied by Government in the Housing Delivery Test[5]), well below the 300,000 per annum national ambition.
Why so low? Current policy tells plan makers to take an estimate of local housing need for their area using a Standard Method (300,000 p.a.) and then set a local housing requirement based on how much of it they can meet. Not all places have enough suitable, available land to meet their need, and too few areas with extra capacity elect to make up the difference.
The Standard Method is criticised because it skews targets towards Labour-voting land-constrained big cities (based on an arbitrary 35% uplift); because it relies on old 2014-based demographic projections; and because it does not reflect the economic growth potential of areas like the OxCam Arc or places experiencing regeneration.
Government’s attempt to update its formula with new projections (which baked-in low population growth in areas affected by a shortage of housing) and to introduce the famous ‘mutant algorithm’ both hit the buffers.
Its difficulties mirror Labour’s experience of Regional Strategies at the tail end of its last period in office[6]. When it comes to imposing housing targets on local areas, Governments find the force of their writ is strongly correlated with their political strength or weakness.

A more effective approach to strategic planning

Third, localism - introduced by Eric Pickles - relies on individual councils doing the heavy lifting on cross-boundary questions previously addressed by County Councils or Regional Planning Bodies.
Neighbouring authorities are forced into the planning equivalent of prisoners’ dilemma over who should accommodate unmet housing need that spills over from constrained areas, particularly administratively under-bounded towns and cities. Thousands of needed homes fall between the cracks in this protracted, Kafkaesque process. Opportunities to plan for and take advantage of new infrastructure are missed.
Attempts to re-introduce strategic planning through an abstract mosaic of Joint Plans, Mayors, Combined Authorities, and Growth Deals are fragile and often collapse on impact with the difficult choices they were designed to solve[7].
The Government itself crashed and burned when it abandoned its own OxCam Spatial Framework in 2022. The latest Government policy change proposes to dilute the obligation to address cross-boundary housing issues, sweeping the problem under the carpet.
London stands out with its relatively mature strategic planning framework, but is not without its flaws: the Mayor’s blueprint has to be supplemented by individual Borough plans – a two-tier process that takes years, has a tendency for duplication[8], and - when it comes to housing - has not met housing need under successive mayors.
There is also no effective mechanism for engaging with local authorities in the wider south east to look at how some of the Metropolitan Green Belt – 35 miles wide in places - might be selectively released.

Realistic and resilient local plans for house building

Fourth, too few areas manage a sufficient pipeline of deliverable land to maintain rates of building necessary to meet their targets. A January 2023 survey by Planning Magazine found four in ten local authorities reporting insufficient land ready for development in the next five years[9], and the real position is likely worse if one accounts for the optimism bias that typically over-estimates deliverability by 10-25%. Property development is a risky and unpredictable business: market cycles, site assembly, technical issues like flood risk and utilities, securing detailed approvals, ever changing regulatory requirements, addressing nitrate and water neutrality restrictions.
All can reduce the speed at which consented sites are built out. When local plans apply the land supply equivalent of a ‘just-in-time’ strategy that lacks resilience in the face of inevitable uncertainty, it leads to shortfalls.
Since 2012, the Government has applied a ‘presumption in favour of sustainable development’ to tilt the balance in favour of applications for new housing to address shortfalls; and 25,000-40,000 homes have typically been granted permission at appeal each year[10].
However, it does not have the certainty of the ‘builders remedy’ measure applied in parts of the US[11], with only around half of appeals being approved. Importantly, decades-old policy provisions exempt land in Green Belt areas except in ‘very special circumstances’.
This protection – which also means less incentive to prepare a local plan[12] - insulates scores of local authorities around our big cities from having to actively confront the housing crisis.

Harnessing the potential of the next generation of new towns

Fifth, we lack a universal road map for large-scale new communities. New settlements positioned at nodes on public transport corridors could act as a release valve for the pressure cooker of London and other successful cities. Yet Eco-Towns[13] in the 2000s and the Garden Communities in the 2010s were patchy in their achievements. Most big schemes grapple with how to deliver expensive infrastructure –new roads, public transport systems, schools and affordable housing – in early phases.
Public sector land, gap funding and interventions by local authorities and Homes England have helped but aren’t possible everywhere, and a succession of local plans have tried but failed to unlock the potential of new settlements.
There is appetite from well-capitalised private sector players and registered providers who are keen to pump prime and act as master-developers, but this potential has not yet been harnessed.

Local government with the resources to plan for growth

Finally, local government planning teams lack resources to keep the system moving, with net expenditure down by 43% since 2010[14]. Covid-19 knocked the stuffing out of many Councils who struggle to retain staff and recruit from a diminishing pool of qualified planners[15], many of whom have opportunities in the private sector as a career alternative.
This comes at a time when, for all the repeated efforts to streamline and better regulate, planning has become more onerous and litigious, grappling with an ever-growing set of policy requirements, within a discretionary system that – back to where we started - operates in a negative culture that can make planning in local government a much less satisfying career than it should be.

There’s hope for the future

It’s not all doom and gloom. We know the problems and have tools available to solve them. There are opportunities – through digital planning reform and elements of the Levelling Up and Regeneration Bill - to improve the effectiveness of current arrangements.
But we need a positive vision from Government that grapples with the negative culture towards housing delivery that has taken hold and which – without change – stands in the way of positive planning on the ground.
If allied to strategic planning where it is needed, and to policies that govern how we direct and deliver homes, we have a fighting chance of solving the housing crisis.

[1] The 2017 Housing White Paper is available here

[2] For example, see this media report from 2000 with the response by a Surrey County Councillor to the report by Professor Stephen Crow on the South East Regional Planning Guidance

[3] This report by Shelter found that “Despite the majority [of people] being supportive or neutral, the level of active opposition runs at more than double the rate of active support (10% compared to 4%). This means that people whose standpoint on local housebuilding is oppositional are three times more likely to actively oppose than natural supporters are to actively support an application (21% compared to 7%). People on the highest incomes are more likely to have actively supported and opposed a local housing development. This shows that people with the highest incomes have a big voice in local housing debates, but are not always opposed.”

[4] A review of the role of housing targets in planning can be found in this blog here

[5] The latest Housing Delivery Test results are here

[6] The political dynamic of that period is captured by the August 2009 Caroline Spelman letter to local authorities

[7] See for example the challenge of progressing the Greater Manchester Spatial Framework, from which Stockport withdrew in 2020 (£) and then saw further speculation in early 2023.

[8] Themes explored in Spatial Awareness, Lichfields’ analysis of spatial development strategy in London

[9] See the Planning Magazine housing land supply index here (£)

[10] See Table 2.5a of the PINS quarterly and annual statistics – available here

[11] A brief summary of the Builders Remedy is available here

[12] Analysis in this blog found that of the 70 LPAs who have not adopted a new local plan in the past ten years, 74% contain Green Belt.

[13] See this Parliamentary briefing on Eco Towns here

[14] See this RTPI analysis here

[15] See this LGA Workforce Survey report here