Labour’s flagship policy when it comes to reforming the planning system is that of the “grey belt” – parts of the green belt that can, in principle, be built on. In the second of two parts on Labour’s planning reforms, Paul Cheshire argues that while the grey belt idea sounds appealing, it’s hard to see it leading to more housing being built without a more precise definition and a stronger presumption in favour of building. He also looks at several alternative policies that represent missed opportunities for more substantial planning reform.
Perhaps the proposal that people are most aware of when it comes to Labour’s planning reform plans, the one that hit the headlines, is the idea of potentially re-defining small areas of green belts as “grey belt land”. This is excellent rhetoric, exposing the arbitrary and outmoded green belt shibboleth but as incorporated in the proposed revisions to the National Policy Planning Framework (NPPF)have very limited practical effect. Clear cut criteria for rezoning small areas of green belt could, however, transform both how many and where houses were built – supporting economic growth and providing houses where people most wanted to live.
The five purposes of the green belt are untouched – essentially all five add to only one purpose – preventing development to stop urban expansion. So it remains the case that for land to be green belt does not suggest in any way that it is scenically appealing, environmentally significant or provides amenity or recreation. grey belt has been sold, however, as green belt that is not attractive, despite “attractiveness” not being any part of the requirement of being green belt.
In so far as the grey belt policy has a saving grace in practical terms, it comes from the statement that grey belt land should be used where Local Authorities are falling badly behind on their housing targets.
In the revised NPPF, “grey belt” is defined just as previously developed land (i.e. “brownfield land”) in the green belt or other land making limited contribution to the five defined purposes of green belt designation. But this does not really identify any land clearly, especially since no land meeting any of the criteria to be classified as “of particular importance” (defined as habitat, scenic quality, rural green space or National Parks) is excluded from grey belt designation. Many brownfield sites such as disused quarries or Ministry of Defence, provide very important habitats and are often used for recreation.
In so far as the grey belt policy has a saving grace in practical terms, it comes from the statement that grey belt land should be used where Local Authorities are falling badly behind on their housing targets. The trouble is that this is so hedged around with other requirements, including a 50 percent affordable housing requirement, that in reality almost no additional building on green belt land will occur – however “grey” the land may be.
The 50 percent affordable homes requirement would be enforced by means of a “planning obligation” or Section 106 agreement. These are a serious obstacle to building houses, however, because they inject yet more uncertainty, so risk, into the already very risky process of development. Extra risk requires a higher expected rate of return for any given project to be viable, so means fewer developments – houses – get built in total. Moreover negotiating Section 106 agreements is a specialised and costly process which imposes delays on development as local councils and developers constantly renegotiate the details of their agreements. So Section 106 agreements not only represents a deadweight loss but strongly favour larger developers, accelerating the loss of competition from the sector.
Although Labour’s proposals at least open the door to a rational debate about the best use of green belt land, it is hard to see many houses getting built as a result.
A far superior method of funding social housing – and the additional infrastructure and public services new residents require – is through land value capture: easy in this context by just imposing a, say, 30 per cent levy on the sales price of all new housing built on former green belt land. To speed construction and sale – even incentivise a lower price – the 30 percent levy could be reduced by say 1 percentage point for every month below 16 months it took the developer to go from getting full planning permission to agreeing a sale. The value of such a levy would just get (negatively) capitalised into the price of land reducing the windfall gains to landowners getting planning permission bring. The essential requirement would be to ensure the funds realised were spent only on the identified purposes – infrastructure improvements for the local communities, maintaining the quality of local public services by financing new schools or medical facilities as appropriate and directly financing social housing provision.
So although Labour’s proposals at least open the door to a rational debate about the best use of green belt land, it is hard to see many houses getting built as a result. Something much more clear-cut, such as a presumption in favour of development on any land within 1 km of a station where affordability is worse than a given threshold and there no indicator of the land having “particular importance” is needed if significant numbers of houses are going to get built in sensible locations currently off limits because of green belt designation. Much more affordable housing will get built if it is directly funded with a new finance stream released by applying a development levy when green belt land is built on.
Squandered opportunities
No moves to a “rules-based” system
This need not even have been much more than “keyhole surgery”. The case for a “rules-based” planning system as in Continental Europe (Master planning as in Germany or France is a much better example to learn from than is the zoning system of the US) is overwhelming. The costs of our discretionary and politicised system are well documented. These include extra uncertainty and risk, encouragement of the monopolisation of the development industry and deadweight losses in playing the system. Moving directly to a rules based system would be costly because of the need for universal and detailed, parcel-level plan making before it could get going. However it would be much cheaper and more practical to trial a rules-based system in, say, a big city region like Manchester or Birmingham and in London where with the Greater London Authority’s resources and existing strategic planning capacity mean the necessary detailed plans already almost exist. So an opportunity missed.
There are good reasons we have policies to preserve historic buildings and urban neighbourhoods, but those reasons do not justify preserving all such buildings and neighbourhoods forever in aspic.
Review policies that dampen growth
There are good reasons we have policies to preserve historic buildings and urban neighbourhoods, but those reasons do not justify preserving all such buildings and neighbourhoods forever in aspic. The Dutch have a national authority using technical criteria to designate conservation areas. The British have a more or less politicised process leading to designating more extensive areas than is socially optimal. Once designated, houses cannot be changed. This means Conservation Area designation all but freezes local housing supply (there can be no more building and building heights are fossilised) and also precludes improving energy efficiency since changing windows, fitting external insulation, heat pumps or solar panels becomes prohibitively expensive or impossible. So while urban conservation delivers benefits it has serious costs to society which need review.
Exactly the same case can be made with respect to height restrictions. Preserving views of historic buildings like St Pauls generates a social benefit but restricts the height of all buildings within the view-protected corridor. Many people get great pleasure from the view of St Pauls from Tate Modern across the river. The view of St Pauls from King Henry’s Mount, 16 kms away in Richmond, generates almost no pleasure because it only exists in the mind’s eye. It is only visible through a telescope on a few exceptionally clear days a year. But it stops building over the whole corridor – indeed further since there are restrictions on height in the corridor beyond St Pauls too.
The collective effect of these restrictions is that green belts stop building out and height restrictions stop building up. A serious-minded review of these various restrictions (individual Boroughs operate their own as well – some have blanket bans on anything over 7 floors) with the remit to relax them where benefits are small, could enable building in the most productive and unaffordable locations of all – central cities – and at the same time trigger investment in green technologies and improve the energy efficiency of the housing stock.
Town Centre First Policy
Retail is a major industry and employer but is subject to a particular planning policy – Town Centre First – that rigorous research has demonstrated a) reduces total factor productivity in the supermarket sector by 32 percent; b) fails to increase town centre shoppers; c) reduces town centre employment in retail, and, d) has boosted the takeover of our High Streets by the national chains squeezing out small independents.
Planning reform does have political costs but almost no revenue costs. Carefully devised planning reform, informed both by the realities of how degraded and dysfunctional our system is and by economic insight, could generate a step change in Britain’s growth.
Town Centre First was introduced in 1996 to “protect the High Street”. Not only has it been shown by subsequent research to have failed spectacularly in that aim but it has also seriously damaged productivity in the retail sector, particularly by forcing new shopping developments onto sites not chosen by retail professionals. Yet the revised NPPF leaves it entirely intact. If the Labour Party’s aim is economic growth then here was an easy hit with no plausible downside at all.
Labour is not just committed to generating economic growth: its political life depends on it. Planning reform does have political costs but almost no revenue costs. Carefully devised planning reform, informed both by the realities of how degraded and dysfunctional our system is – particularly by the standards of many of our European neighbours – and by economic insight, could generate a step change in Britain’s growth. But reform needs to be radical, it needs to be designed to promote growth as well as equity (for once not competing objectives) and it needs the political will to follow through.
All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.
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