The row over changes to the planning system has been both angry and loud, polarising opinion in a stark manner. On the one hand we have George Osborne, the DCLG, business lobbying groups and the property industry, all of which back the new National Planning Policy Framework.
Lined up against them are charities including the CPRE, Friends of the Earth and National Trust, who fear that the document – with its presumption for sustainable development - could provide a carte blanche for a wave of ugly developments across the countryside.
The government’s determination to press ahead with the reforms is due to ministers’ belief that reforming the planning system can help deliver the economic growth that Britain sorely needs. The debate has turned fractious; you may remember our interview with Greg Clark when he accused the National Trust of
“selfish nihilism“ * and not acting like a “serious” organisation. George Osborne says in this morning’s FT that “I am determined to put growth first and take the political risks necessary to make it happen.”
Yet both sides are ignoring a fundamental truth; that there are other reasons for the stagnation in the construction market besides the planning system. Changing the wording of guidance to councils is unlikely to prompt a sudden wave of building across Britain’s green fields, even if you take the most optimistic/pessimistic (depending on perspective) view of its impact.
That is because property companies depend to a huge degree on debt to finance the construction of their housing estates, office blocks and shopping centres. And that debt is now hard to obtain because of the newfound caution in the banking sector. Meanwhile property buyers (both residential and commercial) also tend to use huge amounts of debt – and that supply has likewise been choked off. As a result there are scores of developments across the country which have stalled or which have not got off the drawing board. Building pre-let new schemes in central London is one thing; going ahead with speculative projects in the shires is another.
In London alone, there are about 170,000 planning permissions for homes which have not yet been built. The national figure is said to be 350,000. To some extent this is the result of housebuilders land-banking. But it is also down to the banks – which overdosed on real estate during the credit bubble – turning their backs on the sector. Freeing up the planning system is unlikely (at least for many years to come) to create either the economic growth or destruction of green fields on the scale that people are imagining right now.
* I am reminded that Clark wasn’t talking specifically about the National Trust at that point. In fact he actually said more generally that “people do have an interest in the future – to not care shows a degree of nihilistic selfishness which is actually quite rare”.