Boosting UK productivity: Planning changes form part of the government's agenda
5 min read
10 July 2015
As the Conservatives unveiled a multi-layered plan for improving the UK's output outlook, planning changes are being introduced to help labour market flexibility.
Developers could get automatic planning permission to start building on disused land, while major housing projects could be fast-tracked and London’s extension rules have been relaxed.
While Treasury sources said workers were more productive when they live closer to their jobs, those hoping to see further transport plans feel electrifying the TransPennine rail line and increasing airport capacity would have a more significant impact.
The former caused much criticism of the government’s prospective establishment of a Northern Powerhouse, as electrification of the line between Manchester and Leeds has been delayed. A decision on whether the third runway at Heathrow will go ahead, as recommended by the Airports Commission, will be decided at the end of the year.
Javid said that “the UK has long been incapable of building enough homes to keep up with growing demand”. He suggested that as well as frustrating the “ambitions of hardworking people who want to own their own home” it was also to the detriment of productivity, restricting flexibility in the labour market.
Construction output was 1.3 per cent lower in May than the previous month according to ONS, and there had been a 5.8 per cent month-on-month fall in new housebuilding in May.
While new work and repair and maintenance contributed to the decline, it was the underperforming housebuilding sector that was having a particularly negative impact.
The business secretary announced the introduction of a new zonal system, which will essentially give automatic planning permission on “suitable brownfield sites”, those which have previously been developed but stand vacant or derelict at present. It remains to be seen whether there is enough of such land available to meet the housing needs for the coming years.
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Javid said there was “no need to build on the green belt”, but felt the government needed to “get on with it” as the 141,000 new homes built last year were a drop in the ocean in terms of meeting demand.
Emran Mian, a director of the Social Market Foundation think tank, questioned whether planning changes should be a focus for the government here, saying “housing wouldn’t be the first issue I would leap to” when considering a productivity plan.
The government though, hopes it should give companies more freedom of location and allow workers to own homes closer to their place of work. It said an “excessively strict” planning system can prevent land and other resources from being used efficiently – impeding productivity by increasing both he cost and uncertainty of investment. It also hinders competition by raising barriers to entry, adaptation and expansion.
The change to scrap the need for planning permission in London for developers who want to extend buildings to the height of neighbouring properties, should “add dynamism to house building in the capital”. Planning powers will be devolved to both London and Greater Manchester mayors.
Sanctions will be introduced for councils which don’t deal with planning applications quickly enough and the government will be able to intervene in councils’ local development plans.
Professor Tony Travers, a local government expert at the London School of Economics, said the proposals marked a step towards the “nationalisation of planning decisions” and a “shift away” from the localism agenda of the coalition government.
The government’s “Fixing the Foundations” plan also focuses on transport and higher education as other areas of concern to aid productivity. The business secretary said if the UK’s output per worker was the same as the US, the country’s total economic output would be 30 per cent higher.