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Monday 3 October 2016

Planning Reform: Is green the new brown?

Today, the Adam Smith Institute are doing a session in Birmingham:


The ASI at the Conservative Party Conference Fringe

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  • IET Austin Court80 Cambridge Street Birmingham, England, B1 2NPUnited Kingdom 
If you're planning on making the journey to Britain's second city (sorry, Manchester) for this year's Conservative Party Conference, you might like to come along to one, two or five of the Adam Smith Institute's Conference Fringe events. We've got five excellent panel discussions lined up, covering everything from taxes and planning to marijuana and hangover-free alcohol. We're even offering a free lunch. 
All of our events will take place just three minutes outside the Secure Zone in the Boulton-Faraday Room at the IET Austin Court Hotel (where I'm informed Theresa May launched her leadership bid).

Here's what we've got lined up:

Monday 3rd October

Planning Reform: Is green the new brown?

Time
: 3:00pm - 4:00pm

Everyone agrees that we need to build more houses. But what kind, and where? This panel assembles one of Parliament's leading thinkers on housing and planning, John Howell MP, whose book was an inspiration for the National Planning Policy Framework, along with former advisor to George Osborne Nicholas Boys-Smith whose group, Create Streets, campaigns for beautiful neighbourhoods that people actually want to live in – not modernist monstrosities that only an architect could love. Other panelists include LSE's Prof Paul Cheshire, a firebrand critic of the green belt who believes that we need to totally rethink our approach to planning in a free market way to build the houses we need.

Speakers
John Howell MP, Author of “Open Source Planning”
Nicholas Boys Smith, Create Streets
Prof. Paul Cheshire, London School of Economics
Rory Meakin, Taxpayers' Alliance
Jonn Elledge, CityMetric (Chair)


The ASI at the Conservative Party Conference Fringe — Adam Smith Institute

The Institute have written papers on the subject before:
Futures Forum: Adam Smith and rationing housing supply
Futures Forum: A solution to our housing problems: we need more slums
Futures Forum: A solution to our housing problems >>> a land value tax ... rather than gentrification


PLANNING FOR FREEDOM


Key policies

  • Abolish or reform the Green Belt to allow construction of housing on intensive farmland and other damaged land, while protecting Areas of Outstanding Natural Beauty and Sites of Special Scientific Interest.
  • Replace the current planning system with a rules-based system, along the lines of those in most continental European countries, with a presumption in favour of development.
  • Experiment with mechanisms to provide direct compensation for locals harmed by new developments.

recent paper by Chang-Tai Hsieh and Enrico Moretti, both at the University of Chicago, found that housing supply constraints in the USA drastically constrained worker and firm mobility. According to their calculations, looking at 220 US metropolitan areas from 1964-2009 US GDP, if authorities were able to reduce constraints on housing supply only to the level of the median city, GDP could be 9.5% higher. Output, wages, and living standards could jump around a tenth, that is, if they could only bring everyone’s housing supply restrictions to the middle city. Gains would be substantially higher if every city allowed building like the most liberal city.

The restrictions on UK housing supply are substantially tighter than the US median, especially in fast-growing cities like Manchester, Oxford, Cambridge and London. The US, for example, does not have anything as like as restrictive a policy on outward growth as the green belt. Most US cities (except Washington D.C.) do not have height restrictions anything like as extensive of those on certain viewlines in London. And US cities do not require all new buildings to adhere to such stringent light, highway, and access regulations. What’s more, the UK is a highly unequal country; the difference between its highest- and lowest-productivity areas is bigger even than famously divided Italy and post-reunification Germany.

Thus, it seems clear that liberalising supply in the UK could bring gains at least as large as those available in the USA. They would accrue only over time, and they would be one-off—they wouldn’t permanently increase the growth rate, but would instead increase the level of GDP (and GDP per capita) for all time. But the gains would still be incredibly large compared to most policy options, and would be very tangible and noticeable to any observer.

To a newspaper or tourist or Londoner the change would manifest itself as a huge construction boom—housing and commercial building starts at levels not seen since the 1920s. This would start slowly, as firms built up capacity, but rapidly speed up. Rent growth would stall, then rents would begin to fall. The investment component of house prices would fall immediately, accounting for the large increase in housing supply. Populations and densities would grow rapidly in economically dynamic cities, making mass transport more efficient and viable across the cities, not to mention all other sorts of businesses: cafés, shops, restaurants, pubs, clubs, bars and service industries. There would be income effects across the spectrum.

Loosening housing supply could be done in three main ways: type, location, and height.
  • The London code, and other regulatory restrictions on building designs, could be loosened to allow more popular ways of building densely (like the terraces of Islington, Pimlico, Kensington, Chelsea and parts of Brixton).
  • Some areas of the Green Belt could be opened for construction—perhaps the 3.7% of the London Green Belt that’s within 10 minutes walk of existing transport infrastructure. This could be built densely in a popular way, rather than purely being made up of executive detached houses.
  • And certain areas of London—clusters, like the planned cluster around the American Embassy at Nine Elms/Vauxhall—could allow higher buildings.
  • On top of that, there could be a much easier system for obtaining planning permission to increase the height of existing two or three story buildings to four or five or six storeys. Trillions of property value could be created on top of the £1.7 trillion there already is in London.
The countervailing consideration of congestion is a serious one, and one that should not be ignored. But its costs can be mitigated straightforwardly, since the gains are so large. More bus services, tubes and trains can be run in London; the congestion charge can be hiked to take account of the greater scarcity of the roads. The alternative is essentially a noose around London’s—and other growing cities’—necks, holding their success back.
For more information, see our reports The Green Noose and A Garden of One's Own.


Planning for Freedom — Adam Smith Institute
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