The Observer view on Tory fantasies about planning

With the Town and Country Planning Act 1947, the Attlee government nationalised development rights. That is, whatever benefits that might come from developing land belong in principle to the public. When planning permission is granted, a portion of those rights is transferred to a landowner.

This gives government a lever that can be used for the public good. A vast quantity of latent wealth comes from the fact that planning consent can increase the value of land – according to one study, by a stupendous 275 times. The most realistic way of funding the genuinely affordable housing that this country needs is from sharing this windfall.

Last week, the Ministry of Housing, Communities and Local Government published a white paper, Planning for the Future, which promises, in the prime minister’s words, to “tear down” the system created by the 1947 act and “start again”. The crucial question is whether it will, as the government promises, end the generational divide between housing haves and have-nots.

Its most eye-catching proposal (for England only, as planning is devolved to Scotland, Wales and Northern Ireland), is to designate three types of land, labelled “Growth”, “Renewal” and “Protected”. These would be specified in the plans drawn up by local authorities. Where land is designated for “growth”, outline permission would be automatically granted for development of the type set out in the plan.

This would reduce the public debate and scrutiny that currently come with planning applications and focus on the drawing up of local plans, which is currently a slow, sometimes opaque process. The white paper promises to make the preparation of these plans both faster and more open to public consultation, at the same time as their significance is greatly increased.

The proposals include a “fast track to beauty”, whereby local authorities, with some direction from national government, produce design guides that translate the “basic characteristics of good places into what works locally”. Applications that conform to these guides would be speeded through the planning process. Digital technology would make planning more accessible to the public, basing it on “data” rather than “documents”.

Perhaps most importantly, section 106 agreements, which are negotiated between planning authorities and developers and are the main vehicle for obtaining affordable housing and other public benefits, would be replaced by an enhanced community infrastructure levy (CIL), a cash sum that would be fixed according to national rules. Viability assessments, whereby developers can plead for reductions in their obligations in order to make their schemes stack up, would be abolished.

The idea of these changes, says the government, is to speed up the planning process by slashing red tape. Much of the current system relies on opinion and interpretation, which adds uncertainty, risk and complexity. A clearer, more rules-based system would benefit smaller building businesses, currently squeezed out by the construction giants.

The communities secretary, Robert Jenrick, promises that these proposals will help “recreate an ownership society in which more people have a dignity and security of a home of their own”, where “all pay a fair share of the costs of infrastructure and the affordable housing existing communities require and where permissions are more swiftly turned into homes”.

Looked at neutrally, some of these aims seem valid. If local plans are truly to be exposed to fuller public debate, that would be a good thing. The discretionary nature of the planning system is indeed wasteful, does not always lead to the best possible results and tends to favour those with the resources to shout most and argue hardest. The abolition of viability assessments would be positive. In theory, the improved CIL could be the lever by which those still-nationalised development rights could benefit the public.

But Jenrick saved the Tory donor Richard Desmond millions of pounds in CIL by overriding a planning decision made by the London borough of Tower Hamlets. This episode doesn’t give confidence that Jenrick is the best man to preside over a more equitable CIL, nor that the Conservative party is not primarily driven by its property business supporters.

The white paper also assumes a high degree of administrative competency, for which this government has not so far been notable. The new super-powered local plans will require resources and organisation that are not yet in evidence. The design codes will have to address those tricky issues that really make places successful, such as layout, density, construction quality and mixtures of uses and tenure.

It is possible to see how council estates could be designated as areas for “growth” and therefore vulnerable to comprehensive redevelopment. The CIL proposals come with exceptions that could easily be used to erode their effectiveness. The promise of more equal housing would therefore fade away.

It is a persistent Tory fantasy that deregulation of planning will, through the operation of supply and demand, reduce prices. It does not and will not: volume housebuilders slow down their rate of building if the price is in danger of falling. The European countries with more balanced and successful housing markets than ours, such as Germany and the Netherlands, have more proactive national and local governments, which do such things as assemble land and initiate building. Even if this white paper works, which is doubtful, it will take a lot more to address the housing crisis.