Planning reforms: serious debate needed

The government growth review (launched alongside the budget last week) is calling for "radical changes to the planning system to support job creation by introducing a powerful presumption in favour of sustainable development; opening up more land for development, while retaining existing controls on greenbelt land; introducing new land auctions starting with public sector land; consulting on the liberalisation of use classes; and ensuring all planning applications and appeals will be processed in 12 months and major infrastructure projects will be fast-tracked"

Planning delivers many benefits, but it is also costly (in terms of resources to implement, the way in which it affects costs of living, its negative impact on economic growth). Many would argue, myself included, that we need a serious debate about whether these costs now outweigh the benefits and whether reform is needed. Depressingly, I am deeply skeptical about whether or not we are going to get that serious debate.

Here is what Richard Summers, President of the Royal Town Planning Institute (RTPI), which represents almost 23,000 of Britain’s planning professionals said in response to the budget:
“If sweeping changes announced to the planning system result in the default position being ‘yes’ to development then there is real danger that within a decade we will end up with an England of tin sheds, Lego land housing and US style shopping malls”.

I simply don't see how that kind of comment adds to the public debate. Someone reading that in, say, East Surrey might fear that these reforms mean huge amounts of development will soon arrive on their door step (a third of East Surrey's population work in London and house prices in London and the South East are very high). But according to my colleague Paul Cheshire, 77.8% of the area of East Surrey is Greenbelt and, as the growth paper makes clear, existing controls on the greenbelt will be retained.

As the RTPI itself notes "Good planning combines an awareness of the competing pressures on our built environment with an ability to manage the very real effects on our space." Yet their comment on the budget simply ignores arguments about the potential economic costs of our current planning system. Not an auspicious start for a very important debate.

Enterprise Zones: Right Diagnosis, Wrong Treatment?

As was widely expected, the budget announced the creation of 21 Enterprise Zones. The location of specific zones will be a matter for Local Enterprise Partnerships, but we are told that the Government wants the zones to support real growth opportunities, not remedy local dereliction. It is hard to reconcile this objective with the available evidence.

To summarise: Enterprise Zones will offer firms five year rebates on business rates, planning regulations will be simplified, Local Authorities will be able to keep business rate growth and government will ensure superfast broadband is available. To understand the impact it’s useful to distinguish between the effect on “UK plc” (i.e. national employment and growth) and what happens in the Enterprise Zone.

In areas with strong economies, planning certainly acts as a break on business expansion and development and Local Authorities often have few incentives to allow more development. EZ type reforms would help encourage growth in these areas. Some of this growth would come at the expense of other areas in the UK, but much of it would be additional. Overall, we might reasonably expect both local and national employment and growth to increase.

But EZ’s make these changes in areas with weak economies. Misguided local planning policies may not be helping in these areas but the fundamental problem is that these are unproductive places for business investment. Five year rebates on business rates and relaxed planning regimes attempt to offset these disadvantages for businesses but they don’t address the fundamental problems such as the educational level of the local labour force. The evidence on whether this has any effect on local employment is, at best, mixed. Even if it does it is highly likely that much of this growth would come at the expense of other areas in the UK. Overall we might hope for some small impact on local employment but should expect little, if any, impact on national employment and growth.

There are many reasons to think that the current planning system acts as a break on growth. Unfortunately, reform in local zones does little to treat this problem and it is hard to see this having much, if any, impact on growth. In the current climate, spending money (or equivalently forgoing taxes) to shuffle employment around the country may not be the wisest use of funds.

The Triumph of the City

Prof Ed Glaeser spoke about his new book at the LSE last Monday. The podcast and video are both now available for download.

Enterprise Zones

At this point, I don't have much to add on the public debate about Enterprise Zones. I share the concerns of the Centre for Cities and Work Foundation reports. As I said in my briefing for the election last year - at best the evidence on the effectiveness of Enterprise Zones is mixed.

A few thoughts on the debate. First, comparisons to other policies such as the Future Jobs Fund do not seem that appropriate when you see that those policies have different objectives and are spread across the country rather than focusing purely on very deprived areas. Second, and related, the appropriate cost effectiveness question is whether these are cheaper tools for shuffling jobs across locations relative to, say, Regional Development Agencies. Third, the fundamental question is whether spending large amounts of money to get firms to relocate to less productive areas is truly a growth policy.

Transport and the economy

The transport select committee has published its report in to transport and the economy.

The report pushes the idea that transport needs to be integrated in to a "fully integrated economic development strategy" and that stronger focus needs to be placed on how schemes will achieve regeneration and rebalancing. I am not fully convinced. Good transport policy needs government to state clear and credible objectives and assess schemes against their ability to meet these objectives. If that is what is meant by strategy, then the government does need more of it. But I suspect that many people pushing this agenda want more detailed economic development plans that specify how the government sees the economy developing and how transport fits in with their vision. Unfortunately, such "planning" is quite capable of pushing government to do some pretty silly things in the hope of transforming local economies.

With the strategy in place, we can step back and ask how policy will achieve the objectives. The funny thing about the transport select committee report is that they have already decided transport will help meet these objectives, but they insist that the government must explain how it will do so: "We welcome the Secretary of State’s focus on using transport to support and stimulate the UK economy and to reduce the economic disparities between different parts of the country and we call on him to explain how his policy will achieve that end." I would usually expect the logic to flow in the opposite direction (i.e. from explanation to conclusion). But that's academics for you ...