Labour’s latest planning reforms seem likely to upset just about everyone. On the one hand, they’re taking power away from councillors when it comes to the smallest proposals for new homes; on the other, they’re giving councils the power to seize land from developers which don’t build “on time”.
Sadly, the latter is likely to be far more important, and it is an absurdly lazy proposal aimed at tackling ‘land banking’, a discredited conspiracy theory clung to by people who either don’t understand the economics of a developer or really don’t want to understand that the planning system is the problem.
The latest evidence against it is the Competition & Markets Authority’s Housebuilding Market Study: Final Report, which states in section 4.102 (p.80):
“We do not see evidence that the size of land banks we observe held by different housebuilders individually or in aggregate either locally or nationally is itself a driver of negative consumer outcomes in the housebuilding market. Rather, our analysis suggests that observed levels of land banking activity represent a rational approach to maintaining a sufficient stream of developable land to meet housing need, given the time and uncertainty involved in negotiating the planning system.”
For good measure, it adds in section 4.103 (emphasis mine):
“A lower level of land banking would likely mean fewer rigidities in the market, since it would potentially mean more land available for purchase by housebuilders who could develop it more quickly. However, attempting to artificially reduce the size of land banks from their current level, without tackling the elements of the market that are driving housebuilders to hold them, would be likely to drive lower completion rates.“
And 4.104:
“Given this conclusion, we do not propose any remedies directed at land banks.”
How do you think they talked themselves around this in MHCLG when drawing up Labour’s use-it-or-lose-it plans? Did they even have to? Perhaps they all just ignored it.
Indeed, that might explain one of the most baffling dimensions of the whole thing: the Government proposes to give councils not only extraordinary power to punish developers who don’t build fast enough, but the power to decide for themselves what the proper build-out rate is! MHCLG has explicitly said it isn’t going to give any guidance at all.
What a gift this will be to any council which wants to block housebuilding, which is most of them. They can set developers whatever timeline they like, with no apparent appeal mechanism, and once a developer has failed to hit it can not only fine them, but seize their land and even refuse to even consider planning applications from them in future!
It’s all so, so stupid. But it’s also really, really lazy on the part of Angela Rayner. If you’re going to establish such an extraordinary regime, the very least you should do is the actual work. Farming stuff out to external bodies via sweeping, ill-defined legislation is exactly how Parliament ended up making this country so difficult to govern in the first place.
Ironies abound in Labour’s housing record to date, most obviously that despite being the party with much better political incentives than the Conservatives for getting big developments built on fields, it has so far proven better at smaller interventions on so-called ‘grey belt’ sites. (And despite Rayner’s apparent preference for small developers, and the Grey Belt’s obvious scope for nurturing said developers, Labour has implemented it in a way that favours big developers instead.)
But the overall picture remains clear enough: the Government is not doing nearly enough to tackle the housing crisis. That isn’t a partisan point, the Tories didn’t either, just a fact.
Last July we suggested that Sir Keir Starmer’s failure to include planning reform in his first King’s Speech (when it might have had time to feed through to building by the end of the parliament) could end up being the moment his government failed. It’s been ten months, and nothing he or his ministers have done since has made that any less likely.
