To ask His Majesty’s Government what steps they are taking to increase the supply and improve the quality of the homes people want, in the places they want to live, whilst ensuring that development does not adversely affect existing communities.
My Lords, I start by saying how much I appreciate the opportunity of debating this subject in Grand Committee today. I pay tribute to the collective wisdom of the House; I know many Members have spoken before on this subject. I has taken me a year to get to this point, so I am very excited to be here at last.
One statistic tells us everything we need to know about the debilitating effect of our planning system: in the south-east of England, one acre of agricultural land without planning permission is worth around £15,000. That same land with planning permission is worth a minimum of £1.5 million. At a time of anaemic growth in our economy, the Government literally have the ability to create billions of pounds’ worth of value at the stroke of a pen. Of course, the effects of our planning system are not just economic. The UK’s housing market is socially divisive and deeply regressive and transfers wealth from young to old, poor to rich, north to south.
The sky-high cost of building land has one other perverse effect: it means that money that should be invested in quality, design, space and parkland is instead spent on acquiring land and getting planning permission. It should therefore be no surprise to us that new buildings are unattractive, always overpriced and, most importantly, unpopular. There is a vicious circle. We have created an anti-building system that makes building unpopular, so the Prime Minister’s ambitious and courageous efforts to build new homes should be applauded, as should the Deputy Prime Minister’s determination to release a fraction of London’s green belt, an area that is more than twice the size of London, for the homes that London desperately needs. I am encouraged by their enthusiasm, but I worry that these initiatives will have little or no impact. They certainly will not deliver high-quality homes in the places people want to live at a price they can afford.
It is instructive that in his recent article in the Times the PM exhorts,
“Whitehall, housebuilders, councils and everyone else to stretch ourselves to the max to meet the scale of the challenge we face”.
We have to ask ourselves why are all these disparate groups —bureaucrats, developers, Whitehall and communities —so obstructive? No other market in the UK requires the Prime Minister to urge all the actors involved to do better. The Prime Minister does not need to cajole the food, clothing, electronics or furniture markets into delivering better quality. I was encouraged by the Statement by the Housing Minister today. It was a positive step, but does it not strike noble Lords as strange that the Government are planning to spend £3 billion to help private housebuilders build houses at a time when the system is locking up so much value in unnecessarily expensive land? It is like the person who is wounding you offering you free plasters at the same time.
We seem to forget that the rules against which the Prime Minister believes we should all be stretching ourselves to the max are rules of our own making. We are being urged to fight a system of our own creation. There is a very simple and powerful reason why, since its introduction in 1947, planning has consistently produced fewer, smaller, denser, uglier, less desirable homes than we want. Every reform has begun with the implicit assumption that development needs to be planned by government. We have created a system that controls the supply of land and dictates where we live, what type of houses we live in and where we work and shop. However, government, at every level, national or local, simply does not have the requisite knowledge, incentives or resources to do that effectively. No guiding mind ever could.
My Lords, I declare an interest in that I am a shareholder in Next plc. I am very pleased to follow the noble Lord, Lord Wolfson of Aspley Guise, because he has just shown himself, as ever, to be a very big thinker. He is certainly the most gifted and capable business leader of our generation, but his speech also showed that he has big thoughts and a real view about how these things can be delivered as well, which will be one of my themes. I hope the Minister will consider what the noble Lord said very carefully and will invite him in: I would have been more than happy had this turned into an “hour for short lecture” for the noble Lord to outline all his plans, but I am happy to hear the contributions of others as well, as well as to make some very elementary points that I feel are important.
The first is that I think the noble Lord, Lord Wolfson of Aspley Guise, makes an important point about the impact of housing developments on others. In the communities that we are looking to build, we have to be absolutely clear that the infrastructure is there. It is not just about the economic incentives, which I think are absolutely clear and were outlined very well in the last speech, over the nature of the planning system and the level of costs that it brings, but many of the challenges we face in social cohesion and belief in fairness have all played to the problems caused by development not having the critical infrastructure that is necessary to accompany the extension of wider housing opportunities—GPs, schools and other critical services. Those things have to be planned as well, not just the construction of housing but creating the right incentives for other forms of structure to be there.
Certainly, the Government have done a good job in trying to set the direction on increasing housing supply. They have a significant housing target, a muscular approach to land usage and are putting pressure on local authorities, but it is not enough, because housing targets are huge: 1.5 million over three years is a very significant number, and my concern is that it would be more reasonable to suggest that we could do 3 million over 10 years. It is very hard to deliver 1.5 million over five years for a number of reasons, not least the employment situation in the construction industry and the skills that are necessary to reach that sort of level. Not only that, but we have a huge balance of public sector versus private sector-led development to be able to wash out, and we do not yet have the economics to do that. The private sector is key to this, as is making sure that the private sector has the right incentives to do it.
My Lords, I am most grateful to my noble friend for initiating this short and very timely debate. I will refer in a moment to a speech that he made on 29 February on a similar theme, but he will not mind my saying that he is not one of the usual suspects who turns up to our debates on housing. However, his insight is invaluable, because he comes from a successful commercial background, providing consumers with what they need, which we have manifestly failed to do in housing, and he brings a clarity of purpose—and also a sense of impatience and frustration about the current system, with which I very much sympathise. Who could argue that where we are today is the right place on housing and planning? There was a very perceptive article by Paul Johnson in the Times on Monday.
Having read my noble friend’s speech on 29 February, I have some reservations about part of his approach. He proposed two simple principles to the world of housing, and what he said then bears remarkable similarity to what he has just said:
“I have time to suggest just two … It simply insists that all new development does nothing to materially devalue neighbouring homes and businesses. The second, the ‘carry your weight’ principle, requires all new development to leave infrastructure in the state in which it found it or better. Before 1947, such a free market system existed in broad terms; it delivered the architecture, streets, cities and towns that we love and cherish today”.—[Official Report, 29/2/24; col. GC 158.]
It also delivered some pretty terrible stuff that no planning system would permit.
I have difficulty with those principles, and I am one of the guilty party; I was Housing Minister for about nine years and Planning Minister for four. The trouble with the first principle is that it risks denying the country the new homes that it needs. After 41 years in another place—with those four years as Minister for Planning—I know that there are many people out there who will argue that any new development, however well designed, will materially devalue their homes or businesses. We have need of development, however. We need new pylons —who is going to welcome those?—we need new prison capacity to deal with overcrowding, and we need 1.5 million new homes to meet the Government’s target.
My Lords, I thank the noble Lord, Lord Wolfson of Aspley Guise, for his very stimulating speech and for initiating this debate. I want to pursue the question of who is going to deliver the quality and quantity of the homes we need, whether that is exactly 1.5 million over five years or any other target. Is it likely that the current system, which involves the vast majority of new homes being built by a handful of so-called volume housebuilders, will produce what is really needed, at the right quality, in the right locations, with the engagement of the surrounding communities?
The current system depends upon private developers bringing forward their own propositions for the market they believe to be most profitable. They will build out at the speed that suits them without having to reduce their prices. Moreover, having paid eye-watering sums for the land, as the noble Lord, Lord Wolfson, noted, developers frequently argue that they cannot achieve their yardstick profit of 20% unless they reduce the contributions they previously promised in cash or kind.
In the Letwin review of 2018, an alternative model was proposed, that of development corporations created by local authorities, but at arm’s length, which could acquire the land at a price that reflects the reality that obligations to the wider community are not negotiable. Quality place-making—the green spaces, the schools, doctors’ surgeries, sustainable drainage and the rest—would all be spelled out in a masterplan. Individual sites can be parcelled out to, yes, the major housebuilders, but also to the SME builders, housing associations, providers of student accommodation, older people’s housing and more. Then, instead of the development dragging on for decades, the build-out rate would be hugely accelerated by the mix of uses all being constructed at the same time. The previous Government’s Levelling-up and Regeneration Act 2023 paved the way for the creation of the development corporations that could act in this way, perhaps based on combined authorities and combined county authorities.
My Lords, I pay tribute to the noble Lord, Lord Wolfson of Aspley Guise, for securing this debate, not least in light of the longevity of his interest in this matter, and his role in securing interest in this for the commonweal. I declare an interest in that he endowed the Wolfson Economics Prize with Policy Exchange, the thinktank for which I work. The last one he endowed was on the quality of our hospitals, not least their architectural and urban environment aspects, and I pay tribute to him for that.
I am also grateful for the range of experience of other noble Lords. It is always a concern, when one is further down the batting order in any debate, that people will already have said what one wants to say, so I am relieved to say that there is one dimension which has not been discussed so far and is an underrated aspect in public policy terms. At the forefront of the agenda of this Government, and what they have not done, is the issue of beauty and the shift in the policy on the very word “beauty”. Unless we build homes that create liveable places in rich neighbourhoods, reflect communities and aspire towards beauty, not only will we be making an error of historical proportions but we will be betraying the aspirations and values of future generations by saddling them with the recycled versions of the same housing crisis and the depressing quality of too much of our post-war housing that has afflicted so much of the post-war era.
As I say, I have been involved in this argument for some years. The late Sir Roger Scruton was involved with Policy Exchange as a leading advocate of the pioneering Building Beautiful programme. We played a part in recommending the previous Government’s Building Better, Building Beautiful Commission, which Sir Roger chaired. We have spearheaded moves to reinstate beauty in Britain’s policy lexicon and to ensure that it becomes an intrinsic part of our urban fabric once again. This is not an exercise in aesthetic cultivation or political partisanship. Beauty should not be the preserve of any one side of the political divide; rather, it is an essential element in defusing local opposition to new housing, thereby ensuring that the additional housing supply Britain so desperately needs is finally delivered.
My Lords, when I listened to the Government’s announcement this morning, I was hoping to hear much more courage than I did. As my noble friend Lord Wolfson of Aspley Guise points out, courage and change are what is needed here. We know that the current situation will not do. The longer it persists, the more damage it does. Reversing out of it is a big thing: it will have big consequences, and it will need some big thinking to do it right. I really hope that this Government discover their mojo on that.
As my noble friend said, artificial scarcity over a long period has created house prices that are out of people’s reach. It is not resulting in good patterns of community building. It is not resulting in beautiful buildings. All sorts of things are going wrong. We need a different way of facing. I am attracted by what the noble Lord, Lord Best, suggested as one of the ways out of this: development corporations could help take existing communities onwards and also build new towns.
We have different requirements of towns these days. We want them to support a really good public transport network; we do not want them to be car dependent. A lot of that comes into how we want communities to evolve. Where we have villages, we want them to have sufficient houses so that they can support the local services they need. However, when it comes to towns, they need to be big enough too: they need to support good medical facilities, good sixth forms and other services. There are lots of things that should go into deciding what we want our communities to look like; we then need to find a way of expressing that, through the planning system, in what gets done.
I think that the concept of the green belt has had its day. What we want is communities with embedded green space so that people find green space and nature on their doorstep, something that is easy to access and part of their everyday life. What we want outside towns is spaces that we dedicate to nature, places that are preserved but are accessible by a bus route so that people can get out there to see something and enjoy it, but which are frozen so that we can look after nature in them and are part of the funding system to do with where people live so that they are not cast out on their own, dependent for ever on handouts from Defra or whoever, and are part of the integral economy of the urban centres. We need to rethink the concept of green space completely.
My Lords, this debate took a turn that I was not expecting which has made me entirely rethink what I am going say. I ought to declare from the outset my relevant interests as a vice-president of the Local Government Association and a councillor in the north of England. I do not think anyone else in the Room is from the north. We look at things rather differently perhaps from what we have heard so far today.
The noble Lord, Lord Wolfson, made a speech turning all our ideas upside down. I understand why people get frustrated with the planning system, and I am not one who says that the planning system is entirely right, does everything as it should and produces the housing and infrastructure that we as a country and as communities want and need. However, a more free market approach to housebuilding—all I have heard is of housebuilding—puts more power into the hands of those who are already powerful: those with land to sell, who are, in our current system, powerful operators; and those who are going to build those homes, who are already powerful operators in the system. It omits the one element in the planning system that gives influence, rather than power, to people in that community and that place to help them think about how they want their place to be.
A free market approach, without giving power and influence to the third element of the equation, is not one I want to be part of. That is because, having been in local government for a long time, I know that developers do not have the best interests of local places in their hearts when they start building. They are interested in acting exactly as the noble Lord, Lord Wolfson, described: as a free market, building what they want, where they want to build it, without cognisance of the places around them.
There are many examples of developers who have taken liberties with the planning system and have not left the infrastructure as we would like it. In fact, they do not leave infrastructure at all; they do not build it. One of the main reasons you need a planning system is to put a rein around those whose objective is to see housing as a retail offer—or sale—and not as a place that shapes part of our communities.
My Lords, I declare my interests as detailed in the register. I thank my noble friend Lord Wolfson of Aspley Guise for tabling this important debate and coming up with a provocative presentation that makes us think. In planning, we always need to think. The temptation is always to carry on doing what you are doing, which tends to mean you get the same result.
I think we all agree that we have a housing crisis, and the current planning system is not working as it should. Two important points were raised. First, how do we build houses where people want to live? Secondly, how do we extract a planning gain that is in many, but not all, areas for the benefit of residents not landowners?
I will focus on building the right houses in the right places with the right soft and hard infrastructure. The greatest need for housing in many parts of the country is in urban areas. That is also where there is the best infrastructure. I note that, in London, we are shutting schools because there are not enough pupils; in Bedfordshire, we are building schools because there are not enough schools. Should we not be having more children in London—that is, houses?
That is one of the issues: it is incredibly hard to build on brownfield sites. This is why the previous Government came up with the proposal—I was involved in it—that there should be a strong presumption in building on brownfield land. I am quite disappointed that the current Government are moving away from that and suggesting that we should build on the grey belt. There may be a need to build on the grey belt but we should do everything in our power to build on brownfield first. We should also regenerate on brownfield and regenerate some of our older housing estates in many of our urban areas with gentle densification.
I add that, if we compare some of our major cities—for instance, London—to others, Madrid and Barcelona are four times as dense as London. Paris is nearly twice as dense. That gives a whole number of advantages: as well as being able to use not as much greenfield land, it means that your transport system is much better and that people have much better access to local services. This really is a very important issue.
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That planned economies do not work seems to be a lesson the world never tires of learning. We plod through the standard list of excuses for failure: blame the plan, blame the planners, the developers and the blockers, blame everybody you can. The problem is not the people involved but the system that they have to operate within. Those excuses are symptoms of a deeper truth: planned economies do not deliver, and the UK’s housing market is no exception.
To use a building analogy, our system of building control is built on the wrong foundations, so changing the wallpaper and putting in a new kitchen will not suffice. The 1947 Act needs to be demolished and rebuilt on better principles, ones that achieve the aims which we all, ultimately, want planning to achieve: to have better quality, more spacious and functional homes in the places we want to live, surrounded by the land that we enjoy living in. I suggest that we need to start with an entirely different presumption: a system that starts by presuming that all land is developable but, crucially, subjects building to strict principle-based rules and regulations that protect the legitimate interests of existing communities and the natural environment. At one stroke, such a system would release millions of acres of land for development, dramatically reducing its cost while increasing the numbers of houses built and their quality, along with reducing costs to consumers.
Some people might assume that such a reform—the abolition of top-down planning—would be a free for all. Unsurprisingly, and perhaps fairly, such a suggestion conjures up images of a dystopian race to the bottom, with a nation covered in concrete. But there is a middle ground between top-down planning and a free for all: the same type of system that regulates virtually every other successful economic activity in the world, from food to cars, computing to clothing and chemicals to crops. It is having carefully regulated free markets, with systems that permit growth but prevent the sort of development that undermines the value of existing homes.
A new system of pro-economic, pro-quality building control will take time to formulate. Noble Lords will be delighted to know that I do not have the time to go into the detail of what that system would look like, but let me start with three principles that should be at the heart of any new regulatory system we might consider.
First, and most importantly, there is the “love thy neighbour” principle. This simply insists that development does nothing to materially devalue neighbouring homes and businesses—a principle that goes right to the heart of what people fear most about new development, and one that would incentivise the building of high-quality homes that look nice and therefore do not devalue the property around them. Not only do they not do so, but good developments actually enhance the value of incumbent properties.
Secondly, there is the “carry your weight” principle. This would require all new development quite simply to leave the infrastructure that it finds—roads, drainage, rail networks and more—in the state in which it was found or better.
Finally, there is the recognition that a great deal of land in the country is of communal value. It has special value to communities, so local councils should have the ability to designate that land as having outstanding community value, and that land would have the sorts of restrictions that we currently apply to all land. However, we would not need those restrictions because there would be so much other good land around that there would be no need to destroy areas of natural beauty. That is another great problem of the scarcity that we create in this country: it encourages the building of homes in places where people least want them.
One might justly think that these three principles are already embodied in our planning system, but that would miss the point. The system I am proposing is fundamentally different: it starts at the other end of the telescope. Rather than government seeking to force, cajole and plan the development of good building, it would instead focus on preventing bad building and leave the vast resource we have at our disposal as a nation—the creative energy, intelligence, initiative, capital and innovation of the nation—to deliver the great buildings that we desire.
Before 1947, such a free market system existed in broad terms; it delivered the architecture, streets, cities and towns that we love and cherish today. Let us have the courage to start afresh, release the vast store of wealth tied up in land that we currently squander, put more trust in each other, love the future as much as we love the past and return this nation to another age of great building of which we can be proud.
Here, the planning system is critical. The data says that there were 15,000 planning officers in 2010 and 12,000 in 2020. I, for one, do not feel that this adequately reflects the problems in planning departments. It may well be that there was a drop of only 3,000 but, from my experience of planning issues, it is very significant to see that the length of time in which people are planning officers, where they are brought in and where they are from has changed substantially. I suspect that that involves a huge amount of churn, because the number of full-time planning officers in planning departments that I have dealt with has dropped much more markedly, which makes planning much more complex.
Any plan we have to massively increase housing supply will have to have a real sense about the timings and synchronicity of the plan, the delivery adjacencies, the people challenges and whether we can get the agencies and the role of the state in the right place, and there will be a price to pay, which unfortunately the Government will have to make sure that they can meet. The noble Lord, Lord Wolfson of Aspley Guise, extends the point by saying that if we were to have some very strong advanced principles in this, that would certainly also set the right direction for the future.
What we in fact need is a system that weighs the material devaluation to a few people against the wider benefit to society as a whole. That is what a planning system does and what a free market simply cannot do. A free market, for example, will not deliver the new towns that were delivered after the war and which we will need again. It would not have tolerated the compulsory purchase of land, nor would it have delivered the regeneration of Docklands by the 1979 Conservative Government.
Even if a market-led approach delivered the houses, what about everything else—the schools, mentioned by the noble Lord, Lord Mendelsohn, or the medical centres and so on that need to go with it? What about minimising the impact of climate change by promoting development near, for example, existing transport interchanges? How would we develop social housing—now delivered through Section 106 agreements—without a planning system imposing conditions? The planning system captures the difference between the £15,000 per acre and the £1.5 million by obliging the developer to provide the infrastructure and the social housing. I am not sure how the free market that my noble friend referred to would do that.
I also have a problem with the second principle of leaving the infrastructure in the state it was found or better. My concern is that the “or better” would not be provided were it not for the planning system—either through Section 106 or infrastructure levies—which insists that the person building the houses also provides the infrastructure. If that is not done by the developer, by capturing the land value, the burden would simply fall on the taxpayer, which is not a good option.
Where I agree with my noble friend is that we need to have a system that ensures that there is greater certainty about where development will take place and to have a construction industry that delivers. I am sorry if I have sounded very negative about my noble friend but, having tried over the past 30 or 40 years to do what he wants to do, there are some real issues that I am not sure the free market, or the commercial approach that has inspired his career, would address.
Use of compulsory purchase powers to buy sites where values cannot be agreed represents an integral part of the equation. Some have argued that this requires further legislation because, since the Land Compensation Act 1961, speculative “hope value”—the unfettered market price devoid of any obligations—can be used to justify a huge price tag. Others maintain that a valuation that fully reflects the public-good ingredients can now be used. Can the Minister shed any light on the current legal position in respect of CPO powers for land acquisition?
The opening up of grey-belt opportunities presents a special chance for private, but not for profit and publicly accountable, development corporations to step in and undertake high-quality development without the current dependency on the volume housebuilder. Will the Minister comment on the idea of support for the setting-up of new development corporations, perhaps through Homes England start-up grants? Let us take back control of housebuilding.
There is, as I say, an idea that beauty is for Conservatives only. Of course, we all know that, for William Morris and Ruskin, the great socialist and progressive thinkers of the past, beauty was absolutely integral to their interest. That is why it is a source of disappointment to me and to others that the new Government have dropped the beauty criteria in their ideas—not because it was the policy of the previous Government but also because, as I say, the present Secretary of State for MHCLG had made clear that it would be part of an incoming Labour Government’s proposals. So my question for the Minister is: why the change? Why has beauty been dropped?
On the wider international front, I was privileged, a few years ago, to be able to welcome Marwa al-Sabouni here to London. She is a noted Syrian architect and the author of a book called The Battle for Home. One of the things in Syria that she most eloquently described was the destruction of the urban space by the now-fallen Baathist regime. It destroyed the urban fabric but also, therefore, destroyed the relationship between communities in Syria with tragic effect; that was not the only reason for it but, as she describes so movingly in her memoir, that was part of it. In a wider sense, the importance of an agreed urban space in forging community cohesion is, of course, another further aspect of the present responsibilities of MHCLG. Why have the Government departed from this, and what will they do to ensure that the spiritual and aesthetic benefits of beauty are once again restored to our national discourse?
We also need to look at the regulations that we have imposed on existing communities. We can afford to let these places get denser. By using permitted development rights allow people to extend the houses they have, use the spaces between houses and add another floor or two. A bit of variety never spoiled a streetscape unless it was designed like the Royal Crescent in Bath which you might want to preserve. Most places can take variety. I have a Private Member’s Bill on this subject coming in the new year, and I very much hope the Government will support it. Beyond anything else, I am with my noble friend Lord Godson: we want beauty because living among beauty is one of the most healthful, well-being inducing things that you can offer to people and communities.
I am mindful, having been made to think by the noble Lord, that I have not said any of the things that I had written down. One question that comes to mind, though, is: under that system who would build the million homes for social rent that this country and its people desperately need? It would not be as profitable, so who would do it? That is a key question for the noble Lord, Lord Wolfson. How do you then balance housebuilding and all the other interests local people have, such as the environment, infrastructure, public transport and avoiding flooding? How does that fit in? I cannot see it, and that is why we have a planning system. A plan-based system, even though it is not working as well as it should, is one that I hope we stick with.
I want to come on to some of the issues with the planning system and the one-size-fits-all approach. By way of example, in Central Bedfordshire, we were inundated with speculative applications because there was a big uplift in land value. They were all supported by highly paid barristers challenging our planning system. I talked to some of my colleagues in areas with lower land value; they were not facing that issue. Their problem was that they did not have viable land, particularly where they were seeking to regenerate brownfield land, so they had a different problem. I then talked to developers who told me how hard it is to develop in certain urban areas.
What we need is a planning system that gives local authorities clear guidance on what objectives are to be achieved then provides them with the tools to deliver those objectives. It needs to be a coherent and consistent planning system—something that I fear we do not have. I welcome the new NPPPF proposals and what is said on the outside of the tin, so to speak. My concern is that, with planning, the detail is always the problem. Although we all superficially want better houses, more brownfield and better infrastructure, it is the detail that really matters—what is inside the tin—and it genuinely worries me that we will continue to get this wrong.
Finally, several noble Lords mentioned the Building Beautiful programme. The previous Government had the Office for Place, a department responsible for creating beautiful, successful and enduring places. I am very disappointed that it is not being continued. I ask the Minister: do this Government intend to build as many houses as quickly as possible, regardless of their appearance and impact on the local community? We must focus on building as many new homes on brownfield sites as possible and, where they are not on such sites, on ensuring that they have the right infrastructure and that the community is taken into account. We need to increase urban density gently and do so in combination with regenerating communities, such that we end up building homes and communities that people want to live in.