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Chapter 2

Post-war planning and housing policy

Successive governments have wanted to ensure that all households have a dwelling of a decent standard and, through good planning, that these homes are in pleasant ­places. Unfortunately, the objectives of those devising and implementing planning regulations have not always been the same as the objectives of those concerned about housing market outcomes, and this has often resulted in frustration between different arms of government at both national and local levels.

This is not the story of planning in the UK as a whole: policies in Scotland and Northern Ireland (and in Wales since 1998) have increasingly diverged from those in England as a result of devolution. This means that much of the following discussion is about England (although some of the quoted figures are UK-wide ones). Devolving planning complicates policy, since some measures (particularly taxes) have remained national and can rub up against the devolved administrations’ housing and planning policies.

A little history helps in understanding today’s housing situation, so I give a brief description below of the key planning acts and other regulations, the major changes in the taxation of development and housing, and the shifts in policy towards social and other ‘affordable’ housing. By detailing some of the relevant history, I give examples of how successive policies have often had unintended consequences because of a failure to anticipate how the market would respond and/or because the impact of economic and credit cycles has been ignored.

The 1950s and 1960s: post-war reconstruction11

The most important year in our planning history is 1947, when the Town and Country Planning Act effectively nationalized development rights in England and Wales.12 From that time on, most developments of any size have required an application for planning permission. This Act also introduced the plan-led system, meaning that decisions on planning applications needed to be made in accordance with the local plan unless there were specific reasons not to do so (these are called material considerations, an example being a shortage of school places). Despite many modifications, in principle these two key features still hold sway in England.

The concept of the green belt was also formalized in 1947 as a means to contain urban sprawl. Only London had a green belt initially, but in 1955 Duncan Sandys, then minister for housing, encouraged all local authorities to establish their own green belts.

At first this regime was positive for new housing supply. During the 1950s and 1960s the number of dwellings completed each year in the UK reached a historically high level, peaking at 426,000 in 1968. Local authorities were building on a very large scale for social renting, and there was also a growing supply from housing associations. Social rent completions in the UK averaged over 190,000 per year in the 1950s, and over 160,000 in the 1960s. Private completions rose from just 90,000 a year in the 1950s to almost 200,000 in the 1960s.13 But demolition of unfit housing was also taking place, so overall figures for additions to the stock were less impressive: while total completions ran at around 280,000 in the 1950s, the stock rose by only 250,000 annually; in the 1960s, completions averaged about 360,000 but the annual increase in stock averaged just 263,000.

Nevertheless, the annual increases in the number of homes were far greater than they have been in the most recent two decades. In the 1990s fewer than 35,000 social rental homes were built annually, and in the 2000s this dropped below 25,000 before picking up to over 30,000 again by the end of the decade. Private completions averaged 156,000 in the 1990s and 167,000 in the 2000s (see figure 2.1). For England alone in the 2000s, social housing averaged 19,000 completions and private housing 128,000.

Figure 2.1. UK housing completions. Source: Department for Communities and Local Government.

The high rate of home building during the 1950s and, especially, the 1960s suggests that there is nothing about nationalized development rights and a plan-led system that intrinsically inhibits residential development. Active public policy played a large role: fourteen new towns were designated in the UK in the 1960s in response to faster projected population growth (this projection was later revised down sharply, bringing about a reduction in the new towns programme). However, subsequent changes in planning regulation, the funding of subsidized housing, and attitudes to development and the development industry have all combined to reduce the rate at which homes have been added to the stock in the face of rising demand.

The 1970s, 1980s and 1990s: planning comes under pressure

The early success in boosting housing supply concealed under­lying problems. Under the 1947 Act, local authorities were primarily responsible for drawing up local plans, which then required ministerial approval. This proved unwieldy, with long delays in amending plans to take account of the rapidly changing economic and demographic pressures of the 1960s. In 1968 a two-tier system was introduced, with counties responsible for ‘structure plans’ taking a more strategic view. Until 1992 these were subject to approval by the secretary of state.

This change did little to help. It took until 1975 for the first structure plan to be approved, and plans were often so long in preparation that they were out of date by the time they were adopted. During the 1980s, structure plans were much criticised for increasing uncertainty. The Planning and Compensation Act of 1991 aimed to tackle this. It enhanced the plan-led system by giving the plan primacy in development control; it made district-wide local plans mandatory; it removed the requirement for central government approval of structure plans; and it abandoned small-area local plans. Despite this apparent tidying up, the planning system continued to be criticized for causing delays, because of the lack of coordination between different levels of government, and because of generally excessive bureaucracy. It is often argued that the stronger role given to local plans increased the difficulty of gaining planning permission, rather than making it easier.

The 2000s: an accelerating pace of change

The Planning and Compensation Act of 2004 abolished structure plans, introducing a bigger role for Regional Spatial Strategies to be approved by the secretary of state, alongside a ‘portfolio of local plans’ developed at district level. It was perhaps curious that a review was ordered into land-use planning at the end of 2005, very soon after the 2004 Act: a review that I was asked to lead. The government of the day realized that there was continued impatience with the planning system, particularly when it came to large infrastructure projects. Besides, it already seemed like the process for producing the new local development plans was (yet again) unduly cumbersome.

Following my review, the Planning Act 2008 introduced a new planning process for major infrastructure. For housing, the key measure was the concept of the Community Infrastructure Levy, which I discuss in chapter 7. Also, the processes for local plan production were streamlined.

Since 2010 the coalition government has continued to reform the planning system. Their initial rhetoric was about localism and greater democracy, reflected in the 2011 Localism Act, which abolished the regional tier of planning. Among other changes, this Act introduced a ‘duty to cooperate’: a not very successful attempt to ensure that local authorities worked together on planning matters of joint concern (such as transport projects that straddle local boundaries).

Fears from the pro-development lobby that these changes would stifle development quickly gave way to a wave of concern from environmental groups during consultation on the new National Planning Policy Framework. This relatively short document (which did not require primary legislation) came into effect in March 2012, replacing many pages of planning guidance with a shorter and less complex framework. The main sources of contention were as follows.

•The strong emphasis on planning for growth, which led to concerns about environmental sustainability.

•The introduction of a presumption in favour of development where there is no existing plan.

Local authorities were given a year to put plans in place, but in spring 2013 a substantial minority of councils had not even submitted plans for approval by the planning inspectorate, which potentially left them vulnerable to speculative planning applications.

Hard on the heels of the Localism Act, the Growth and Infrastructure Bill included still more changes: a planning authority judged to be performing badly could now be ‘designated’ for a period, and during that time applications in that area would have to be made to the secretary of state directly.

The impact of legislative change