Planning for productivity?

Today George Osborne is due to release his productivity plan – Fixing the Foundations – in effect the second half of this week’s Budget.

The productivity issue is one that has lurked in the background of all recent economic news, and is the next big challenge facing this Government. British worker productivity sits around 15% below where economic forecasters thought it should sit if pre-crash trends had continued. The UK currently lags behind Germany, France and Italy on productivity. The US, for every hour worked, produces 31% more output relative to the UK.

This plan – largely the work of the Chancellor with his Business Secretary Sajid Javid MP and Treasury minister Lord Jim O’Neill – has identified the planning process as central to Britain’s productivity problems. Osborne has often set out his desire to increase housebuilding but has been increasingly frustrated by ‘nimby’ councils obstructing development.

The measures set to be included in today’s plan are:

  • Establishing a zonal system that would in effect grant automatic planning permission on brownfield sites.
  • Allowing ministers to impose a housing plan on councils that fail to develop one themselves.
  • Permitting property owners in London to add an additional two storeys to their homes (or up to the height of an adjacent building) without the need for planning permission.
  • And all of this will still be delivered while protecting the Green Belt.

It is clear something needs to be done around planning and many will welcome the focus on brownfield and on ensuring local authorities up their game. And the need to stimulate housing development – and the benefits that brings – are very clear. Here are four quick thoughts on the plans:

1. Allowing homeowners to build upwards in London is unlikely to solve any sort of housing crisis. . It is however likely to lead to bad and unsympathetic development, and make London a slightly less pleasant place to live.

2. The Green Belt should not be a sacred cow with people living there continually protected from development. Large areas of the Green Belt hardly fall into the ‘green and pleasant land’ category and building on a small proportion of this – at ideal commuter distances from London – would be hugely beneficial. While the brownfield site focus is important and should put some urgency into the system, our housing crisis is unlikely to be fixed through brownfield alone.

3. Despite the devolution rhetoric of the Chancellor’s ‘Northern Powerhouse’ offer, on planning he has become an out and out centralist. Local authorities are there to represent the wishes of the local people – often opposing development puts them in complete alignment. The planning process is about compromise and balancing the desire of the developer against what is appropriate for the location and the community. Often this can be an adversarial process but it doesn’t have to be. Central and local government need to make a far more effective case for the benefits of good development in which the planning process clearly plays a part. Developers also have a role here and should engage proactively with local communities to work with them to address concerns early in the process. The productivity plan risks further alienating the developer from community and council.

4. If Osborne spoke to developers (and I assume he does from time-to-time) a common criticism he should have picked up revolves around the calibre and capacity of local planning officers. Here, he has to take his share of blame. The Coalition Government’s (and one assumes the current Government’s) decision to ensure local government bore the brunt of the cuts has made it harder for local authority planning departments. Teams are over-stretched and struggling to recruit and retain high calibre officers. Providing support to them – rather than circumventing them – might have been a better way to boost productivity.

 

UPDATE – the plan is now out. Fixing the Foundations – Creating a more prosperous nation