Planning hikes the cost of living, by Paul Swinney

There is no doubt that the cost of living is likely to be a key issue in the upcoming general election.

And it is also likely that the usual suspects - particularly electricity, gas and fuel companies - will be first in the firing line. But it is planning, not consumer, policy that could make the biggest difference to alleviating what is the most significant single expenditure in people's lives - namely, housing costs.

House prices in the UK have risen by 60 per cent since 2003, spurred on by a raft of cities in the south of England, whose economic successes alongside a lack of housebuilding have seen them become increasingly unaffordable.

In London, house prices have risen on average by 6.3 per cent each year over the past decade, while in Cambridge, the figure is 5.4 per cent and it is 4.6 per cent in Oxford. Given that wages are also stagnating, the cost of housing as a percentage of income has increased dramatically as well. In each of these three cities, house prices now amount to at least 13 times the average income. In such a context, the housing crisis and the cost of living crisis represent one and the same thing.

So how did we get into this position? And where should the blame lie? The first answer is simple – we are not building enough homes where we need them, and have not been doing so for a very long time.

As for the second, there are a number of parties whose actions have contributed to the current situation, including both landowners and developers. But we must also acknowledge the role that planning policy has played at both local and national levels in exacerbating the housing affordability crisis. Primarily, this has manifested itself through the explicit choice to defend and protect the green belt at all costs.

The solution to the current crisis must begin with efforts to increase land supply. The government must empower cities to repurpose and develop brownfield sites, encourage them to work with their neighbours to identify opportunities for building and move beyond the political paralysis hanging over any attempts to have a sensible conversation about the green belt. In the ten least affordable cities alone, although there would be great cost and complexity associated with development, there is enough brownfield land for around 425,000 extra homes. But this will not be sufficient to meet housing demand on its own. By contrast, well-connected green belt sites in and around these cities have the capacity to supply 1.4 million low-density homes.

Given such opportunities and the pressures on growth if we fail to act, it is time for both local and national planning policy to begin assessing land on its merits. There is no doubt that the cost of living crisis will dominate the next general election – and yet the answer lies beneath our feet. All parties need to step up to the challenge and put planning at the heart of the solution.

Paul Swinney is senior economist at Centre for Cities


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