Economy: Growth

Lord Wolfson of Aspley Guise Excerpts

Thursday 6th December 2012 Lords Chamber

[Lord Wolfson of Aspley Guise]

My Lords, I congratulate the noble Lord, Lord Heseltine, on his excellent and energetic report. However, I should like to add a different perspective. In doing so, I declare an interest: I am the serving CEO of a FTSE 100 retailer that employs around 46,000 people. Our problem is not cash or the availability of funds; we generate £240 million more than we need to invest in the business or to pay our dividends. Our problem is not finance. Along with many large companies, we are able to raise finance on the bond markets at prices that we have never seen before—4% for 10-year money. Nor is the problem a lack of opportunity for investment; we have identified 1.2 million square feet of shops that we would like to open and we would like to employ 5,000 more people.

The problem is that all too often the Government are getting in the way. Next year, of that 1.2 million square feet, we will open barely 250,000 square feet. In the vast majority of cases, the problem is the planning system. The issue is not just that it says no but the time that it takes to say yes. In one shop, it took nine months just to get planning permission to build storage for stock. We then had to wait three months to see if we were going to be judicially reviewed. That is one year in which 100 people did not have jobs because of our planning system.

The problem, it seems to me, is that, while we have some great councils in this country, there are far too many people involved in our planning system who simply do not understand wealth creation. They do not understand that building new shops and creating new jobs and new services for local communities actually creates wealth. Far too often they say to me what one council official I was talking to said. We have a £2 million shop in the town centre and we wanted to put an additional shop outside the town. He said, “Surely you’ll just spread the same amount of trade over the two shops”. The shop outside the town centre will take, conservatively, £20 million. He did not understand the potential. Oddly, he did understand the inverse. He understood that to close shops is to destroy wealth and deprive people of local services.

That imbalance of perception courses through the veins of our planning system. It means that we have a planning system driven by people who are profoundly pessimistic about the ability to create wealth. Their belief that one cannot create new wealth by opening new shops, for example, means that they stop us opening new shops. It is a self-fulfilling prophecy and extremely dangerous. In particular, it has led to a hugely damaging zoning system that puts houses in places where people do not want to live and shops in places where they do not want to shop.

Noble Lords will all see an example of that if they drive down a motorway over the next week; if they look to the side they will see, at some point on their journey, a brand new housing estate; neat new-build houses, built where the planners have put them. The planners cannot see, because they do not understand wealth creation, that by building houses in horrible places they destroy wealth.

If we are to have a thriving economy, my belief is that there is enormous pent-up energy in the private sector that can be released. All the planning system needs to do is let us build homes where people want to live, and of the type they want to live in, and build shops where they want to shop and offices where they want to work. If the planning system were driven by those principles, we would have a far more vibrant and effective economy.