Planning Reform

Simon Clarke Excerpts

Wednesday 13th March 2024 Westminster Hall

[Sir Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

I beg to move,

That this House has considered reform of the planning system.

The housing shortage that we face in this country is the great crisis facing the United Kingdom today. Since 1973, house prices have more than tripled in real terms, with the average house price today reaching over £284,000. Just in the last 20 years, the ratio of house prices to incomes has more than doubled. The average household faces paying more than seven times their annual income for a home to call their own; in 2000, it was three times their income. For the average individual, the statistics are even starker. The housing shortage means that the overwhelming majority of our young people simply cannot hope to afford a home. It means that people cannot move to be closer to work or to their family, and that people are stuck in cramped, unfit and often unsafe homes throughout the country.

The housing shortfall is strangling our economy and choking off the growth that we need to restore our economic fortunes. Put simply, the housing shortage is making us all much, much poorer. The only solution to this crisis is to build more homes. According to a Centre for Cities report, the UK has a shortfall of well over 4 million homes. Even with the Government’s target of building 300,000 homes a year, that deficit would take at least half a century to fill, and sadly we are nowhere near that number.

Evidence from around the world shows the power of home building to make lives better for people right across the income spectrum. In 2016, Auckland liberalised its planning system and precipitated a boom in housing construction, which resulted in significantly lower rents six years later. Across the Atlantic in the United States, new buildings attracting more affluent residents have freed up the homes that they used to live in, lowering demand and rents for homes across the entire market, even at lower income levels. A Swedish study found that the benefits of new housing are evenly distributed among residents from different income groups.

How we actually get to building more homes is clearly far from simple, but what we do know is that the planning system is not fit for purpose, so how do we reform it to get where we need to go? There is growing consensus across the House that the planning system is holding us back from delivering the homes that are needed. Fixing our outdated, top-down and restrictive processes must now be a priority for both main parties and, I hope, all parties in the House. But how do we do that?

The first and most important thing is to make home building more popular with the British public. When asked, people across the country broadly support the idea of new housing. The 2020 British social attitudes survey found that 58% of Britons want to see more home building, with only 25% inherently opposed, and yet, as colleagues will know, specific house building projects in one’s own constituency always seem to attract far more opposition. Some of that opposition is unthinking, knee-jerk nimbyism, and we should have no time for it, but not all of it is unreasonable. Despite the benefits of new homes, existing residents see very little immediate benefit when development comes to their home area. They do, however, experience real costs, ranging from crowded roads to overburdened GP surgeries, and sometimes they witness low-quality homes being unceremoniously dumped on the edge of their town.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I do not disagree with a number of my right hon. Friend’s points. One concern that people have at a local level in Suffolk, and more generally, about additional house building is that it very rarely comes with the additional infrastructure that he mentions. More houses are built, but more pressure is put on the local infrastructure—on schools, hospitals, GP surgeries and the roads. What does he suggest as a mechanism to change that, so that if people accept more house building, they actually get the infrastructure that is needed?

[Sir Simon Clarke]

My hon. Friend is absolutely right. I have seen that in my constituency, where a new GP surgery in Nunthorpe, a suburb in the south of the town, has changed people’s attitudes to new homes coming in. However, we need to institutionalise that sort of offer to residents. The planning system must deliver a worthwhile settlement that gives residents a reason to say yes to extra homes.

The Government have legislated for one important potential solution: community land auctions. CLAs allow local government to see a substantial share of the profits from new development, enabling local authorities to capture the uplift in value that comes from planning permission being granted. The value of agricultural land can rise by up to 80 or 100 times. The council getting their fair share of that increase in the underlying land value allows them to deliver benefits to local people, which they can then spend on the new infrastructure that my hon. Friend rightly says is essential to make new developments viable. Residents then get to see their fair share of the upside, too, while the country sees homes unlocked with more community support. I hope to see the Government press on and make the most of the Levelling-up and Regeneration Act 2023 by getting trials of CLAs moving quickly, because they have huge potential.

[Sarah Dyke (Somerton and Frome) (LD)]

“Decisions and policies are most trusted when the people making them are representatives of the people affected by them”—that quote is from a civil service training manual. Does the right hon. Member agree that we need to ensure that localism remains in the planning process?

[Sir Simon Clarke]

I think localism as a principle of good Government is very important. I am a strong believer in the mayoral devolution of the kind that the Government have introduced in recent years. I will come to the hon. Lady’s question about how we can best address the balance between local and national Government. Local government can be a very good thing, but it can also become an obstacle to actually building homes anywhere at all, which is something we need to try to balance.

[Jim Shannon (Strangford) (DUP)]

Will the right hon. Gentleman give way?

[Sir Simon Clarke]

Of course—it would not be a debate without the hon. Gentleman.

[Jim Shannon]

I commend the right hon. Gentleman for bringing this debate forward. Planning rules on the mainland are slightly different from those in Northern Ireland. The principles that he refers to are important, so I sympathise with his comments, particularly about the time that it takes for a planning application to be granted fully. I have a close relationship in my area with the local planners through the council and also with numerous developers and builders, because there is a tradition of building in my constituency. The frustration about timescales is understood. Does he agree that one of the most pivotal ways in which we could reform our planning system is by ensuring that councils are funded adequately to ensure a more robust planning approval process? Councils have a key role to play; let us make sure they are part of it.

[Sir Simon Clarke]

I totally agree. The hon. Gentleman is exactly right: councils need to have the planning departments to process the applications, and too often, as we know, good planners are poached by consultancies when they are needed in our local government system. The answer is to allow local authorities to capture more of the upside financially from new homes being built so that they can fund the requisite staff and expertise— I see the hon. Member for St Albans (Daisy Cooper) nodding—to do exactly what the hon. Gentleman refers to.

[Daisy Cooper (St Albans) (LD)]

The right hon. Member will be aware that there is a Government-imposed cap on how much money local councils can charge big developers when they put in applications. That led to a situation in St Albans where the constituents of a district were subsidising big developers to the tune of £3 million a year. The Government have increased but not scrapped the cap, and councils can still not recoup the full cost of processing an application. Would he support a measure to scrap the cap altogether?

[Sir Simon Clarke]

That is a very reasonable question. I would need to look at the detail of the policy to see whether simply raising the cap further or scrapping it would be the best solution to the problem. Do I accept entirely that we need to make sure that councils are not cross-subsidising the cost of development, but are incentivised to welcome good development? Yes, I do.

Another important piece of the puzzle is leasehold reform, and I thought that the Minister for Housing, Planning and Building Safety spoke brilliantly on that issue in the House last week. Although nominally owners, the relationship between leaseholders and freeholders often resembles that of a landlord and tenant. There is too little protection against drastically increased service charges and few incentives for freeholders to properly maintain a building.

Secure and fair property rights are a core Conservative principle. The Government are making great strides with the Leasehold and Freehold Reform Bill. It is absolutely right that we fix the balance and ensure that once people get on the property ladder, their home is truly theirs. I encourage the Government to go further, and I welcome the commonhold system whereby leaseholders all own a share of the common development, but we must address the fact that leasehold reform is vital.

We should also address the fact that new homes in Britain are too often of low quality. Poor-quality designs leave new and existing residents feeling that new homes are too often nothing more than ugly boxes, and we should look seriously at how design codes can ameliorate that. For example, we could allow individual streets or areas to vote on a design code for new housing. Establishing pre-set and pre-approved design rules ahead of time would allow everyone on the street to see a large share of the potential uplift, while significantly increasing the number of homes built. Design codes could also increase housing through densification, rather than relying on outward suburban sprawl, which would also reduce the potential dependence on cars and would allow more green space to be preserved.

As we have discussed, even if the public are on board, local authorities need to be as well. Councils are vulnerable to particularly vocal activism, even if it is a minority opinion among residents. Any reform will need to empower councils to take long-term decisions in the interests of their area, giving them the tools to get the right outcome from new development and incentivising them to say yes where appropriate, while ensuring that a few bad apples cannot shirk their responsibility to allow more homes. As you know, Mr Betts, our councils really matter.

I recently had reason to feel considerable frustration at my own planning authority in Redcar and Cleveland, when the chair of that authority made the baffling decision to delay the consideration of the proposed new British Steel electric arc furnace at Redcar. That reflects the power that councils can have for good or for ill, and we certainly want to ensure that their natural incentives are to welcome investment.

To do that, we need to ensure that development plans are brought up to date everywhere. These plans allow builders a measure of certainty when deciding where to construct new homes, but they are often not up to date. Unfortunately, the consequences under current law if an authority does not have an up-to-date plan are often trivial.

One possible remedy comes from California—the so-called “builder’s remedy”. Under that policy, if an area fails to plan for enough homes, it must approve any housing project that contains at least 20% low-income or 100% middle-income housing. That solution can be extremely effective. A few weeks of the builder’s remedy in Santa Monica resulted in more affordable housing being approved than there had been in the previous seven years. I certainly favour restoring a presumption in favour of development wherever an up-to-date local plan is not in place.

[Sarah Dyke]

I would not be a Somerset representative if I did not mention the phosphate levels on the Somerset levels and moors Ramsar catchment area, caused by phosphates entering the water system. It is stymieing the building of new homes in parts of Somerset, so we no longer have that five-year housing land supply. That means that the local plans are effectively suspended, and the local planning authority is forced to approve inappropriate new housing development in areas where it would normally be refused. Does the right hon. Gentleman agree that in those circumstances, the local planning authority should be afforded better protection from the five-year housing land supply requirements?

[Sir Simon Clarke]

I confess that I think the issues surrounding phosphate and nutrient neutrality need to be addressed—indeed, I commented on this with my right hon. Friend the Member for Newark (Robert Jenrick) this morning—by looking at the underlying causes of the problems and allowing mitigation measures to be put in place and counted forward so that homes can still be built where appropriate. That would mean that we do not end up in the situation where authorities either commission homes where they are not appropriate or do not commission homes at all. We need to resolve the Gordian knot of nutrient neutrality, because it is an irrational obstacle to building new homes. It is something that we have created through policy, and we need to resolve it through policy.

The Government have rightly said that development plans ought to prioritise building in cities. I welcome the exciting plans set out by my right hon. Friend the Secretary of State for major new developments in east London and Cambridge. That is precisely the kind of visionary development that we need and should welcome, and I think it will command broad support. Demand is obviously highest for homes close to city centres, where jobs are located, so those new homes often contribute disproportionately to economic growth. Building in cities also means that less money is required to support the infrastructure needs of new residents, and it is environmentally friendlier. Urban, dense communities inherently encourage lower usage of energy, because living in a smaller space means there is less to heat, and living in an apartment building means that there is natural insulation from other units, and so on.

Estate regeneration is also a win-win way to add more housing in cities and to deliver social justice. Too often, our post-war council estates are impractical and prohibitively expensive to rehabilitate. However, redeveloping an estate with new private housing that helps to cross-subsidise a wider improvement and redevelopment of social housing can result in a plan to deliver a really good outcome for all residents. Allowing tenants to vote on these plans would ensure that their rights were protected while providing new and renovated homes of a kind that is desperately needed.

However, although the brownfield-first policy is sensible, a brownfield-only policy cannot be, and no debate on planning would be complete without my referring to the completely uncontroversial subject of the green belt. The green belt was intended to prevent sprawl, but I would submit that it has done the opposite. Today’s green belt, which is three times larger than London itself, causes a leapfrog effect, whereby individuals wanting to live in London end up settling in distant commuter towns instead, which increases transportation and climate costs. Parts of the green belt—the disused car parks, the petrol stations and the dreary wastelands that make up what the right hon. and learned Leader of the Opposition rightly calls “the grey belt”—are far from the natural paradise that some would have us believe.

The green belt, in truth, has the best spin doctors around, encouraging a widespread misapprehension that it is all beautiful green land, when in fact 11% of the UK’s total brownfield land lies within the green belt.

[Daisy Cooper]

Will the right hon. Gentleman give way on that point?

[Sir Simon Clarke]

I will give way, but then I should make progress.

[Daisy Cooper]

Does the right hon. Gentleman accept that some of us do not give or accept that portrayal of the green belt? Some of us are very clear that there are brownfield sites and there are developed sites within the green belt, and most of our concern is about the undeveloped green-belt sites that have natural habitats.

[Sir Simon Clarke]

In response to the hon. Lady’s point, I am strongly in favour of making sure that we can better enshrine the protections for the areas of genuine natural beauty and community amenity, rather than having a reductive debate that simply suggests that the entirety of the green belt is an untouchable verdant paradise, because it is not all like the front of a box of Yorkshire Tea; we all know that it is a mixed area of land. It was a crude line on a map drawn in the late 1940s, with good intention but adverse consequences today, and I would argue that we need to have a much more sophisticated debate about what is and is not tradeable in that context.

My own party needs to stop pretending that all of the green belt is valuable, which is bad policy and bad politics, and it is time that we started to look at releasing some grey-belt land to provide us with the housing that we desperately need. The hon. Member for Mitcham and Morden (Dame Siobhain McDonagh), who is a fellow PricedOut parliamentary champion and a friend, has done excellent work in pointing out that some of the worst areas of blight in her constituency are characterised as being green belt.

Of course, even where the planning system does allow developers to bring forward new homes, regulations that are too strict can still strangle supply and push up prices. Year after year, conditions and requirements are added at every level, driving up costs without necessarily delivering high quality. Perhaps the most egregious example of this comes from the Mayor of London’s London plan, where the dual aspect rules require every flat to have external windows on multiple walls. Clearly, indeed inherently, that is desirable, but it comes with a cost, and if it restricts the number of homes built, that intervention needs to be balanced against the wider social imperative of creating homes where they are most needed.

Minimum space standards are another example. While young people in other countries live on their own in flats of between 20 and 25 square metres, in the UK they are forced to live with strangers in overcrowded houses in multiple occupation because we have banned new flats of that size. Politicians need to be honest with the public and with ourselves about the options that exist in this area. In the middle of a generation-defining supply crunch, we cannot afford these rules. People would be much better off in small, modern and affordable flats of their own than in ageing, chopped-up homes built over a hundred years ago. We need to nuance this debate.

We also need to talk about tax. Our main real estate taxes often feel to those priced out of home ownership as though they add insult to injury. Stamp duty land tax and council tax both need fundamental reform. Stamp duty, as it is currently constituted, penalises people every time they move house, meaning that some households remain in homes that are too small for them when others remain in homes that are too large for them—in both cases for too long.

Council tax is regressive and unfair, and fails to compensate local councils properly for increases in land or property value, undermining the incentive to add more housing. Given that all parties are, frankly, terrified of the effects of a revaluation politically, and given that there has not been a revaluation since I was a child of seven, we need to look at fundamental reform of local government taxation. That is a major issue—I do not deny it—but at the moment it is worsening the planning system as well as acting irrationally in terms of the tax system. I submit that both those taxes should be replaced with a proportional property tax, which would save households an average of more than £500 a year and result in up to 600,000 extra new homes over the next five years.

I hope that this morning I have highlighted some easy, sometimes controversial but generally win-win solutions that we could use to help soothe our housing crisis. In the long run, there is no substitute for real root and branch reform of our planning system. Ultimately, I favour a rules-based system along the lines set out by my right hon. Friend the Member for Newark when he was Secretary of State for Housing, Communities and Local Government. It was unfortunate that the Opposition misrepresented those plans as a “developers’ charter”. If only they had been allowed to do anything of the kind!

Housing has an impact on every facet of our lives. Rising housing costs suppress productivity, increase wealth inequality, worsen climate change and increase homelessness. People need to be together. Bringing people physically together is a social good, but people need homes to do so. This is not an abstract debate; fixing the issue is a moral priority and it also ought to be a top political priority for my own party, as it always was under Prime Ministers as different as Harold Macmillan and Margaret Thatcher. I do not know how we can make the case for popular Conservatism when in too many areas of England people cannot accumulate capital in their own lives. I certainly feel that is why major political change may be brewing in parts of the country that we have long called our heartlands.

One need only contrast the recent success of the Canadian Conservatives to see the amazing difference that embracing pro-home-ownership policies can deliver, even among the youngest voters. The UK is falling behind in the quest for higher productivity and better wages, and at the moment we are only making ourselves poorer by refusing to meet one of our most basic human needs—a place to live. The UK needs innovation, we need infrastructure and most of all we need housing. We will not get enough of it under the current system. That is why the time for talking is over.

We have made too little progress on effective planning reform over the last 14 years and it has become clear to me that politicians are not holding ourselves sufficiently accountable on the issue. That is why I am delighted to announce that PricedOut, Britain’s largest campaign for affordable news homes, will publish an index of Members of Parliament in England running for re-election, ranking their performance on housing, planning and infrastructure issues. That will serve as a guide to voters up and down the country at the next election, showing just for whom the issue is a priority. PricedOut has my support in bringing all of us in this House to account. The country deserves a more serious debate than the one we have had, and we need it soon, before lasting harm is done to another generation by our collective unwillingness to deliver the serious planning reform the country needs.

--- Later in debate ---

[Sir Simon Clarke]

I thank the Minister for her gracious comments about giving me time to respond. This has been a very good debate and, despite the proximity of an election, a remarkably consensual one about a number of the issues that we know we need to overcome if we are to build the homes we need as a country. Clearly, there are areas of contention and big challenges that require significant political courage to be addressed.

I will briefly give credit to those who have spoken. I agreed with the hon. Member for Westmorland and Lonsdale (Tim Farron) about the importance of allowing local planning departments to be sufficiently resourced to do their job. I have more faith than he does in the ability of the market to fix these problems, but that is probably not an unusual distinction between us.

I thank my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) for attending the debate. I wish him every success with bringing forward the Shrewsbury ring road—the 9 o’clock to 12 o’clock segment. Although I concentrated primarily on housing in this debate, it could equally well be extended to infrastructure. We must allow ourselves to build what we need to succeed. The Government need to address some of the obstacles that have progressively accreted and stop us from doing things that we know are in the national and often the local interest.

I welcome the ambition that the hon. Member for St Albans (Daisy Cooper) set out for 380,000 homes a year, but that needs to be underpinned by robust methodology in terms of clear national targets. As the shadow Minister, the hon. Member for Greenwich and Woolwich (Matthew Pennycook) said, local plans need to be up to date and we need to make sure that they are resourced appropriately so that they can be kept up to date. I count the shadow Minister as a friend in this place, and he is right that there are things that we need to do to give greater accountability for local authorities when it comes to their work. We obviously disagree on nutrient neutrality: I think Labour failed to put their money where their mouth has been when it comes to the importance of house building.

Finally, I thank the Minister. I welcome the fact that we are on track for 1 million homes a year. I would clearly like to see more of that home building and I look forward to discussing with her, as we approach the manifesto-writing process, how we can best deliver it.

Motion lapsed (Standing Order No. 10(6)).