Issue 11
Words by

Why Britain doesn’t build

23rd May 2023
40 Mins

The history of attempts to reform planning in Britain is proof that political willpower is not enough: you need to be smart, not just brave.

Since the Second World War, housing in Britain has become increasingly expensive and scarce. Following a pre-war housing boom in the 1930s, during which decade more houses were built than ever before or since, between 1947 and 1955, Labour and Conservative governments enacted strict new planning rules controlling development. These rules gave local councils the power to block nearly all housebuilding, with little incentive to permit it. 

Following a brief grace period after the Second World War, Britain never managed to build enough homes. To address this, successive governments have tried to get the planning system to deliver the homes the UK needs, through ideas including regional planning, a land commission, New Towns, and also by attempting to loosen planning controls. All of these attempts failed. If Britain’s next generation of leaders want to get more houses built, they should learn from these missteps.

The backdrop

Britain has been one of the richest countries in Europe since the medieval period. Its early political consolidation, and geographic isolation from the mainland, meant that it could dispense with city walls very early, and, in relative terms, spread out into terraced houses rather than living in apartments. From the nineteenth century Victorian period onwards, its cities were further extended with trains, trams, and underground railways, creating the world’s first suburbs. 

Still, the British advantage in housing outcomes in 1955 was largely the result of huge building programs – both public and private – over the previous 35 years. 

Note: Data for Scotland and Northern Ireland is not currently available for the pre-1945 period. Therefore only data from England and Wales, which makes up 85% of the United Kingdom’s population, is used for this comparison.

Housing supply had collapsed during the First World War because potential construction workers were mobilized for the army. This, along with the expansion of the munitions industry workforce in industrial towns, drew people into those areas – causing a housing shortage. The subsequent rent increases led to major industrial unrest, which culminated in an eight month rent strike in Glasgow in 1915. The government responded that year by freezing rents and mortgage payments at pre-war levels.  

These controls partially remained throughout the inter-war period for working class rented housing. However, high inflation, both during and immediately after the war, meant that this led to a major reduction in the real rents of controlled property, of over 20 percent. This heavily restricted the investment in lower-end private rented housing which comprised 69.1 percent of the private rental market in 1931.

To compensate, the British government introduced subsidies in successive housing acts from 1919 to 1924, which were primarily aimed at funding local authorities to begin large-scale programs of public housebuilding. What followed was an average of 60,000 homes, or slightly more than 0.6 percent of the housing stock, being built by the state every year between 1920 and 1938. 

Building was focused on urban ‘slum clearance’, in which working class families in urban areas such as London, Birmingham and Manchester were ‘decanted’ (moved) out of inner cities and swathes of older stock were demolished.

The families were then moved either to public housing at lower densities on those same sites, or new public housing estates on newly available greenfield sites outside the urban area. In London, this included the large Beacontree estate in Dagenham, where 24,000 new homes were built on 3,000 acres of market gardens in Essex. Likewise, Manchester built over 8,000 houses on over 2,500 acres of farmland in the Wythenshawe estate to its south.

Between the First and Second World Wars, public transportation systems were extended to connect new areas to urban labor markets. Surface light rail systems, which connected urban cores with their suburbs, began to be electrified starting with South London from 1908. 

Access to these new electric tram and motorized bus networks spread. This unlocked land which had not been previously accessible for suburban housing construction for urban commuters. However, infrastructure improvements occurred later outside London, with Manchester electrifying its tram line to Altrincham in 1931.

During this period, Britain’s planning restrictions were extremely lax by modern standards. What regulations did exist were mainly minimum standards for sanitation and space, with the only major exception being an eight story height limit in London that was imposed in 1894.

When Britain left the gold standard in 1931, interest rates fell from six percent to two percent. This new regime, with loose monetary policy, cheap mortgage finance, cheap materials, readily available labour (in the wake of the Great Depression) and minimal planning restrictions, enabled private housebuilders to build houses across the newly accessible areas, turning them into new suburbs. 

Private housebuilding more than doubled between 1932 and 1934, from 142,000 to 286,000. These high private building rates, of around 2.5 to 2.9 percent of the housing stock, were sustained until the outbreak of the Second World War.  

The beginning of the backlash

This housebuilding was, in part, a victim of its own success. The rapid rate of new urban expansion led to a political backlash from residents outside the urban boundary, who were upset by the ‘urban sprawl’ of new developments towards them.

Both sympathetic architects, led by the Royal Institute of British Architects, and supporters of urban planning, such as the Town and Country Planning Association (which developed out of Ebenezer Howard’s New Towns movement), believed these issues could be solved by restricting and reshaping new development. 

To do so, they created the Council for the Protection of Rural England (CPRE) under the leadership of Sir Patrick Abercrombie, who was the country’s leading urban planner, and the architect of the Greater London Plan that laid out the capital’s post-war destiny. The CPRE lobbied central government to implement planning laws to restrict unplanned urban expansion. Many senior politicians and civil servants regarded this activity with suspicion: as an attempt to disrupt socially necessary housebuilding and turn the countryside into ‘the preserve of the wealthy and leisured classes’.

However, the grassroots strength of the CPRE, which had, by 1938, grown to a body with constituent bodies – 152 affiliated bodies, 38 county-based branches, and an ‘ever increasing’ associate membership – meant that it could mobilize a significant amount of voters. This pressured MPs in areas affected, which fed through to politicians at the highest level. 

At the 1929 election, the leaders of the three major parties in Britain jointly wrote an open letter to the Times endorsing the CPRE’s work and message. In 1935, the CPRE’s bête noire, ‘ribbon development’ of houses alongside arterial roads, was banned by the government. Its developers had been described by the Observer newspaper as ‘public enemy no.1’.

The great break for the CPRE, however, came in 1937. Then-Prime Minister Neville Chamberlain, ever the appeaser, gave Abercrombie official sanction, by commissioning the Barlow report on regional inequality and appointing him as a commission member.

In 1940, under the cover of war, this committee proposed a radical attempt to square the circle between the political demands for rural preservation and the need for house building. It concluded that the political backlash that had emerged in the 1930s was not due to housebuilding per se, but instead from the growth of cities. 

They argued that the growth of successful urban areas in the interwar period, particularly London and Birmingham, was undesirable for two reasons. First, large-scale urban expansion caused congestion, pollution and the destruction of rural amenities. Second, growth in these prosperous cities was deemed to be unnecessary as, they argued, it could have been redirected to deprived areas in the North of England. This would both reduce the need for housing in ‘congested’ urban areas from internal migration and reduce unemployment in areas affected.

The Labour government accepted the recommendations of the Barlow report, and combined its anti-urban ideals with the post-war drive for state-led development in the 1947 Town and Country Planning Act. The UK’s modern planning system was born. 

The planning system’s overriding aim was to ensure development would only proceed if it was in the ‘public interest’. To ensure this, the majority of housebuilding would be nationalized. To this end, the act prohibited all private development without explicit permission. It was intended that the (allegedly) socially undesirable private development in and around existing cities would be replaced by state housebuilding in New Towns. This policy of state-directed development would, the framers argued, end the destructive externalities of urban expansion, and so successfully placate any opposition to housebuilding.  

Initially, the system worked as expected. To obtain permission to build, private firms had to apply for building licenses from the government, and only a small number were provided, which suppressed private construction to 20,000-40,000 a year (0.2-0.35 percent growth) between 1946 and 1951. This compared to over 250,000 private homes built a year (above two percent) in the five years before World War Two.

To compensate, the amount of public housing built was increased to 150,000 a year (1.2 percent). But, this was not enough to counteract the reduction in private house building, which meant total building remained far below 1930s levels, at under 200,000 homes a year.

This was not enough. Over 200,000 homes had been destroyed by bombing during the War, and a further 250,000 had been demolished for slum clearance in Britain’s cities by councils. Housebuilding had also ground to a near halt during the war, with only 190,000 homes being built in total across the six years. Put together with unmet demand for the housing that would have been built in normal times, civil servants estimated there was a housing backlog of around two million homes from World War Two.

The backlog was not cleared by the post-war Labour government’s building rates, which were only sufficient for contemporary household formation. The dire housing shortage led to a major political backlash, with the Conservative opposition putting poor housing conditions at the center of its 1951 campaign, against Labour’s policies of state control and rationing, in an effort to gain votes from the most affected groups: the working classes, and women, who managed most household budgets. 

1951 election poster
Image used with permission from Wikimedia

This strategy was electorally successful because at this point, the number of privately rented homes was still greater than the number that were owner-occupied – something that would change after the 1950s.

Private renters are directly and immediately affected by housing shortages – by increases in rents or, if rent controls are in place, by reductions in the quality and availability of accommodation. This is not quite the same for owner-occupiers, since shortages can increase the value of the houses they own. Equally, homeowners are more incentivised to oppose development that is perceived to have a negative impact on local quality of life, given that it threatens the value of what is often their largest investment, their home – whereas renters can move elsewhere (or may get lower rents in compensation for a worsened local area). 

The Conservative party pledged to make housebuilding a priority ‘second only to national defense’, and to increase gross housebuilding rates to over 300,000 a year, from 172,000 in 1950.

When they were duly elected, the new Conservative government abolished building licenses while simultaneously increasing funding for new public housing. This combination managed to increase the rate to above their housebuilding target within a year. To this day, the building rate of 2.3 percent achieved in 1954 was the highest post-war building rate that Britain achieved.

Green belts and New Towns

This building boom was not just a result of the Conservatives’ policy reforms. The new conservative government also had a lucky advantage: it was able to use sites that had been nominated for housing by Patrick Abercrombie, previously leader of the CPRE and hugely influential among planners. 

Abercrombie himself was against only continuous and contiguous urban growth, not housebuilding in itself. His urbanistic vision was to replace unplanned urban ‘sprawl’ with planned growth through geographically distinct New Towns. He believed that, assuming these settlements were ‘in competent architectural hands and well planned’, they would ‘drop into place almost unnoticed’ and avoid the large-scale political opposition that earlier suburban expansion had faced.

Consistent with these values, Abercrombie drew up the Greater London plan in 1944. This proposed two major policies. First, Britain was to establish a ‘green belt’ around London, with a seven-to-nine-mile-width (called a ‘radius’ in planning policy). Development on green belt land was to be almost completely banned. Second, there were to be ten New Towns connected to London via railways, on ten new sites inside and outside the green belt Abercrombie had nominated to accommodate London’s growth.  

Abercrombie used his influence and prestige to convince the CPRE not to oppose these new settlements, and the post-war Labour government began their construction by passing the 1946 New Towns Act. This allowed the central government to bypass local authorities and found New Towns. In these areas, planning would be managed by an independent development corporation. Around London these ‘Mark I’ New Towns include Basildon, Slough, Crawley and Stevenage, which by 1970 together housed 470,000 people. 

The success of Abercrombie’s program was short-lived. The plan was predicated upon seriously flawed beliefs about the reality of political opposition to housing. The 1947 Act assumed that people were opposed to the uncontrolled outward growth of cities, but not housing per se. Once that had been planned for, the theory held, opposition to housebuilding would subside. 

This was not true. In fact, in both cases, national-level opposition to development was an outgrowth of local opposition. There was opposition to the growth of cities because that was where housing happened to be built in the inter-war period. So people affected by the externalities of building lobbied for planning restrictions where they lived, which led in turn to restrictions at the national level.

Instead, moving development to New Towns simply meant there was a new redirected opposition from a different base of local residents and their representatives, who lived in the locations affected by New Town construction, instead of those on the rural-urban fringe. When the then-housing minister Lewis Silkin visited the existing residents of the proposed New Town site of Stevenage, he was chased out of a public meeting to cries of ‘dictator’ – to find that local boys had deflated his tyres and put sand in his petrol tank. 

The Mark I New Town of Stevenage
Image used with permission from Stevenage Museum

The first round of development plans had been drawn up and founded either during the Second World War, with no major political opposition, or during the immediate period afterwards, when the government had a historically-unprecedented landslide majority. Yet the benign political conditions that enabled the foundation of these new settlements did not last. 

Though the Conservatives’ promises of a major housebuilding program had won over working-class voters in the 1951 election, the resultant government had a wafer-thin majority of just eight seats. This meant it now required the support of MPs from rural and suburban constituencies to pass legislation, many of whom were threatened by the new ‘overspill’ development planned beyond London. 

Building 1.5m homes between 1951 and 1955 had ameliorated the immediate post-war housing deficit. After this, the government bowed to pressure from these MPs to increase planning controls near them by allowing the expansion of green belts. If an area was designated as part of a green belt, there would be strong legal prohibitions against housing development which the central government could not overrule except in ‘exceptional circumstances’. In 1955, the government allowed local councils in areas just outside the immediate vicinity of London to designate land as green belt.

This had two major effects: First, it subjected all British cities to containment, including cities for which there were no New Towns. Second, it meant that areas threatened by overspill from the areas originally designated green belt could now be classified as such as well. For example, the green belt around London expanded from a 9- to a 35-mile radius, as neighboring counties rushed to end the prospect of displaced development from the original green belt areas. 

Rural counties surrounding urban areas thus obtained a veto on all further housing development, beyond the relatively small sections of land that they had to allocate for development in their ‘local plans’ (which set out where development could and couldn’t occur in a given area) – before they could be approved by the central government. The amount of land they were required to allocate was based on projections of population growth. But if demand for housing proved to be higher than anticipated there was no clear mechanism for the housing ministry to allocate additional building and declassify that part of the green belt after a plan for an area was already accepted.

Theoretically, the government could use the New Towns Act to appoint a development corporation, which had the power to redraw green belt boundaries. But in 1957, the government of the day ruled this out by announcing the end of further government-imposed New Town developments.

The combination of green belts and the political death of the New Towns project effectively meant the end of large-scale new greenfield development within commuting reach of Britain’s cities.

The growing land shortage

As the supply of building land was curtailed, and building rates dropped, its price began to rise from 1955.

By the beginning of the 1960s, it was clear that housing demand in the South East and the Midlands was higher than had been planned for. Emigration from the country outstripped immigration into it, but the post-war birth rate had unexpectedly increased as well. Population forecasts made in 1944 projected that Britain would reach a population of 54 million by the year 2000. In reality, this population level would be reached in 1966, following the post-war baby boom. 

Responding to these growing pressures, in 1962 the Conservative government, now under Prime Minister Harold Macmillan, set a target of 400,000 new homes per year by 1965. Despite them failing to meet it, the next newly elected Labour government under Harold Wilson raised the target in 1965 to 500,000 homes a year by 1970.

Population pressures were not spread evenly across the country, but concentrated in the prosperous areas of the South East of England and the Midlands. Government population projections in 1961 and 1966 estimated that the South East of England would see its population grow 3.5 million from 1964 to 1981. To meet these numbers, central government studies concluded that many local plans needed to approximately double the current amount of land available for development. In particular, the outer metropolitan areas of London had only been planning for population growth of one million between that time.

In the meantime, the building land that had already been allocated in local plans, which was meant to last until the early 1970s, had been used up by the late 1950s. As a result, by 1966, areas of the South East and Midlands were close to running out of demarcated areas in which building was lawful altogether.

An alternative, densifying existing land, was generally discouraged under the view that it went contrary to slum clearance goals. Policymakers overruled the preferences of planners and forced through high rise construction in cities, where only politically weak working class renters lived, but were unable to get any densification past planners in suburbs, where politically strong middle class homeowners were an additional obstacle.

The Macmillan and Wilson governments attempted to deal with the problem of underbuilding by stimulating housing demand and introducing generous tax breaks for homeownership. The Schedule A tax on the rental value of owner-occupied homes was abolished in 1963, and owner-occupied property was exempted from capital gains tax in 1965. Finally, in 1966, the mortgages of low-income workers were supported via a direct subsidy.

These private housing subsidies were not unusual by the standards of the time in Europe – indeed, Britain was an outlier in not having them before 1963. However, subsidies can only increase housing production, as they did in post-war Europe and interwar Britain, if there is capacity for more supply, such as land allocated for new development. Otherwise, subsidies will tend to push up prices.

To try to deal with this problem, the Wilson government set up a Land Commission in 1965 to deal with the shortage of land designated for housebuilding and the resulting high land prices. The Land Commission attempted to obtain land either with unused planning permissions, or a good likelihood of getting planning permission, in order to build housing and sell it to housebuilders, believing that a centralized body would have the resources to appeal to the Ministry of Housing successfully, where small builders had failed. 

Initially, it attempted to work with local authorities and county planners in areas with land shortages. However, local administrations in the South East of England and the Midlands opposed the measures and refused to cooperate with the commission. So, in 1969 the Land Commission began to demand the intervention of central government to force local authorities to reclassify land designated as green belt and allow housing development. But before this intervention could materialize, Harold Wilson lost the 1970 election to the Conservative Edward Heath – whose party had explicitly promised to abolish the Land Commission and respect local definitions of green belt land. The Commission was disbanded.

During its short existence, the Land Commission purchased 286 acres of land in the South East, theoretically enough for around 7,000 houses, or roughly one percent of the estimated housing need for the next 15 years in the region, at contemporary densities. But it was unable to obtain planning permission to cover most of this land, so much of it was used for gravel extraction instead. In the Midlands, it managed to purchase a grand total of four acres for housing development. Unsurprisingly, this minimal supply of additional building land meant that the proposed strategic plans did not materialize. 

Instead, the growing land shortage led to a flatlining of overall housing production in the mid-1960s, at rates significantly below the housebuilding peaks of the late 1930s, despite the strong demand for housing. There were simply not enough sites to build on. 

Since governments of both parties were politically unable to declassify non-negligible amounts of green belt land during the 1960s and 1970s, the only option left was to build more in areas that were politically easier to build on. In practice, this meant bulldozing working class urban neighborhoods and building new social housing at extremely high densities. One example of this is Charles Dickens’s house in Bethnal Green, East London, where the area both before and after the rebuilding can be seen below:

Charles Dickens’s house: before and after
From Tower Hamlets Local History Library and Archives

The high structural costs to build and maintain these high-rise structures were coupled with heavily restricted council rents. Together, the combination of high costs and limited funds led to low architectural, building and maintenance standards. This, unsurprisingly, led to further significant backlash against these developments. The government relented to political pressure in 1967, cutting high-rise subsidies and allowing the 1967 Civic Amenities Act to pass. This imposed stringent height limits and design restrictions, and allowed conservation areas to be established in the historic urban neighborhoods under threat from redevelopment, severely restricting the potential of any future urban high-rise.

The Wilson government also chose to restart the New Towns program, while trying to find less politically sensitive areas to put them. Such areas were beyond the now extended green belts where fewer people and potential detractors lived. The downside was that these homes were therefore far away from urban labor markets. A partial exception was Washington near Newcastle, which was built closer than earlier towns, but still in an area of scarce employment.

The first generation of New Towns were all within an approximately thirty-minute train journey from their parent cities. ‘Mark II’ New Towns such as Peterborough, Milton Keynes and Skelmersdale were built up to be within 90 minutes’ commute from London, Birmingham, Liverpool and Manchester, the major cities they were supposed to be satellites of. As a result, many of the Mark II towns have been far less successful than their Mark I predecessors in providing their populations with jobs and amenities to this day. For example, Slough and Crawley, both Mark I towns outside London, have average weekly wages of £797 and £744 respectively

Milton Keynes, further outside the same region, has been the most successful Mark II town in providing its 250,000 inhabitants with employment opportunities, but has a comparatively low average weekly wage of £678, while its contemporaries have fared even worse. Fourteen out of 23 districts in Mark II town Skelmersdale, in Lancashire, are in the poorest 20 percent of districts in England. The median weekly wage in Mark II Peterborough is £560, 20 percent less than in Stevenage, which is on the same rail line and economic region but at least half an hour closer to London.

The crisis

By 1970 governments had attempted New Towns, a Land Commission, and high-density social housing as ways to overcome the land-use constraints around cities. These had ended up being at best suboptimal, and at worst complete failures, and it became increasingly attractive for central government to do nothing and just let the availability of land to build on fall and fall. This incentive was compounded by the fact that, by the 1971 census, increases in home ownership had meant that Britain was by now a majority owner-occupier society. The majority of the electorate were now insulated, at least in the short term, from the direct increased costs of housing shortages. 

All of this led to a new equilibrium of triumphant local NIMBYism, completely un-confronted by the central government, that has persisted from the late 1960s to the present day. In England and Wales, private housing production dropped during economic downturns from 1.3 percent in 1968 to 1 percent in 1970 and then to 0.7 percent in 1977. 

Yet, unlike in the 1950s and pre-Second World War, there were only trivial house building increases during the economic upswings from 1970 to 1973 and 1977 to 1979. This was despite the new tax incentives for house purchases. Coupled with loosening credit conditions, there were double-digit increases in house prices relative to the general price level during both these periods. 

The growing political inertia on house building can also be seen in the sharp decline in public sector housebuilding rates which more than halved between 1968 and 1979, from 1.05 percent to 0.5 percent respectively.

The chart below, using data and code from my report on the history on the British housing crisis with Centre for Cities, shows that after the decline in the 1970s, housing supply has effectively plateaued at the rates it settled on in the early 80s, which is extremely low by historical standards.

What Europe did differently 

In the post-war period, Western European countries did not suffer from the same planning constraints that led to such dramatic falls in housebuilding rates in Britain. Rather, after 1955, the majority of Western European countries enjoyed higher building rates, and increasingly more abundant and better quality housing than Britain.

As can be seen in the chart, irrespective of their starting positions, a range of European countries increased their ratio of homes per capita faster than Britain. In the 1970s Switzerland and Germany overtook Britain, with Finland close behind. Sweden and Denmark, which had both started ahead, maintained their advantage. Only the Netherlands, whose population increased by 40% in this period, five times that of the UK’s 8% growth over the same period, failed to close most of the gap, though it did gain ground.

Why were these countries able to sustain higher housebuilding rates? Some of it was luck. By European standards, Britain is a densely populated country. It had urbanized extremely early, during the nineteenth century. This meant that by the post-war period it already had a large number of settlements around cities, on built-out railway networks, and their residents were not keen on further expansion. 

Since European cities and towns expanded later, it was into relatively sparsely populated farmland, around small and often poor villages whose few inhabitants could be bought out by the windfall that came from selling their agricultural land to developers. 

In other words, when British cities expanded outwards, it was towards a large number of angry voters; when European ones did, it was towards a small number of impoverished farmers who stood to gain directly from the expansion.

This may have been why European governments were subject to less pressure to restrict development around their cities. Most of these governments introduced their planning legislation later than Britain: West Germany did so in 1960, the Netherlands in 1965, and France in 1967. As a result, these countries enjoyed a brief period of unconstrained housebuilding similar to what Britain experienced in the 1930s, but with postwar building technology and infrastructure. 

While underlying voter interests exerted a huge amount of influence on the direction of policy, institutions mattered a lot too, since they created the incentives that determined how these interest groups were encouraged to behave. 

The British planning system of 1947 accepted the main arguments being made by senior planners at the time – that the views of those opposed to housebuilding should be taken at face value. Both the planners and politicians who advanced their program believed that complaints about urban growth were legitimate, and that large-scale private housebuilding was not socially optimal. They took advantage of these complaints to design a new and restrictive system to regulate housebuilding consistent with their ideals, in the misguided hope that this would placate the opponents of development.

Planners thought that people would accept the housing that was deemed to be necessary, if new housing was directed away from cities and their immediate suburbs, and new house building was done by the state for the public benefit, to alleviate the conditions of those most in need. But this theory, although internally coherent, failed on first contact with reality. You cannot pretend that the inherent advantages of building homes in existing urban areas – and their convenient suburbs – do not exist, and expect people to be happy to commute for hours, or take poorly paid jobs, as a result. Many people will always want to move to cities for the jobs, attractions and variety of urban life, whether or not there are enough houses there to take them in. 

More importantly, however, these ideas profoundly misunderstood the politics of housebuilding. The British planning system implemented in 1947 created the worst possible incentives for the political groups it was trying to placate. It was based on the idea that the right amount of housing could still be built even if local communities had the power to restrict development as much as they liked. The ability to control the location, tenure and design of housing would reconcile communities to the necessary development.

This was not enough to incentivise housebuilding at a local level. Local opposition to housing was never driven by what was best for society as a whole, even if opponents to development phrased it in that way to make it more palatable to national policymakers. Affected Brits opposed the planned social housing of the 1947 Act no less than the unplanned private housing that had gone before. No matter how well designed, no matter how affordable it would be, it didn’t matter – because their central concern was the inconvenience it created for them at the local level. 

Simply put, where people live matters to them. It governs the public services they use and the quality of their local environment, and therefore has a significant impact on their overall quality of life. If someone personally loses out from increased congestion, pressure on local services, or perceived change to local amenities, then it doesn’t matter how good the plan is from a perspective of national welfare – they still have the incentive to oppose it. 

What’s more, once there is an expectation that locals have substantial control over local development, this becomes a de facto right. It is reflected in the price of property when new people move in, and fiercely defended like any property right.

The 1947 consensus didn’t just fail to reduce political opposition to new housing, it made the problem worse. If a neighboring area enacts strict planning restrictions, like expanding its green belt, then you are threatened with their overspill as well, creating a chain reaction of NIMBYism. After communities on the immediate urban fringe secured the right to veto new development, communities further afield also demanded it. When that was granted, and development was pushed back into the urban core, people there too obtained the right to block development. 

The few new houses that snuck past the new political constraints fell under two options. Some were in the middle of nowhere – similar to the Mark II New Towns, but on a smaller scale. One example is the settlement of Northstowe, a development eight kilometers outside Cambridge, which is one of the largest current residential projects in England. It was started in 2003 and completion is expected by 2030, with 10,000 homes planned for. Yet this is not near any rail networks, and has to be content with a guided busway.

The other option was to build on euphemistically named ‘brownfield sites’, which are primarily former industrial wasteland. Unsurprisingly, these derelict areas often have both low amenity value for their new residents and are far away from current employment. This has meant that British housebuilding rates are unconnected to where people want to live. The economist Paul Cheshire notes that between 1980 and 2018 the declining industrial areas of Burnley and Doncaster built 56,340 houses while adding 22,796 new residents. By comparison, the high-wage university towns of Cambridge and Oxford built just 29,340 houses for a combined population growth of 95,079. Unsurprisingly the house price to wage ratios of the latter two cities are some of the highest in the country.

As a result, in 1947, the UK’s central government had given local governments both the power and the incentive to heavily restrict housebuilding far below the level necessary. The primary path that the government intended to use to build houses was the New Town mechanism. But this was not politically feasible on a sufficient scale in peacetime – since it still involved imposing houses in or near areas with locals who would object, or else building them too far away from existing cities to be desirable to live in. By the 1960s, once the full consequences of these mistakes had been realized, it was too late to change them.

No other European country made this mistake when setting up its post-war planning apparatus.

Germany’s local authorities had to comply with the earlier housing acts of 1950 and 1956, which enforced a statutory duty to continuously plan for sufficient housing. The Dutch ensured that their housing ministry could frequently redraw local plans that were deemed insufficient. Likewise, the French system required the approval of a central government representative for all local planning policies. This meant a local land shortage could be solved through administrative mechanisms which did not require the direct intervention of the central government, which would suffer a direct political backlash.

Why Britain’s story matters

This is not just a story of British failure but a warning to the rest of the world. Britain was the first European country to suffer from restrictive planning after the Second World War. But Britain is no longer the only country in that position. As the chart shows, many formerly successful countries such as Sweden and even Germany have converged to low British building levels after 1980. House prices in Sweden, the country with the lowest building rates from 1980-2015, increased by 160 percent relative to the general price level between 1995 and 2015.  

Throughout the post-war period, the political fundamentals in Europe have drifted towards tighter planning restrictions. Just as in Britain during the 1930s, as Europe’s cities were built out, there was less area within commuting distance of urban labor markets that could be built on without inconveniencing anyone. As World War II was the trigger to end the loose planning restrictions in England, so the 1973 oil shock did the same for many nations in post-war Europe. 

The immediate financial impact of the oil crisis and recession was that governments slashed public spending on new housing and infrastructure. The reduction in subsidies reduced the potential to build new infrastructure connecting new housing to urban labour markets. This meant housing was now only economic in areas with already established infrastructure and large numbers of existing residents – many of whom were now homeowners who would be inconvenienced by development. Alongside this, the immediate reduction in the employment and economic strength of the housing industry reduced its ability to lobby against this increased political pressure for further restrictions. 

For example, after ending its ‘million houses program’ in 1974, Sweden tightened its planning laws in 1987, cut housing subsidies in 1990, and established a green belt around Stockholm in 1991. Likewise in 1989, the Netherlands cut its program of housing subsidies while simultaneously introducing a tight system of green belts around its existing urban areas. The cumulative effects of these policy changes can be seen below:

The politics of failure

The central problem since the mid-1950s has been that Britain’s planning system drastically reduces the areas where it is lawful for housing to be built. Yet it is only exceeded in its dysfunctionality by its staying power. Among those in British housing policy who accept this, there is a divide on how to solve this problem: more planning, or less.

The ‘more planning’ side of this debate is sympathetic to the goals and early implementation of the planning system. According to this view, we need a more assertive strategy that plans for sufficient housing: a system similar to what briefly existed in Britain during the early 1950s. This would provide social housing for those most in need in well-planned New Towns, free from the perceived negative impact of urban sprawl. The powers for this state-led housebuilding program still exist. The British government can either directly found New Towns itself or implement strategic planning at a regional level, which compels local administrations to co-operate and build sufficient housing to meet the needs of the whole area. In recent years, this school of thought has also proposed increasing housing targets and focusing them on areas with greater housing shortages. 

The alternative ‘less planning’ school of thought is that the planning system is structurally incapable of delivering sufficient housing and needs to be radically scaled back. Its central proposal is to reduce the ability of local government to restrict which areas can be used for housing development. In particular, this may mean reducing their power to prevent development within green belts. 

Alternatively, the entire planning system could be replaced with one of ‘flexible zoning’. This system would require local planners across Britain to implement a zoning code which allows significantly more houses to be built in an area than currently exist. Councils would then be legally required to accept housing proposals that comply with the code.

Many attempts have been made to reform the system to build homes with more planning. Planners have attempted to resurrect the New Towns program envisioned by Abercrombie. 

Labour administrations in particular have been sympathetic to this vision of state-led development. Yet they have not been enthusiastic enough to use the powers of the central government to deliver them, instead delegating the task and political backlash to third-party organizations. 

As we have seen, the Labour government of Harold Wilson tried to unlock land via strategic planning driven by the Land Commission in the 1960s. Undeterred by this earlier failure, the Tony Blair government tried again in 2004 with regional planning bodies that allocated housing targets in their respective regions (the South East, the East Midlands, and so on). Yet these bodies were met with large-scale opposition from local residents and authorities which frustrated their task. The South West plan was delayed after receiving 40,000 local objections. If objecting was not enough, then these bodies were then hamstrung by being taken to court, as occurred with the strategy for the South East.

The Labour government did not give these organizations the power to to seriously overcome the opposition of local residents and administrations.  Nonetheless the Conservatives and Liberal Democrat opposition were still able to convert these objections into votes, by promising to abolish these regional bodies. So, after Labour lost the 2010 general election, regional planning was immediately scrapped, having achieved nothing. 

Many attempts have been made to reform the system to have ‘less planning’ as well. Successive Conservative administrations have tried to reduce planning restrictions. The Thatcher administration proposed reforming the green belt in 1983 and streamlining the planning system in 1989, and both times the proposals were defeated by rebellions of Conservative backbenchers. The coalition government of David Cameron tried again in 2012, and most recently Boris Johnson’s administration proposed transitioning to a more flexible zoning system in 2020. All these proposals met the same fate. 

Every attempt to allow more houses to be built, be it New Towns and regional planning or flexible zoning and green belt reform, have met the same fate. The problem, as always, is the politics.

Planning restrictions exist for a reason. When local communities obtain no direct benefit from new housing, but bear all the costs, attempts to build more homes hit a wall of opposition from the residents who are already there and their elected representatives. They are then delayed, scaled back, and often eventually scrapped altogether.

Does this mean that politically-imposed housing shortages are inevitable in Britain and other European countries? 

Perhaps not. Other countries with federal government systems, such as Austria and Switzerland, have been more successful in incentivising local authorities to permit housebuilding. This is because the local authorities there depend upon local income or property taxes to fund public services. If they permit houses to be built, then the additional taxation from the new inhabitants will mean they can fund better local services – a win-win for existing locals.

Alongside local government tax reform, there are also ways to give existing residents or communities the benefits of the new building. In Britain, several have been proposed. 

One is the proposal to give smaller government units more power to permit well-designed urban extensions, even in green belt, so long as other settlements are protected. The CPRE itself approvingly cites South Milton in South Devon as a good example of community-led development in a protected ‘Area of Outstanding Natural Beauty’. This could work because, in many cases, these areas are small enough to reach win-win arrangements with local landowners to build in ways that enhance the quality of the place while making generous contributions towards better public services and infrastructure. 

Another example is to have community land auctions. These are an attempt to break the iron ring of green belts around Britain’s cities, by giving communities on the urban fringe an incentive to develop land: by allowing the community itself to take options to buy land, give it permission to be built on, and then auction the land to developers. Since it is permission to build on land that is so valuable, this could deliver windfalls of hundreds of thousands of pounds per home delivered, which could go towards cash payments, tax cuts, or investment in infrastructure or local amenities like parks.

Another is the street votes proposal, which would allow residents of a given street to give themselves planning permission to rebuild their street at a higher density, capped at a height that would avoid blocking sunlight for neighbors on other streets. This would potentially allow use of suburban housing land to be intensified for the first time since 1947. The extent of the housing shortage in Britain means there is now a huge economic benefit to building more intensively on existing plots, which would be captured in large part by the residents voting on the proposals to densify. 

Britain, the first industrial nation, has often been a trailblazer in economic history.  After 1947 this continued to hold true, for a terrible reason, as it became the first country to give itself a self-inflicted housing shortage that has caused painful economic and social consequences. But its failure at least allows us to observe that, in modern developed democracies, the main constraint on housebuilding is a political one – and no attempt to remedy it will succeed without being designed explicitly to overcome those who lose out.

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