Yes, let's blow up the planning system


Today Marina Hyde suggests that instead of spending £7.1 billion to do up the Palace of Westminster we could just hire an arsonist for rather less. Amusing although we think there might be a trick being missed there: shouldn't we be running a competition to see who would pay most for the privilege? But on to other things that we might burn down, blow up. Here's something about "affordable housing":

Coming at the problem from these different starting points, both reports make an estimate the gap between what genuinely affordable homes would cost to build and how much of the cost could be financed from rents. They both conclude that this gap is about £59,000 per house (on average, with considerable variation between London and the rest of England). This is the amount that would need to be provided by a combination of government grant, free or low-cost land from local authorities, contributions from developers and – potentially – cheaper debt through government guarantees.

That's the cost to us of the planning system. Or at least one incomplete but roughly accurate method of measuring it. The value of an asset really should be the net present value of all future income from it and that's roughly what they're estimating there. And yet the land to build a house upon costs around £1,000. It's the planning permission that allows you to build a house upon that land which is the thing that is in short supply. And that's where the £58,000 is. The scarcity value of the planning permission.

Given that planning permission is something that is manufactured very simply within the bureaucracy it is therefore not beyond the wit of man to make more of it. Or we might observe that the last time the free market did provide the housing needs of the nation was the 1930s. Before the imposition of the Town and Country Planning Acts which led to this artificial shortage of planning permissions. Thus the solution to our housing woes is really very simple indeed.

Burn down the planning permission system.

We'd happily pay for the privilege of applying the burning brand: but who is willing to outbid us?