HOW TO MAKE PLANNING REFORM WORK FOR WORKERS

The root cause of Britain’s housing shortage is a planning system that gives local planning authorities power to say ‘no’ but little reason to say ‘yes’. It takes longer and costs more to get planning permission than ever before. Small builders that employ local people have seen the real costs for planning applications increase by five times over the past 30 years. It can take more than a year to get a yes/no answer when it used to take just three months.

This has made the dream of homeownership for young people almost unattainable without the financial support of families. In 1991, 67% of 25-34 year olds owned their own home. Today, less than 40% do. In England the average home costs 8.6 times the average salary and in cities like London, Cambridge, or York this can rise to 12 or more times the average wage. Since 1999, the median household disposable income has almost doubled in nominal terms while the median house has increased in price by 4.5 times, vastly outstripping wage growth.

The challenges within our planning system significantly impact working people. We surveyed Community members to ask how they’ve been affected by high energy and housing costs. A majority have seen their monthly budgets significantly affected by high electricity costs. These high energy prices force hard-working families to cut back on daily expenses, leaving them worse off. In fact, 84% of Community members have reported reducing how much they heat their homes in response to high energy costs.

High housing costs are also negatively affecting the quality of life for Community Union members. The monthly budgets of a majority of members are significantly or moderately worsened by high mortgage or rent prices. Furthermore, members are concerned about the impact of high house prices on their and their family members’ ability to buy a home. Forty-five percent of respondents believe that high house prices have made it completely impossible for them or their families to buy, and an additional 18% said that high house prices have made it partially harder to buy. Among respondents who rent or pay a mortgage, 81% reported that high rent or mortgage payments have forced them to cut back on other expenses.

The change Community members want to see

But Community members don’t want to accept high energy prices or unaffordable homes, they want to build. An overwhelming majority of respondents, 72%, believe Britain isn’t building enough clean energy sources like wind farms, solar panels, and nuclear power stations. Similarly, 61% feel the UK is failing to construct enough homes in and around major cities. The support for improving transport links like rail and roads is even stronger, with 79% of respondents saying Britain needs to build more.

This desire for change extends to policy. Over 70% of Community members who responded support reforming the planning system to accelerate the development of domestic clean energy. Given that offshore wind farms can take up to 12 years to begin generating power, despite construction taking only two, these reforms are crucial for speeding up approvals and grid connection times.

There’s also significant support for new nuclear power plants, with nearly two-thirds of members in favour compared to less than 20% opposed. Finally, 62% of Community members who responded support planning reforms to make it easier to build more homes in well-connected areas, while only 21% oppose such measures.

To determine how planning reform can make workers’ lives better, Britain Remade have modelled changes to energy and housing policy. For energy this involves two scenarios, the first is a core scenario where planning reform unlocks the investment in electricity infrastructure to deliver 2030 clean power. Britain Remade have also modelled a second ‘Nuclear Stretch Scenario’ where reforms to planning and regulation also cut the cost of building new nuclear power stations.

Both the core and nuclear scenarios meet net zero targets because planning reform unlocks investment into clean energy infrastructure.

Under the core scenario, planning reform unlocks an additional £92 billion of investment by 2030, boosting the economy by £63 billion in Gross Value Added (1.9% of the UK’s GDP in 2023). In the nuclear scenario, planning reform unlocks £65 billion in investment and increases GVA by £44 billion, with the lower figures a result of the extra time that nuclear construction takes.

Investment in new energy infrastructure, in both scenarios, will take time to bring down energy costs, but the benefits in the long-term are large. The counterfactual scenario sees electricity prices slowly falling from £148 per MWh in 2019 to £117 per MWh in 2040 (all in 2019 prices). In our core planning reform scenarios, prices fall to £86 in 2040. That’s a fall of 26%, which will help lower the pressure on working people’s budgets. In the nuclear scenario, prices fall slightly slower due to the time it takes to build nuclear power, but, at £95 per MWh in 2040, prices would still be 17% lower than the counterfactual. By 2050, the nuclear stretch scenario would have the lowest cost of energy at £69 per MWh.

The higher short-term cost of electricity dampens the initial job benefits, but there would still be 10,000 more jobs created under the core scenario by 2030 and 8,000 in the nuclear scenario. As the cost of electricity falls over the 2030s, we expect the number of jobs created to rise to 60,000 in the core scenario and 50,000 in the nuclear one.

Reaching the Government’s housebuilding target

We also conducted economic modelling to determine the impacts of the Government meeting their target to build 370,000 homes in England. Over the last 5 years, England built an average of 210,000 homes per year, so the Government’s reforms will have to lead to an additional 160,000 homes being built. Each home built results in an additional 2.4 jobs across the economy. In total, boosting England’s house building rate to the Government’s 370,000 target would lead to an additional 400,000 jobs and £38 billion in gross value added. While 236,000 of these jobs would be in the direct construction of the new homes, there would also be indirect jobs benefits across the UK, such as 41,000 jobs in wholesale and retail trade and 30,000 in estate agents and other professions.

When these homes are built in the right areas near our productive cities, they can enhance labour mobility. By making it easier to afford a home near well-paying jobs, these homes will also increase worker’s earnings.

Building more homes will improve the Government’s balance sheet. Stamp duty revenues would rise by £3 billion as these additional new homes are sold. As more homes are built, the cost of housing falls, which means the cost of housing benefit paid out will fall as well, saving the Exchequer £700 million.

New homes have lower carbon footprints and it saves enough carbon to justify the construction emissions after 13-27 years. Over a 60 year lifetime, the average new home saves 100 to 140 tCO2. That’s similar to the average emissions from a petrol car over a 60 year period.

Cities like Cambridge, Oxford, Bristol and York face similar challenges with well-paying jobs, but not enough homes for workers to take advantage. New towns should be built near these cities to make it easier for workers to get to jobs with higher salaries.

These are also places where the average price of a home is much higher than the cost of building a house. That means every house that is built unlocks surplus value that can be captured to provide upgrades to infrastructure, better green spaces, and more social housing.

In a report co-written with the urban design firm Create Streets, Britain Remade proposed 12 sites for new towns that would be built near existing cities with high-paying jobs. These include expansions of Cambridge, Oxford, York, and Bristol. There’s also scope for new developments around underused railway stations that could see more capacity if strategically planned new towns were built around them. Places like Winslow on the new East West Rail line, Iver and Langley on the Elizabeth line, and Cheddington on the West Coast Main Line could all be vibrant and liveable new towns if they were given the opportunity to expand.

The report also identified many stations like Hatfield Peverel in Essex and Salfords in Surrey where there’s a town on one side of the tracks and nothing on the other side. By mirroring the town, the community can naturally expand around its railway station. These ‘mirror towns’ provide a great opportunity to sustainably build more homes near good public transport, allowing more working people to afford their own home with easy access to well-paying jobs.

Clean Energy Zones

To cut bills and become energy secure by 2030, we need to unlock an additional 70 GW of renewable power generation. This is a massive challenge, but it is deliverable – even the largest offshore wind farms where 200 m tall turbines are installed in difficult conditions can be constructed in just two years. The problem is construction is only a small part of the timeline. Three times more time is spent on navigating the planning system and even then projects can be stuck in limbo waiting for a grid connection.

Britain should learn from nations that have dramatically shortened planning timelines for renewable projects like Spain. In anticipation of EU-wide legislation to speed up renewable deployment in the wake of the energy crisis, Spain moved to a new zonal system for renewable planning. Under the new model, using existing protected sites legislation the Government would identify land of negligible biodiversity value and designate them as go-to zones for renewable projects. Onshore wind and solar projects in each area would be exempted from existing requirements around environmental impact assessments and a rule of positive silence would be applied to consents from environmental regulators. Put simply, unless an environmental regulator brought a timely objection, the project could proceed without producing the usual lengthy paperwork. Independent forecasts of Spanish renewable deployment have increased substantially since the measure was brought in.

Instead of requiring renewable developers to produce 15,000 page environmental impact assessments, Britain should adopt the Spanish approach and designate zones of low environmental value where the default requirement for environmental impact assessments for all onshore wind (75 MW and under) and solar projects (150 MWs and under) is removed.

Aberfeldy estate before versus plans for renewal

Modernise Environmental Protections

Britain’s system of environmental protection is delivering the worst of both worlds: many key nature indicators are in long-term decline while infrastructure projects are delayed and forced to spend millions on ineffective solutions. For example, EDF has been in a long-running dispute with Natural England and the Environment Agency over the requirement to install an auditory fish deterrent at Hinkley Point C. This deterrent would at best protect the equivalent of a single trawler’s annual catch while adding costs to an already highly expensive project and creating dangerous work due to the requirement to maintain the system in difficult underwater conditions.

The Government’s proposal to move to a system where environmental impact assessments are replaced with shorter ‘living’ environmental outcome reports and compensation for impacts to protected species is delivered at a higher strategic level through a new nature restoration fund are both welcome. However, as they stand, the proposals will not be sufficient to prevent the requirement to produce expensive and complicated mitigations such as HS2’s £100 million bat tunnel in many cases. The key issue is that the EU-derived Habitats Regulations will still apply and insist on ‘bat tunnel’ style mitigations for individual projects that have large impacts on protected species when an environmental delivery plan cannot, or is yet to be, put in place.

To keep the cost of building new infrastructure down and avoid unnecessary delays, the Planning and Infrastructure Bill should include measures to diverge from the “The Conservation of Habitats and Species Regulations 2017” and allow the strategic approach to compensation where the state uses developer contributions to deliver effective nature recovery solutions, linked to the species abundance targets in the Environment Act, to be used in more cases. This is a win-win for environmentalists and workers enabling us to deploy funds to protect nature more effectively while accelerating vital developments from wind farms to new housing developments.

Reform Nuclear Regulation

Britain used to lead the world in nuclear power. We split the atom, built the world’s first full-scale commercial reactor, and built ten more in the decade that followed. In fact, until 1965 Britain had more working nuclear reactors than the rest of the world combined. Yet, we haven’t built a new nuclear power station in 30 years and Hinkley Point C, currently under construction, is set to be the most expensive nuclear power station ever built. High costs threaten future investments in sites such as Sizewell C and Wylfa B. When two thirds of responding Community members think nuclear should play an important role in Britain’s energy, compared to just 21% who disagree, we need to solve our nuclear cost challenge.

The good news is our high costs are not inevitable. South Korea can build a new nuclear power station for six times less than Britain on average. France, building the same type of reactor as us, builds almost twice as cheaply. Regulation and the planning system are not the only causes of high costs – long-term failures to invest in the workforce and a pipeline of projects deserve equal blame – but they are a key factor.

For example, while Hinkley Point C uses the EPR design that France’s Flamanville projects also use, there were more than 7,000 design changes due to requirements from the Office for Nuclear Regulation and Environment Agency. They also made it hard to apply lessons in how to build more efficiently learnt in France and Finland. In the short-term, Hinkley Point C’s design changes have led to delays over the financing of a successor Sizewell C.

The UK Government’s recently announced changes to the planning system to allow small modular reactors to be built at a much-wider range of sites are welcome and will unlock the opportunity to co-locate energy-intensive manufacturing and data centres with clean nuclear power. However, there is a need to go further. The new Nuclear Regulatory Task Force presents an opportunity to tackle the disproportionate rules and regulations that have pushed the cost of building nuclear power up and forced us to rely on dirty imported fossil fuels.

Three barriers to Nuclear

This new task force should tackle a number of barriers that have held back a sector where each project provides long-term unionised jobs with good pay and conditions.

Making Brownfield Passports Work

The Labour Government has proposed a ‘Brownfield Passport’ to make the default answer to any planning application on previously developed (‘brownfield’) land ‘Yes’. While details are still being developed, if done well, this could be transformative for working people who are struggling with unaffordable rents and are priced out of home ownership.

The Government should use National Development Management Policies to create an overwhelming presumption in favour of development for new six-storey developments within walking distance of stations and business hubs in cities where house prices are more than 7.5 times local incomes and housing targets are not being met.

A few restrictions should apply:

• There should be no net loss of green space.
• All new housing should be built to the highest energy-efficiency standards feasible and offer low-carbon heating options.
• All new buildings should be built to a design code developed with local people.

When Auckland, New Zealand adopted a similar policy, rents rose much more slowly than the rest of the country. One study estimated rents were a third lower because of the policy. That would save a couple renting a one bed flat in London £6,000 a year, providing a huge boost to working people’s budgets and ability to save for a place of their own.