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Adam Smith Institute supports LVT but also Planning Reform

November 11, 2020 4:48 PM
By Tony Vickers

Like its founder, the Adam Smith Institute (ASI) has always spoken up for LVT in general terms but once again it has published a muddled report that merely recommends its introdction on "major [housing] developments". The ASI report recently had a little mainstream publicity and can be found here https://www.adamsmith.org/news/build-build-build-and-beat-the-germans-again

However your reviewer cannot agree that the current Government's proposals in the "Planning for the Future" white paper is also part of the solution to our housing crisis, even though ASI's report cites support for certain proposals therein from the Town & Country Planning Association (TCPA). TCPA has published a damning indictment of the White Paper and the logic in both the ASI and Government papers defy me - and most councillors I have spoken to. https://www.tcpa.org.uk/news/press-release-ripping-up-the-system-wont-build-the-homes-we-need-tcpa-responds-to-planning-for-the-future-white-paper

Both ASI and Government peddle the total falsehood that the planning system is the main cause of the housing crisis - the lack of new homes being built where they are needed. This is simply untrue. Land for almost one million homes has planning consent and is not being built on. Every year for the past 10 years councils have granted permission to build more homes than the builders have delivered.

A small number (no more than 12) national home builders monopolise the "major development" sites through off-registry 'options' and other opaque deals with speculating landowners. It is they who control the supply of land for housing, not local councils.

One cannot blame anybody but successive governments for this. Every player in the land market is acting rationally within the law - albeit not all act morally. There needs to be a much better incentive for those who have control of land (which local authorities do not!) to make use of it in the way local councils have granted, without unreasonable delay and without capturing almost the entire unearned uplift in value which results in there being no money left to pay for the necessary infrastructure - or even to produce a sustainable quality home for those who need to live in the inadequate homes that are being built.

The land market requires radical structural change. This doesn't need to be seen as anti-market - just the opposite. We have here a classic example of market failure, in which the 'externality' of land value leaking out of the active economy that created it falls into the laps of those who acquire wealth in their sleep. This has profound impacts on our national prosperity. Liberal Democrats are the party best placed to tackle this, because we stand for fairness, against privelage and democracy is in our name. "Planning for the Future" is utterly anti-democratic.