a better narrative on growth – Inside track

This is an Inside Track long read by Shaun Spiers, executive director of Green Alliance.

As the dust settles following Rachel Reeves’s big speech on kickstarting the economy, it is worth thinking about who is influencing the government’s growth policies and to what end. The welcome given to the speech by the Centre for Policy Studies (CPS), Britain Remade and the Institute of Economic Affairs (IEA) gives a clue. 

Britain Remade is a relatively new lobby group, pressing the case for new roads and other infrastructure, but the CPS and the IEA, along with Policy Exchange and the Adam Smith Institute (ASI), have been pushing the same message for at least 20 years: weaken the planning system to get stuff built. The message was taken up enthusiastically by Conservative governments between 2010 and 2024. Policy Exchange alumni, for instance, worked in Number10 as David Cameron’s head of policy and as his special adviser on planning and housing, while its former director, Nick Boles, served as planning minister. They pushed forward a raft of deregulatory reforms. The CPS helped write the 2019 Conservative manifesto and the IEA was credited with many of the successes of Liz Truss’s government.  

The ‘liberalise planning and build, build, build’ line has been given a fair wind. It has not delivered, but the deregulators continue to press their case with supreme confidence. Their most influential recent report is Foundations, which argues that “the British economy has stagnated for a fundamentally simple reason: because it has banned the investment in housing, transport and energy that it most vitally needs”. It is a full-blooded assault on England’s planning system. Sweep restrictions aside and the private sector will deliver, to the joy of everyone.  

Right wing think tanks are influencing the chancellor

To no one’s surprise, the essay’s authors have backgrounds in Policy Exchange, the ASI and the CPS. What is more surprising is that the Foundations narrative and 20 years’ worth of similar anti-planning reports have won over influential figures in the Labour Party, not least the chancellor and PM. The blogger Sam Freedman recently criticised Keir Starmer’s managerial approach, saying, “you can’t run a country without some kind of guiding philosophy”. But, on planning, the PM does have a doctrine, one borrowed from the political right. As Keynes almost said, madmen in authority, who hear voices in the air, are distilling their frenzy from some old, half-baked, developer-funded, free market think tank report. 

Foundations contrasts the supposed speed of French planning with the UK’s sclerotic system. It blames the 1947 Town and Country Planning Act (TCPA) for moving Britain “from a system where almost any development was permitted anywhere, to one where development was nearly always prohibited”. The TCPA, it argues, prevented a post-war housing boom of the sort seen in the late 1930s, and stopped cities growing. “Most American cities, like those of France, Italy and Germany, have at least been able to sprawl.” Constraints on the free market leave our most affluent areas cluttered with poor people: “a staggering amount of central London is socially rented.”  

That is one way of looking at things. Alternatively, one could say that careful planning is necessary because mixed communities are desirable and sprawl is not. England’s population density is almost four times that of France and people care passionately about place and beauty. Foundations talks airily of “preserving and enhancing our landscapes and townscapes”, but the interwar planning free for all they celebrate, born of an economic slump, when interest rates were low and labour plentiful, resulted in terrible environmental and aesthetic harm.   

Foundations argues that the Attlee government’s reforms stifled growth for over 30 years and, to this day, cause us to build too few new homes. But there is a large dollop of ideological prejudice in this analysis and the essay has been the subject of some comprehensive rebuttals.  

Arthur Downing, for instance, points to the inconvenient fact that “France may be able to build things because of a large interventionist state”. Its nationalised water and energy systems are the nightmare of the free marketeers. Foundations makes much of Britain’s failure to build a new reservoir for 30 years but fails to join the dots. Downing concludes that “there is limited evidence that the planning system is the problem”.  

Planning’s problem is that it’s too weak

But perhaps the problem is democracy? “Planning and permitting rules”, he says, “are something that every country in the world complains about (except perhaps China).” Predictably enough, Rachel Reeves recently favourably compared China’s indifference to “bats and newts” with the UK’s painful concern for inconvenient nature. I recall George Osborne making a similar point when he was chancellor. 

The historian David Edgerton, in his critique of Foundations, points out that “from 1945 it was an active British state that transformed the country’s infrastructure…. The country has subsisted by sweating the assets it accumulated before Thatcher.” The planning system and an active state also delivered large numbers of new homes for 35 years after the war, of which at least 100,000 a year were built for social rent. After 1979, the state more or less stopped building and private sector output did not increase. That, not planning, is the reason we now have a housing crisis.  

This is not to deny that the planning system needs reform. But its problem is not so much that it stops development as that it has become too weak to facilitate the building the country needs. The 1947 settlement had two sides. Development control aimed to maintain a clear physical distinction between town and country. That part of the system is still in place, however tattered.  It is why this crowded country still has so much countryside. It is also the reason the system is under such attack from those who want unfettered development.  

A confident system should build to high environmental standards

The other side of the settlement, now almost forgotten, was ensuring a plentiful supply of low cost development land. For instance, between 1946 and 1970 work started on 32 new towns which now house almost three million people. When Milton Keynes was first developed, the compulsorily purchased land contributed about one per cent to the cost of a home. A confident, well-funded planning system should result in more new settlements, urban extensions and urban densification, with the uplift in land value that comes with planning permission captured to ensure good design, high environmental standards and a reasonable mix of market and social housing. It should help direct housing and infrastructure development to the right places.  

But we do not have a confident, well-funded planning system. After umpteen reforms aimed at weakening it – Foundations’ claim that there has been a “persistent lack of planning reform” is ludicrous – we have a system that makes developers and lawyers a lot of money and leaves everyone else feeling cross.
It would be good to hear Rachel Reeves and Keir Starmer say, “we need a strong planning system to deliver a better future for the country. It is the way to deliver the development we need in a nature positive way and with the largest possible measure of public consent.” The Pickles-Osborne-Johnson-Truss line of bashing planning, newts and local communities as blockers to growth is growing rather tired.  

As it was, the chancellor was hardly pro-planning in her speech, but at least she did not pit growth against nature. Better still, she said: “There is no trade off between economic growth and net zero, quite the opposite. Net zero is the industrial opportunity of the 21st century and Britain must lead the way.” That was a welcome improvement on the rhetoric of recent weeks.   

Let’s ask what type of growth and who benefits?

In the wake of recent setbacks, progressives and environmentalists must now reflect on how it is that opaquely funded, climate indifferent, right wing think tankers and lobby groups have won the argument on planning and growth with large parts of the Labour Party.  

Politicians like simple answers and they like putting on hard hats. The proponents of unfettered development have great confidence and simple answers. But it should be clear to anyone that there are no simple answers to the intrinsically difficult problem of boosting growth.  

There is a pressing need to restore the country’s crumbling infrastructure and build large numbers of new homes, but development is not the elixir that will revive the economy. Nor is growth, undefined, the be all and end all. We need to ask, what sort of growth and who benefits?  

The challenge is to come up with ideas for the government – and, more crucially, sell them – that can deliver growth without wreaking the damage that will come with new roads and runways. 

In all this, we must not forget climate change, the biggest medium-term threat to economies around the world. We need to show how going green is not only good for the economy, but essential for humanity.  

Long term growth needs a viable planet

And here I hear groans and sniffs from Labour’s Yimbys and their friends in Tufton Street. But the climate and nature crisis has not gone away just because the UK economy is ailing and the biggest Yimby of them all has been elected as US president. Long term growth needs a viable planet. As the Treasury commissioned Dasgupta review sets out, nature is an economic asset, just as produced and human capital are assets. It is only by taking nature conservation seriously that we will be able to benefit from it while meeting the need for development. 

On climate, Ed Miliband was spot on to warn the Environmental Audit Committee that the consensus is under strain. “There are siren voices in the UK who are saying that we should step back from this agenda, that now is the time to give up on climate action because it is not in our national interest. I think this is a massive fight about the future of our country… because, whatever the disinformation, the misinformation, the truth is that climate action is essential for our national self interest.”   

Roads and runways are a wrong turn

The government is taking a wrong turn in pushing new roads and runways, with flimsy economic justifications. It was wrong to pit growth against nature and I hope that will stop. The £100 million bat tunnel is indefensible, but it says more about HS2 Ltd’s poor project management and community engagement than it does about serious nature protection.  

NGOs and communities will vigorously oppose unnecessary and damaging developments, but we are also ready to support a big increase in well planned housebuilding (we have had a constructive dialogue over the proposed Nature Restoration Fund) and 2030 power decarbonisation (again, there has been good engagement on nature). I hope the PM and the chancellor cool the rhetoric and recognise the chilling effect their recent statements will have in Whitehall on action to tackle climate change and nature loss, and on the confidence of international green investors. They should avoid repeating Rishi Sunak’s mistakes. Sustainable, green growth is good, incoherence at the heart of government is not.