1. Developers purchase land, get permission to build on it, and sit on it, deliberately delaying or refusing to build.

2. Developers purchase land, get permission to build on it, and place it in a pipeline that they then build out at a later date.

Critics often conflate the two. (1) implies anti-competitive behaviour, price gouging, and greed; (2) is what we expect in a market subject to the constraints and realities of building homes.

Land banking is therefore often seen as a significant hindrance to solving the country’s housing crisis. The planning system, goes the argument, isn’t the problem - developers are just refusing to build the homes that the planning system offers to them.

The argument is wrong.

How many unbuilt permissions are there?

Attempts have been made to size the problem. You often hear numbers as large as 1.4 million - which, were it true, would put a good dent in the UK’s housing shortage (but by no means fix the problem.)

These numbers cannot be trusted. We don’t really know how many unused permissions there are, because we don’t have good housing data, and it’s very difficult to measure.

Some permissions need to be requested again because the scheme has changed, which often renders the original permission invalid. Schemes can change during development for many different reasons. Things get discovered as you work which can constrain where you put homes or the sorts of homes you can build. Infrastructure requirements change. Market conditions shift, so four-bed houses become less wanted in an area and the developer needs to build more flats instead. These end up with new permissions granted, which increases the number of total permissions without increasing the number of actual homes that those permissions represent.

We don’t know easily whether two applications relate to the same site – location plans are submitted as PDFs, which make comparisons difficult – so there are cases where ‘Land to the east of Longstanton’ becomes ‘Northstowe’ and the figures are counted twice. Developments which have been already permitted might be held back by sudden changes to national guidance, as happened with the introduction of nutrient neutrality rules in 2019.

Schemes might be held while critical infrastructure is built, or while pre-commencement conditions on the original planning application are completed. Or, in the case of affordable housing schemes, there simply isn’t a buyer yet: in February 2025 the HBF claimed that 31% of the 2024/5 affordable housing supply is stalled because the housing associations are not purchasing them.

There’s also the fact that larger schemes just take more time to build, so the permitted-but-not-started numbers can also be inflated by schemes that are in progress.

The people who compile these figures try to make adjustments for all these caveats, but it’s simply too difficult to do with the current state of our data collection apparatus – to the extent that the government itself says that these numbers should not be used to estimate the number of unbuilt dwellings with permission. We can’t trust the numbers; we simply don’t know.

Is this behaviour anti-competitive and greedy?

The fact that we can’t trust the numbers reported doesn’t mean that land hoarding isn’t a problem. In order to address that issue, we need to assess the logic of the claim. Under what circumstances would it be rational to hoard land, get planning permission to achieve an asset gain, and withhold development?

If a developer believes that selling or developing later will yield significantly higher profits than building now, then it would be rational behaviour to do so. More precisely, if the profits from doing so minus the costs of holding the land for that period of time are significantly higher than building now, then it would be rational to do so.

Fortunately, those costs are often much higher than the expected return to holding onto the land.

The appreciation of greenfield land with planning permission varies widely depending on location and existing use, but government estimates suggest an average value increase from £21,000 per hectare to £1.95 million. But this is the increase in land from agricultural use to land with planning permission for residential development: it represents value that could be realised by the landowner today. (This, incidentally, is the business model of land promoters: they partner with the landowner, achieve planning permission, then sell it on to a builder.)

So in order for them to not realise that value increase as soon as they can, they would need to believe that the value of the land would continue to increase, taking into account the costs of holding it, more than developing it.

As for how land values fluctuate over time, this is much more unpredictable:

There is always a risk that by holding the land and not realising its value immediately, the value of the asset could decrease – sometimes significantly.

And, of course, there are costs to holding the land. Land is generally not bought with cash that already sits on a company’s balance sheet – the money is borrowed, and therefore has a direct cost of capital. (Even cash sitting on a balance sheet has a cost of capital, of course, which is the inflation rate.) The average development loan costs 5.2%, and can range from 4-16%; it is also driven by broader interest rates, so when the rates increase, so does the cost of future loans. The chart above shows that in only nine quarters since 2016 did the value of greenfield land increase at all – and in only four of those quarters did that increase exceed 5%. For every other quarter, it would have been more expensive to hold onto the land than to sell it.

And that’s just the cost of capital. Homebuilders have other costs too. They have wage bills they need to pay, supply chains they need to maintain, the costs to gain planning permissions for future projects, insurance, site security, sales and marketing costs, contributions to government. Even when some of these costs get assigned to specific projects, there’s a cashflow issue - they need to keep paying them.

In short, it is rarely rational for a homebuilder to hoard land and not build houses. Hoarding land is a costly endeavour. They act greedier when they build homes, not when they don’t.

Is the planning system to blame?

It takes, on average, 2.8 years for schemes between 100 and 500 houses to receive planning permission. Just to achieve outline permission – which establishes the principle of development, something which is generally not needed in a zoned system – it takes a year.

The planning system is supposed to be used to ration land for development, but in practice it does much more. We expect it to protect the environment, preserve our heritage, reduce noise, increase biodiversity, promote light, promote cycling, promote driving, and even fight crime.

This means that the average local authority requests 30 different document types for an outline permission, and the total variety can stretch into the hundreds:

In some cases these reports are necessary, and lead to a better decision and scheme. But in many others, developers are encouraged to do the maximum work possible in order to ‘copper plate’ the application and reduce the likelihood of a challenge. This builds extra cost and time into the process where it is not needed.

And this cost and time needs to be accounted for in a housebuilder’s plans. In order to run maximally efficiently, they need to be working on sites continuously, which means they need to maintain a pipeline of sites at various stages of the planning process.

This pipeline – a direct consequence of the uncertainties inherent in construction and the UK planning process – is a land bank.

This effect has been studied many times, by both industry bodies and in independent reviews. The last major investigation was by the Competition and Markets Authority last year, who say that:

observed levels of land banking activity represent a rational approach to maintaining a sufficient stream of developable land to meet housing need, given the time and uncertainty involved in negotiating the planning system

These findings were also backed up by 2018’s Letwin Review, which:

found no evidence that speculative land-banking is part of the business model for major house builders, nor that this is a driver of slow build out rates

A review in 2008 by the Office of Fair Trading suggests:

that homebuilders are not delaying building on permissioned land to an extent that would appreciably affect the rate of delivery of new homes

And that:

[h]omebuilders' landbanks appear to be largely explicable in terms of the amount of time it takes to promote land through the planning system, and the risks involved in doing so.

And in 2007, the Callcut Review opined:

'There are no doubt some individual cases where house builders hold land for longer than they need. But, in our view, the current evidence does not support the suggestion that this practice is at all widespread.'

There are several other such reports, reviews, and studies, each one of which reaches the same conclusion.

Conclusion

We can’t trust the numbers, because our data quality is poor and there are lots of reasons why a site might have permission without it being built on. It would be irrational for developers to purchase land and sit on it, because their costs of capital and operation would almost always outweigh the expected increase in the value of the land while hoarded. And there is an incredibly strong, consensus case that developers’ pipelines are a benign and rational response to the incentives created by the planning system.

If we want quicker build-out rates, and for developers to sit on less land in aggregate, we need a planning system that brings certainty, predicability, and speed to the process of assigning permissions to build. Blaming it on greed is both inaccurate, and cheap.

Thanks to Paul Smith, whose work and conversation I’ve drawn on extensively, and Ben Dunn Flores for notes on this piece.

This morning, the Looking for Growth team released the full text for their first major campaign project: a national priority infrastructure bill.

British infrastructure planning suffers from three connected problems:

• Multiple overlapping consent regimes producing too many veto points

• Onerous, unpredictable, and individualised requirements

• No mechanisms for meaningful value capture

The goal of the bill is to hit all three issues in one go by introducing a new consent type for infrastructure deemed a national priority.

The bill is systematic, so it will be difficult to see what it means for any specific project until it is put into practice. But it is an important step forward in several directions at once, and has some interesting characteristics.

The bill’s main mechanism is a new “priority consent” process for “national priority infrastructure”, defined as data centres, nuclear power stations and overhead electricity lines. This list can be amended later by the government, without primary legislation.

Priority consent offers planning permission for a given project, and bypasses any of the standard environmental review and extra consultation checks that usually come with larger infrastructure projects. This displaces existing consents like planning permission under the Town and Country Planning Act 1990, development consents under the 2008 PlanningAct, listed building consent, etc.

As with the existing NSIP regime, developers make just one application to the Secretary of State (SoS) for permission. Unlike the existing NSIP regime, the Secretary of State makes the decision unilaterally, bypassing the Planning Inspectorate, statutory consultees, local authorities, and any of the other parties and stakeholders that are given formal or informal veto powers.

Such a decision making process should operate under a presumption in favour of approval:

[exceptional circumstances] must be construed from the starting presumption that any adverse impacts are outweighed by the urgent need for national priority infrastructure and the clear, substantial and exceptional benefits arising from national priority infrastructure.

This gives ministers a straightforward mechanism to bypass existing planning arrangements, as well as the motive to use it.

The bill also imposes tighter statutory deadlines for decisions, with no simple way to extend the deadline. This means that the worst case scenario is 376 days to a rejection:

• 28 days for the SoS to confirm the application is “relevant”;

• 42 days for public representations;

• 42 days for the SoS to decide if further information is needed;

• Up to 180 days for the SoS to make a decision;

• If minded to refuse, a further “interim decision” adds another 42 days for the developer to respond plus 42 more days for the SoS to confirm.

Note that a worst-case scenario of 376 days – just over 12 months – is much better than the current average of 44 months.

These sorts of improvements are table stakes for anybody wanting to get more infrastructure built: faster permissioning with fewer veto players means more approvals. But approvals don’t mean completed projects, and the more pernicious damage is done by the uncertainty and delays, not just the overall approval rate. Long timelines and high levels of uncertainty around project scope are the real investment killers.

To that end, then, the bill introduces a mechanism for standardised environmental and transport contributions.

Projects that have environmental impacts, or impacts on local transportation networks, will pay 110% of a priorly assessed impact amount into a pot for the SoS to disburse as she sees fit. Rather than adding specific, case-by-case requirements grafted onto the project itself – like £100m bat tunnels added to train lines – Natural England will get the cash to spend more effectively.

This replaces the current mechanism of Environmental Impact Assessments, a thoroughly unhelpful system that leads to spiralling for developers costs, masses of documentation, and poor environmental outcomes. It looks a bit like the French system of Déclarations d’utilité publique, which grant approval for public works subject to a standard set compensation mechanisms. It’s powerful, because it replaces individual, case-by-case negotiations (like, eg, our existing Section 106 planning obligations) with cash amounts that are known ahead of time, based on a predictable rubric.

It’s easy to underestimate the significance of this, but the current British system is profoundly, deeply, discretionary – there are, for the most part, no real rules that aren’t subject to the interpretations and preferences of individual planners. This means that every project gets adjusted and such adjustments are not knowable at the beginning of the project.

It should also help improve environmental outcomes, not only because it should result in the allocation of more capital, but because it gives Natural England, and other such bodies, the power and budget to use their expertise to actually do the things they would otherwise impose duties on others to do, breaking the back of perhaps the worst British policy anti-pattern: legislating in terms of obligations for others rather than powers for ourselves.

These structural demands for baroque sets of requirements are underwritten by the omnipresent threat of judicial review. So the bill also raises the bar for such reviews, limiting the grounds for challenge and curtailing repeated attempts to block or delay key projects. I won’t talk much about this, because I can’t model what it will mean in practice very well, but I worry that existing case law will swallow it up: broaden the scope of ‘interests which are substantially and seriously prejudiced’, ‘aggrieved by the making of a priority consent order’, and ‘exceeded the powers’; that these protections against judicial review will arrive stillborn on the statute book. The higher bar for reviews mostly revolves around restricting cost protection for serial challengers – helpful on the margin, sure, but not obviously solving the core problem. Still, this might be a fight for another day.

Finally, it requires developers to provide a payment “to a person or persons in a prescribed proximity to the development by reference to its type and scale of development”, giving local communities a reason to support new development.

These are marketed as “patriot payments”, which is perhaps a little too cute for me, but it’s a nice idea. It doesn’t solve the value capture problem entirely, since it doesn’t give local authorities any access to revenues, just the people living nearby. But it legitimises Coasean bargaining, as well as, hopefully, makes supporting new infrastructure higher status.

It seems like a smart bill. Unilateral decision making from a starting presumption that “adverse impacts are outweighed by the urgent need for national priority infrastructure” should get more things approved more quickly. Tight deadlines with no extensions should provide more certainty for developers, and standardised conditions and compensation for environmental and transport compensation should provide more certainty for local authorities and communities. Payments to individuals living nearby creates an incentive, one right now lacking, to support new projects.

But it remains to be seen whether an expansion to the formal powers of politicians – powers which they broadly have already – will give enough political cover to actually use them. Ministers have the means and motive already, but lack the opportunity. Will this bill help solve for the politics, for the stubborn persistence and endogeneity of NIMBYism? I hope so.

The key to understanding how the UK planning system works is to notice that it is not a system for delivering houses. It is a system for delivering developable land.

British land is, by default, not developable: it is illegal to build a house without the explicit permission to do so. Your land needs to be converted from its raw, unpermissioned state to its permissioned state, and the supply of these permissions are tightly controlled.

We do, however, recognise that some amount of these permissions need to be given out every year. The national government, in particular, wants enough houses to be built on net to meet demand, encourage economic growth, satisfy a particular voter base, or otherwise achieve some orthogonal political or socioeconomic goal. In order for houses to be built, enough permissions need to be given out.

The trouble, of course, is that the national government is mostly not responsible for giving out these permissions – that power usually lies with an organisation called a local planning authority, often a town or county council. For various structural reasons – political psychology and selection effects, amongst others – these local planning authorities generally don’t like giving these permissions, and will often go to great lengths and expense to avoid doing so. So there is a preference clash: national government wants permissions to be granted, local government doesn’t.

Housing targets are an attempt to resolve this clash, by forcing local authorities to give out a certain number of permissions each year. This obviously needs to happen via some mechanism. It isn’t enough for the government to say “you should give out this number of permissions”, since many local authorities would rather not, so we need to get these targets from the government’s PR team down to the decision-makers in the local authorities by some route that incentivises or even compels them to do so. Whether these targets are successful is therefore mostly dependent on whether this mechanism actually works.

Right now, it doesn’t: the number of houses built has been lower than the target every year for over two decades:

So Angela Rayner, the new Labour government’s Secretary of State for Housing, Communities and Local Government, has been talking about fixing it: both changing the target and how it’s distributed, as well as changing the mechanism through which it compels local authorities to give out permissions.

Since it has been in the news, I thought it might be a good idea to see how these targets work right now and work out what the proposed changes actually mean. This post is the first of three on this topic, which will set out:

1. How housing targets are currently determined;

2. How those targets translate to developable land, and

3. What our new Government is proposing to change about it.

I’ll begin with a high-level overview of how the targets system currently works.

A High Level Overview of How Housing Targets Currently Work

‘Housing targets’ means a few different things in the British system. There are five sorts of targets in the UK system that we’ll talk about over the next two posts:

1. National targets

2. Local housing need figures

3. Local Plan housing requirements

4. Five year land supply requirements

5. Housing delivery tests

Each of these ‘targets’ serves a different purpose. (1) and (2) reflect, crudely, ambition and assessed need. (3) and (4) try to indicate planned supply. And (5) is a post-hoc measure to see whether that ambition and need was actually met.

In slightly finer detail:

Central government conjures up some national targets, based, as far as I can understand, entirely on what is politically convenient and salient. These targets are used primarily to shape political discourse.

Central government ‘distributes’ this national target around the country by giving each authority a local housing need figure, derived through a process called the Standard Method (SM). This figure provides a baseline for a given local authority to plan around, and is only advisory.

Local authorities take this local housing need figure as a starting point, and then produce their own Local Plan housing requirement based on a different set of data (and opinions). Local Plan housing requirements are the actual number of homes that local authorities plan to deliver, and form the quantitative benchmark for a set of documents that outline the local authority’s ‘spatial strategy’: where new development should or should not go, and what infrastructure will be put in place to support it. This set of documents is called a Local Plan.

Local Plans specify where land is likely to be given permission through a process called allocation. Specific parcels of land are allocated – marked out as the sort of place where development is likely to happen – and each allocation has a number of dwellings that the council believes it could support. Local plans are supposed to allocate enough sites to meet the Local Plan housing requirement over the lifetime of the plan, usually 15-20 years. But they also need to ensure that there is enough supply available in the short term. In particular, a local plan must demonstrate at least five years of land supply, enough deliverable housing sites to meet five years of required supply based on the local housing requirement.

Eventually, the local plan is agreed upon and landowners begin to ask the council for permissions to build there. At this stage houses can start to be built, and the actual delivery needs to be tracked against what the local plan suggests. This is what the housing delivery test does: it, in effect, closes the loop between the national housing targets and the amount of land that a given local authority plans to make developable. If a borough fails to meet its housing targets, there are various consequences which, ostensibly, should encourage local authorities to get their act together and grant more permissions.

In this post, I’ll discuss (1) and (2) – how do we set our national target, and how do we split that target up amongst the various authorities that have to deliver the permissions required to meet it?

National Targets

National housing policy is decided by the UK government, specifically the Ministry of Housing, Communities and Local Government (MHCLG).1 A lot of British state power flows through the Secretaries of State, a practice tracing back to the ancient court in which officers of state had separate property, powers and responsibilities granted directly by the Monarch. So it’s likely that the Secretary of State, working with her political team, the civil service, and the Prime Minister’s office, will be responsible for deciding what the target should be.

But that is about as concrete as it is possible to be. There is no government whitepaper explaining how the current 300,000 figure was derived. There is no chapter in any textbook detailing who is responsible for deriving it, or what formula they use, or what we would expect to see if the target was hit, missed, or exceeded. There isn’t even a reliable chronology of how it has changed over time.

So, absent of any other evidence, the natural conclusion is that housing targets are born from political expediency and not much else. Which would make sense: they are usually announced in manifestos before elections, and the methodology is rarely published. This isn’t to say that they don’t want houses built, just that the headline number is more for PR purposes and doesn’t bear much on what the local authorities actually do.

In particular, a national target doesn’t tell us how many houses a particular authority should deliver. This matters not only because housing demand differs depending on where you are in the country – just compare house prices in, say, Burnley against those in, say, Cambridge – but also because housing markets aren’t coextensive with these authorities. If you can get a neighbouring authority to build more than they need, they can ‘absorb’ your demand and you have an incentive to free-ride. So we need authority-specific targets to tell us both what demand in an area is likely to be and what we want to happen given that information.

The Standard Method

These ‘targets’ are called local housing need figures, and they aim to be a measure of the minimum number of homes needed within a given local authority area. They are measured through a process called the Standard Method (SM):

The SM consists of three steps for each local authority in England:

1. Start with a household growth projection2 from 2014, for that authority, taken as an average over a 10-year period (with the current year as the base year);

2. Adjust that projection upward based on local housing affordability;

3. And cap the increase at 40% of the baseline need.

In certain urban local planning authorities, an additional fourth step applies:

4. Increase it by 35%

This method currently produces an England-wide target of 305,223 dwellings, with London accounting for roughly a third (98,822). This number is pretty close to the 300,000 total, which I have to imagine is no coincidence: without the 35% urban uplift, London alone drops the total by 35,000, so step (4) feels like a relatively ad-hoc way to distribute the ‘remaining development’ to hit the target. But London needs more development than anywhere else, so in practice this looks like a good thing. (The new Secretary of State disagrees, but we’ll come to that in Part 3.)

Using household growth forecast from 2014 as a benchmark for future housing needs has some obvious problems (some of which I’ve discussed already). For one, household formation changes over time: as patterns of divorce, cohabitation, multi-generational living etc., change, so does the way that the changes in the number of households responds to changes in the number of homes built for them. If household formation in the years leading up to 2014 looks different to the years leading up to, say, 2040, the assessed need will be more inaccurate. Another, simpler, problem is that household formation is a function of housing supply. We’ll see both of these problems occur in the Brighton case study below.

There are plenty of criticisms one can make of the SM. But the basic idea seems to be a good one: if we’re going to have to try to predict what future housing need will be, we should probably do so in a standardised way that can’t be institutionally captured by veto players.

Local authorities are supposed to use the SM to determine housing need unless there are ‘exceptional circumstances’ to the contrary. What are these exceptional circumstances? The National Planning Policy Framework gives us an idea:

The outcome of the standard method is an advisory starting-point for establishing a housing requirement for the area (see paragraph 67 below). There may be exceptional circumstances, including relating to the particular demographic characteristics of an area which justify an alternative approach to assessing housing need; in which case the alternative approach should also reflect current and future demographic trends and market signals

Which is elaborated further in a footnote:

Such particular demographic characteristics could, for example, include areas that are islands with no land bridge that have a significant proportion of elderly residents

Perhaps most significantly of all, however, is that the number is meant merely to be advisory, and this is said quite explicitly. The resulting figure is intended as a starting point for local planning processes, not a final housing target. What this means in practice is that local authorities have significant discretion in determining their actual housing targets, and frequently rely on a broad understanding of exceptionalism to achieve lower targets than they otherwise would.

This flexibility is supposed to be a benefit: many of the criticisms of the standard method imply that it is too centralised, too uniform, and that allowing for flexibility is crucial to recognise the ‘unique characteristics’ of a specific area. But in practice it provides a loophole for development-averse councils to set targets well below what is genuinely needed.

Local Housing Need Is An Opinion

When trying to determine what they need to plan for, the local authority puts together a document called a Strategic Housing Market Assessment (SHMA), which does this working out – and often finds the assessed need is lower than the standard method suggests. Here is Brighton’s, picked for no other reason than it is recent and happened to be at top of my Google search.

The current standard method housing need for Brighton and Hove is 2,319 dwellings per annum. The consultants that wrote Brighton’s SHMA found instead an assessed need of 810 dwellings per annum, nearly three times less than the standard method suggests. The real coup-de-grace, though, is the reasoning:

The Standard Method household growth figure uses the 2014-based household projections which are now over 8-years old (in terms of the base data for analysis). However, the more recently published data from the 2021 Census suggests the 2014-based projections are fundamentally wrong.

Overall, the 2021 Census indicates that population growth has been substantially lower than the 2014 projections and that trends observed previously are no longer reflective of recent trends. 

The population of the city grew less than we were expecting over the past decade. Therefore, there is a lower ongoing need of new housing. Do you spot the problem?

Population growth is itself constrained by how many new houses get built. So past population growth is not the sort of thing that should be used as a measure for future need: if population growth has been low, but prices have increased, then there has been more demand for population growth than there is the ability to grow it. Median house prices in Brighton have increased comfortably by over 2% each year during the same period, and the rate at which they increase has also been increasing. So we can fairly confidently conclude that either:

1. House prices are increasing for reasons independent of supply and demand, and their increase does not encode any information about what the population would grow to were it not constrained by supply; or

2. Population growth has been constrained by a lack of supply, which would tell us the opposite of what Brighton conclude – namely, that housing need is greater in the future than it is today, both to plan for future increases and to absorb any residual growth that would have occurred were it not for the constraint on supply.

But prices aren’t used as a measure for demand, despite the NPPF’s suggestion that alternative methods pay attention to ‘market signals’. So this thought doesn’t occur to Brighton, and they revise their housing need downward. They rely on their own past failures to meet housing need as a justification for lowering future targets. Remarkably, however, it gets worse:

In reality, the level of future housing delivery in Brighton and Hove is likely to relate more to capacity than housing need. On this basis, it was considered that the housing target in the current City Plan (660 dwellings per annum) would provide a realistic assumption for housing delivery moving forward.

Not only do Brighton and Hove acknowledge that they are likely to fail to plan enough permissions to meet the need that they themselves have already reduced by a factor of three because they failed to plan enough permissions, but they then suggest that they are actually going to plan around the number of permissions that they think they will decide they want to grant, rather than trying to meet any measure of housing need at all.

Under what circumstances does this make sense? You would need to believe at least one of the following:

• The current housing supply in Brighton and Hove is adequate or close to adequate, despite high prices suggesting otherwise;

• The city's infrastructure and environmental constraints are truly immovable, with no possibility of improvement or expansion to accommodate more housing; more development capacity simply can’t be found;

• The negative impacts of increasing housing supply (e.g., strain on local services, changes to community character) outweigh the benefits of addressing housing shortages and affordability issues;

• Economic growth and population increase in the area will naturally slow down or reverse, reducing future housing demand;

• The spillover effects of inadequate housing supply (e.g., increased commuting from surrounding areas, potential economic stagnation due to workforce housing issues) are negligible or acceptable;

• The housing market will somehow self-correct without intervention; or,

• The long-term social and economic costs of sustained housing shortages – e.g., increased inequality, reduced social mobility, impacts on local businesses – are less important than short-term stability or political expediency.

Brighton's approach only makes sense if one accepts a highly constrained and pessimistic view of urban development possibilities, combined with a prioritisation of maintaining the status quo over addressing pressing housing needs. It views the city's development capacity as fixed rather than something that can be expanded with proper planning and investment.

And this is an adjustment justified merely on the grounds of terms internal to the standard method calculation. There are also external reasons that a local authority might claim exceptionalism: special land-use designations such as green belt, environmental designations, flood risk, the agricultural quality of land. We’ll see in the next post that the processes by which these targets are supposed to influence the allocation of land and eventual development of homes are no stronger than the justifications for the targets themselves.

Conclusion

We now have a sense of how housing targets are determined, and a sense of why this framework is flawed. If the goal of our regime – a regime of politically-expeditious national targets distributed across local authorities by means of a standard method – is to actually deliver the number of homes in that target, than it doesn’t appear to be working. But we have only just started looking at why it doesn’t work, and in order to do that we need a clearer idea of how it is supposed to work. That will be the subject of the next post.

US vs UK

Most significant was the quick observation from @IronEconomist that my graph, which plots the UK data:

and the original graph, which plots some US data:

were using different X-axes:

Is the x axis here total completions per 1000 households over a decade? Whereas the US one is annual completions?

This wasn’t something I had noticed before. When I was compiling the original dataframes my attention was on the ‘per 1,000 units in 1990’ bit, not the ‘annual’ bit. But, of course, he’s right: the UK graph is using the sum of completions across the relevant time period and the US graph is using the annual average.

When we recalculate the UK numbers to use annual averages, and plot three of the US results, we get an even more horrifying picture of UK construction shortages:

The three US data points are, from left to right:

• San Francisco (price = 5000, completions = 5)

• Atlanta (price = 740, completions = 35)

• Las Vegas (price = 830, completions = 72).

I took those numbers by eyeballing the US graph, and doing the conversions from $ to £ and from square feet to square metres, so there’s good reason to doubt them. These numbers also represent different ranges: the US data is from 1990-2013, whereas the UK data are from 2011-2023.

But if they are even vaguely, directionally correct, we should be shocked: of our three cities, the only one clustering with the UK cities is San Francisco. If we try to make the axes match, almost every UK city ends up in the top-left quadrant:

And if we impose (roughly) the same boxes as the original? Oof.

It’s not just the US that builds well, either. Here’s Austria, that great darling of YIMBYism both left and right:

Less shocking, but still pretty impressive - it is slightly higher wrt costs and toward the top range of UK build rates.

Austria have some decent stats on completions, and, helpfully, they also had a census in 2011. There’s a lot of social housing in Austria, and there are lower rates of private ownership, so I’m not sure how reliable this number is: but here’s where I got the price from.

And then I remembered that the UK has seven times the population to Austria, so, scaling up:

I had to change the axes to fit it in. I know this is cheating a little, but still: good job, Austria.

The lesson of all of this: the UK builds very, very, very little. Even under conservative assumptions. Even with lots of caveats. Even if you’re sceptical. We are not even remotely in the direction of beginning to catch up with other places.

Land vs Houses

Some readers, such as John Stepek and Vicky Spratt, interpreted these results as a counterpoint to the YIMBY claim. And there’s a sense in which they are right: it does complicate the analysis.

The basic YIMBY take is something like a combination of the following three claims:

1. The housing market is a market like any other, following laws of supply and demand

2. The planning system restricts the supply of land more than it needs to

3. Building more houses will reduce those prices

Based on the data here, this basic take seems essentially true in London, although if you really wanted to challenge it you could gesture towards eg high levels of pre-existing development in certain London boroughs (which would push against 2; ie the planning system as the cause of restricted supply). Even that, though, is hard to defend, when you consider that London is much less dense than it could be.

You might also push against (3) if you think that there is a cycle of productivity growth to be gained by building more houses. More houses increases agglomeration effects, which drives productivity higher. Some of the surplus created by higher productivity is captured by workers, who gain a wage premium for being there. Higher-paid workers are willing to pay higher nominal amounts for rent and homes; this drives up prices, inducing more supply.

And this also seems the case, but we’d only expect to see prices go up relative to wages if supply was constrained, and it is, and we do. So the problem is not so much that ‘London is successful therefore land is expensive’, as John and Vicky argue: it’s that London doesn’t build enough relative to demand growth that real-terms increases are inevitable. But that is a reversible thing without having to meddle with demand: build more.

They also get something more fundamental wrong, which is an easy win for the YIMBY: ‘land’, in this instance, doesn’t mean soil, it means developable area. You can gain more land by building up, as well as out. And the British planning system is, for a mixture of reasons, perversely set against building higher than a few stories anywhere other than the dead centre of the city. So we can easily gain more space for supply to grow if we are willing to densify zones 2-5.

Outside of London, though, the story seems a bit different, and it wasn’t clear to me at first blush why that would be the case. There are places outside of London where the market seems less dysfunctional than it does inside the M25: places where an increase in prices is met with an increase in supply. In these areas, there are a range of completion rates and a range of prices, and a weak but positive correlation between completion and price. In some of these places housing is more affordable than others, and a lot of this difference is almost certainly accounted for by differences in variables other than mere supply: total amount of available land, local demand pressures, the effects of build rates in other neighbouring housing markets, etc.

These thoughts combine to give us a highly plausible explanation for why we see this negative correlation in London and nowhere else:

The planning system works against the sort of development that London needs, so it restricts supply. And London is so extreme, so obtusely, so effervescently undersupplied, and has been for such a long time, that it has hit a form of inefficiency frontier: it will take a lot more supply to flip the correlation round and start seeing decreases in prices in nominal terms. But that doesn’t mean that there aren’t margins where building more will reduce prices, nor does it mean that we cannot stem the bleeding. Building more homes won’t decrease prices in London overnight, but it will make things cheaper relative to the counterfactual where we don’t.

And as for the rest of England? The market works more like we would expect it to. But this is also not a reason to celebrate, and it doesn’t mean the market is effective. Compared to many, many countries in the world we pay much higher prices and get much less living space for it. Until proven otherwise, the assumption should be that this is caused by the planning system, since it is the planning system that sets the rules, grants the permissions, sets the strategies and and doles out the punishments. Reforming that system to get more houses built should demonstrate – all else equal, of course – lower prices. And, once again, the the burden of proof is on the person who doesn’t accept the laws of supply and demand to make the case for why it is any different.

Variations on a theme

Some of the other responses had the rough outline of: “interesting! Let’s see it with THIS variation!” I picked a few of my favourites and produced the same graphs.

Duncan Stott asked:

Very interesting. What happens if the y-axis is affordability (i.e. divide by local average incomes)?

Good question, Duncan. Let’s pull the ONS data on earnings by local authority, reformat it a little, and divide median price per sqm by median salary in that local authority: 

Same result, only this time it’s more worrying: not only is London expensive, it’s also unaffordable.

Matt suggested change in price rather than absolute price:

Thanks, that’s really interesting. One suggestion: I feel think change in price would be a better metric than absolute price? In other words what impact has building had on price. Appreciate you were comparing to the US analysis in the first instance!

Sure! We’ve got the price data for 2012-2022 already, which is close enough. Let’s plot that on the Y-axis instead:

And with a log scale:

The non-London ceiling still appears, which is interesting, and London is clearly still bunched up at the top left (which means both high changes in price and low completions):

Rory Evans wanted an interactive version. I didn’t have the time to make one truly interactive, but I was able to generate a graph for every single authority. They’re sorted by descending price, and each graph has the name printed above, so you can Cmd + F and find the place you’re looking for:

Just Another Dan suggested that we see how the x-axis looks with respect to demand. Both change in price and median wages seem like reasonable, albeit very noisy, proxies for demand, so I’ll go ahead and give you median price by completions over change in price:

And median price by completions over median annual wages:

These graphs are interesting, in part because of the more visible hyperbolic shape. There’s a more obvious inverse relationship between price and completions over change in price, and this graph shape is what you would expect to see in cases of inverse relationships (compare, eg, Boyle’s law in physics.)

What this tells us about the housing market is that local authorities with a higher completion to ‘demand’ ratio have both lower, and, it seems, much more stable prices. This is important, because the x-axis can be interpreted as a measure of how responsive housing supply is to price signals. The fact that we see these high levels of volatility when this responsiveness is low suggests that there areas which build less are more susceptible to local demand-side factors. Or, running it the other way, areas which build more can absorb changes in demand more effectively. This is (yet another) instance of the housing market behaving, well, the same as most other markets. Demand goes up, and prices will chase it – unless supply can expand to catch them.

Finally, Baron Douro taught me the word heteroskedasticity, which, apparently, means that I should use more log scales.

Read the original here:

Kensington and Chelsea

Camden

Hammersmith and Fulham

Islington

Wandsworth

Hackney

Southwark

Lambeth

Tower Hamlets

Haringey

Richmond upon Thames

Brent

Lewisham

Ealing

Barnet

Elmbridge

Kingston upon Thames

Merton

Greenwich

Waltham Forest

Newham

Harrow

Cambridge

Hounslow

Mole Valley

Three Rivers

Hertsmere

Hillingdon

Windsor and Maidenhead

Epsom and Ewell

Epping Forest

Enfield

Bromley

Brighton and Hove

Guildford

Redbridge

Oxford

Brentwood

Waverley

Sutton

Runnymede

Woking

Spelthorne

Watford

Tandridge

Wokingham

Reigate and Banstead

Winchester

Sevenoaks

Croydon

Dacorum

South Oxfordshire

Slough

Barking and Dagenham

Havering

Surrey Heath

Uttlesford

Tunbridge Wells

Hart

Bexley

Mid Sussex

Horsham

Broxbourne

Chichester

North Hertfordshire

East Hampshire

Tonbridge and Malling

South Cambridgeshire

Bracknell Forest

Dartford

Chelmsford

West Berkshire

Reading

Vale of White Horse

West Oxfordshire

Adur

Rochford

New Forest

Cotswold

Lewes

Bath and North East Somerset

Harlow

Maldon

Maidstone

Rushmoor

Cherwell

Wealden

Central Bedfordshire

Worthing

Canterbury

Thurrock

Castle Point

Basingstoke and Deane

Test Valley

Warwick

Arun

Gravesham

Stratford-on-Avon

Eastleigh

Basildon

Fareham

Milton Keynes

South Hams

Crawley

Rother

Colchester

Bedford

East Cambridgeshire

Cheltenham

Ashford

Southend-on-Sea

Babergh

Braintree

Bristol, City of

Havant

Exeter

Wiltshire

South Gloucestershire

East Devon

Tewkesbury

Solihull

Stroud

Luton

Bromsgrove

Folkestone and Hythe

Eastbourne

Medway

Huntingdonshire

Mid Suffolk

Wychavon

Swale

Tendring

York

Rushcliffe

Dover

North Norfolk

Harborough

Teignbridge

Trafford

Malvern Hills

Broadland

Southampton

North Somerset

South Norfolk

Derbyshire Dales

Swindon

Thanet

Rutland

Hastings

North Devon

Lichfield

Mid Devon

Rugby

South Staffordshire

Norwich

Breckland

Cheshire East

Portsmouth

Gosport

Herefordshire, County of

Stockport

Blaby

Shropshire

King's Lynn and West Norfolk

Isle of Wight

Charnwood

West Devon

Torridge

Ribble Valley

Torbay

Forest of Dean

Hinckley and Bosworth

North Warwickshire

Worcester

Gloucester

Ipswich

South Derbyshire

South Kesteven

Cheshire West and Chester

Redditch

Stafford

Fylde

North West Leicestershire

Oadby and Wigston

Melton

Leeds

Great Yarmouth

High Peak

Tamworth

North Kesteven

Warrington

Manchester

Fenland

North East Derbyshire

Plymouth

Coventry

Wyre Forest

East Staffordshire

Birmingham

Salford

West Lancashire

North Tyneside

Peterborough

Cannock Chase

South Holland

Newcastle upon Tyne

Bury

Gedling

Chorley

Nuneaton and Bedworth

East Riding of Yorkshire

Dudley

Broxtowe

Leicester

Newark and Sherwood

Telford and Wrekin

Amber Valley

Staffordshire Moorlands

Sheffield

South Ribble

East Lindsey

West Lindsey

Lincoln

Sefton

Walsall

Kirklees

Wakefield

Chesterfield

Tameside

Lancaster

Derby

Wyre

Calderdale

Boston

Wirral

Erewash

Sandwell

Wolverhampton

Bradford

Preston

Halton

Nottingham

Bassetlaw

Rochdale

Stockton-on-Tees

Ashfield

South Tyneside

Wigan

Oldham

Darlington

Rotherham

St. Helens

Newcastle-under-Lyme

Bolton

Middlesbrough

Knowsley

Mansfield

Rossendale

Redcar and Cleveland

Barnsley

Sunderland

Doncaster

Bolsover

Liverpool

Hartlepool

North Lincolnshire

North East Lincolnshire

Stoke-on-Trent

Kingston upon Hull, City of

County Durham

Blackpool

Blackburn with Darwen

Pendle

Hyndburn

Burnley

Imposed over the graph is a grid, breaking the data into four groups:

• The top-left, cities that are expensive and build relatively little

• The bottom-left, cities that are cheap and build relatively little

• The bottom-right, cities that are cheap and build lots

• The top-right, cities that are expensive and build lots

Check the top-right: it’s empty. YIMBY Twitter likes this graph, because it demonstrates a core corollary of the YIMBY position: no expensive housing market also builds much housing.

Of course, this doesn’t constitute proof of the point in either direction: cities could still be expensive despite building lots if they simply don’t build enough. If demand keeps outstripping supply, things get more expensive. Lots of popular, housing-constrained cities have been both popular and housing-constrained for a long while, and this produces a backlog of demand from which new supply can draw.

And nor is it the case that building lots is necessarily the reason why places are cheap. There are, indeed, examples of cheap places that both build (like Vegas) and don’t build (like Detroit).

But it does suggest that building lots is at least a necessary condition for affordability, and, for the most part, that’s the ball game.

I spent Saturday afternoon playing with the UK data:1

And we see the same general phenomenon: no area that builds a lot is expensive. We even see the same pattern when we use a log axis to help us ‘uncluster’ the individual points:

I’m using slightly different datasets, with slightly different definitions, from the original US example.2 The choice of these datasets was much more governed by how easy it was for me to find on a Saturday afternoon, and not by their statistical quality. This is, as should be clear, an inexact piece of science.

But the core logic looks the same: no expensive UK housing market builds lots of housing. Only 19.7% of the local authorities that build more than the median are in the top quartile of prices.

The funny thing is, though, this effect is only visible in London. Here is the original plot, with London in red:

There is a horizontal line drawn at around £5,000/m^2 indicates a ‘ceiling’ effect where no authorities outside of London reach the price levels seen in most of the capital, regardless of their completion rates. (In fact, the only non-London borough to exceed this £5,000 mark is Elmbridge, which sits within the M25.)

If we isolate London entirely, we see something a lot clearer:

This negative correlation between price and completions in London is strong: -0.429, with a p-value of 0.016. So it’s both strong and statistically significant. There’s also quite a lot of internal variation here. Kensington and Chelsea is five times more expensive per square metre than Kingston upon Thames, despite the fact they have similar build rates. And Barking and Dagenham build four times more than Kingston!

But in the context of the rest of the UK, even the stalwarts of Barking and Dagenham are only at the 65th percentile of builders, and the average London is at just under the 30th percentile – 70% of UK authorities build more.

The lesson for London seems pretty clear: build more, and the price should come down. London is experiencing such extreme demand pressures that building more might not always depress nominal prices, but there’s good evidence here to suggest that where boroughs do build more, prices are lower.

Outside of London, though, it’s a different story. Here’s the same graph but with London removed:

The effect is much less visible. In fact, the correlation is slightly positive: areas that build more have higher median prices. Which… makes sense? In a typical model of a market, higher prices would induce greater supply. And while UK housing supply is inelastic, it’s not completely inelastic: people do want to build in more expensive areas.

We we look at the South East, we also see a weakly positive correlation between house prices and completions:

If we restrict the authorities to those within 50 miles of Charing Cross, we can see the negative correlation much more clearly:

But this is obviously because London is throwing it off:

When we go further afield, up to the North East, we see that both the average number of completions is much higher, the price is much lower, and the correlation is strongly positive:

There are few places, in fact, that build less than London, and no region that costs more:

But we do again see this weak positive correlation between build rates and median price between the regions, too: the South East and East of England have built twice as much over the past decade, and their prices are upward of double those of Yorkshire and The Humber.

Local authorities do differ quite widely: some are rural, others are mostly urban and suburban. One important variable is whether there is a significant amount of ‘Green Belt’, a type of planning designation intended to prevent urban sprawl. But we can see that even the presence of significant amounts of Green Belt land in an authority doesn’t change the pattern very much:

There is a general clustering to the left of the graph, which makes sense, considering that Green Belt is designed to restrict development. When we take the averages of local authorities with at least 30% green belt coverage and those without, there is an important difference:

Non-greenbelt land builds more but also has a higher-price - although, again, London is confusing things (most of London isn’t Green Belt). When we remove London from the comparison, we do see local authorities with at least 30% Green Belt coverage build less and cost more:

But none of these comparisons are really that informative. Areas with large amounts of Green Belt have, almost definitionally, higher demand. And the scale matters: sat against the rest of the rest of the country, the difference seems much less significant:

So, what lessons should we learn from all of this?

First, that the UK housing crisis really is a London problem. There is extreme price disparity between London and everywhere else, including the South East, and London builds much less than the rest of the UK, including the South East, and even very near London but not quite in London (50 miles from Charing Cross gets you to Oxford). There’s a clear ‘ceiling’ at around £5,000/m² that only London boroughs (and one nearby area) exceed. There are unique supply and price dynamics within London, too, showing a strong negative correlation between construction rates and prices.

Second, that there is a positive relationship between price and completions everywhere except London – and this is rather interesting. It of course does not invalidate the basic YIMBY claim, but it does suggest that there are more complex reasons why prices are high. Even in the traditionally expensive and more dense South East, we don’t see a meaningful difference in prices between areas that build more and areas that build less. Why this is isn’t clear to me; I’ll have a think and post again when I’ve figured it out.

Third, that the US and UK patterns seem similar. There is a cluster of ‘superstar cities’ in the coastal US – that build little and have high prices – as well as a few highly productive cities in the sunbelt that build a lot of houses and keep prices low. In the UK, we have one superstar city, and some significant variation between the others in terms of build rates. A few places stand out as doing a good job delivering even with high demand: Cambridge and Winchester have both had roughly 140 completions per 1,000 households in 2011.

But, fourth, there is still a significant difference in absolute cost. Las Vegas sells its homes for somewhere near £850/m²; this is nearly six times cheaper than Cambridge. There are many places in the US where prices are significantly lower: the superstar cities begin around $200/sqft, which is ~£1,660/m², putting eg Boston comfortably in the cheapest quartile of UK cities.

Overall, this suggests to me that the UK YIMBY project should double-down on London, since focussing on London is where the highest returns are likely to be. The New Towns programme might be an easier political project to justify, but it seems substantially less effective at bringing down costs.

Thanks to Benedict Springbett, Ben Dunn-Flores, Jessica Rumbelow and Henry Dashwood for support and comments.

One of the few things that my wife and I fight about is the correct level of cultural importance that should be assigned to Bruce Springsteen. She is a huge fan: she was raised by Springsteen in the same way I was raised by Jarvis Cocker; she thinks he throws light into a world both alien and familiar. I think he is overrated, a little saccharine and prolier-than-thou, a tiresome reminder of an Americana that never was, to be celebrated for avoiding the kitsch but not given the universal respect he seems to enjoy. This is a whole other post, but Springsteen is to Le Carré as Meat Loaf is James Bond.

Nick Wasicsko would side with Jessica. There were, by my count, twelve different Springsteen songs in David Simon’s Show Me A Hero., at least four of which were played directly by Wasicsko, the show’s protagonist. At one point early on in the series, Wasiscko and his team are planning his mayoral run. Bored of going round in circles, he walks over to the jukebox. “Springsteen? This again?” Wasiscko replies: “It’s my theme song.” 

It is a truly excellent piece of television, and recommend it wholeheartedly to anybody interested in housing, NIMBYism, and politics. There is a flavour of The Wire, believable and stylistic images of housing projects and life gang-adjacent, the racial and class injustices of 90s America. But it’s a bit like The Wire in a deeper sense, namely that it’s about process as much as it is about outcome. The process of getting politics to happen, getting decisions made, recognising trade-offs and attempting to communicate them.

1.

In 1980, a significant legal challenge unfolded when the US Department of Justice brought a case against the City of Yonkers. This lawsuit, filed in the district court, accused the city of violating the Civil Rights Act by intentionally segregating its schools. The core of the plaintiffs' argument was the city's approach to public housing: by concentrating these units in predominantly Black and Hispanic neighbourhoods in the southwest, the city effectively underwrote racial segregation. This strategy not only segregated residential areas but also had a direct impact on school demographics, effectively dividing the city's educational system along racial lines. According to the DoJ, these actions constituted a clear breach of the CRA.

After a couple of years of lawyering, the court negotiated a deal that, amongst other things, required the City (and the Department for Housing and Urban Development) to provide access to housing in the mostly-white east of the city, as well as construct a small number of public housing units in that area. The City and HUD didn’t do what they said they would do, the issue became even more contentious, and the lawyers rubbed their hands with glee.

Some more lawyering up ensued, and, in 1985, Judge Leonard B. Sand, decided to put all the lawyering to an end and issued a desegregation order, forcing the city to build 1,000 housing units in the white, middle-class east of the city. The city didn’t have my disdain for litigation, so fought back, and took the case as far as the Supreme Court, spending upward of $11 million in the process (roughly ~3.3% of the city’s budget at the time.)

The order was upheld, but the City Council still refused to budge. So Sand was empowered to hold the City in contempt of his order, layering fine after fine onto the City (and threatening the opposing council members themselves with prison time) until they complied.

It’s at this point that the storyline of Hero begins. Nick Wasicsko, a young and newly-elected councilman for the city’s seventh ward, decides to run for the Mayoral role, defeating a six-term Republican incumbent. The election was, predictably, entirely about the housing issue: both Martinelli, the incumbent, and Wasicsko ran on opposition to the integration plan, with the latter promising to “resist the court-ordered integration by legal appeals”. Martinelli, who had been tied to the housing issue and was therefore the target of much of the vitriol, lost the election. On November 3rd, 1987, Wasicsko became the city’s youngest-ever Mayor.

Then? He has to govern. And as George Washington says to Hamilton in the musical, “winning is easy young man, governing’s harder”.

2.

The issues are a bit complected, but opposition to the housing came in a few different flavours:

• Racism and/or racial prejudices. Concerns that low-income housing might increase crime rates in East Yonkers featured prominently in the show, as well as instances of overt racism, culminating in an arson attack. Judge Sands and several of the HUD appointees are Jewish, and this further flares up tensions.

• Preserving ‘neighbourhood character’, an understandable reason in itself, but easily racism-coded.

• Legal precedent causing runaway development, while not mentioned much in the show, does pop up occasionally.

• Property values, and the seeming unfairness of giving people access to a space that they haven’t paid for.

• The top-down enforcement of the plan from above, reflecting a lack of care about what the community says it wants, especially from a liberal Jewish judge who doesn’t live in the area and who doesn’t share the interests or history of the predominately working-class, post-industrial community.

I was worried that it would become a story of racism through-and-through, but it didn’t. (If it had been made today, by somebody less blessed with subtlety than Simon, I suspect it would have been.) Racism was clearly a big part of the opposition, and the show deals with that sensitively and well. But most of the items on that list, and the process surrounding it, aren’t really about race at all.

Earlier in the series, before the debates get too heated, there’s a clear sense of community pride. The community are frustrated, are concerned, and these concerns come from what seems to be a place of sincerity. It is racialised explicitly by the council, who present it as a wedge issue. One memorable scene involves Hank Spallone, aggressive and spiteful and disdainful, the councilman doing the most to encourage opposition to the housing, driving round the existing projects and taking selective photographs of young black men and pregnant teenagers.

Before Spallone stokes the fire, it is burning with legitimate concern. These people, like many NIMBYs, are earnest when they say they are worried about their neighbourhood changing, the fears of runaway development, the suppression of their property values. These people are proud. They’ve worked hard. It’s difficult to not feel sympathy for them.

But Spallone does stoke the fire, and the vitriol increases, and the energy transmutes into anger. There’s a crackle of that anger long before the racialised campaigning begins explicitly. The town hall meetings are chaotic, with residents shouting and booing and screaming at the council for their betrayal. The councilmembers receive death threats; Wasicsko receives a bullet in the mail. Protests start to form around those who the community take to be iconic of the developments; first Martinelli, then Wasicsko, then others.

And it ultimately becomes a matter of loss-of-control. As the City is held in contempt and the fines and legal fees begin to mount, a hapless council are pushed in an increasingly difficult corner. The object-level matters begin to fade away into the background, and the perceived betrayal comes to the forefront.

The community ends up in a war of attrition against itself, the Save Yonkers Federation becoming more and better organised against the housing, the Mayor and council subsumed by infighting and politicking, and HUD and Judge Sands at the sidelines, equal parts exasperated and bemused.

But there is some redemption. One of the main redemptive arcs involves a significant NIMBY campaigner, Mary Dorman, who starts out as one of the council-screamers, and whose disdain for the black members of her community borders on the cruel. But Dorman ends up supporting the new housing, and plays an important part in making the actual integration work and rendering it legitimate in the eyes of her neighbours.

There is also a clear willingness on the part of HUD to adjust the designs and locations of the housing to accommodate the community’s worries. The main architect of the new housing, Oscar Newman, sees this as a test of his ‘defensible space theory’, and the show goes to some lengths to illuminate why. Higher crime rates existed in high-rise housing projects, in part, Newman argued, because of a lack of ownership over the public space. If the garden is nobody’s garden, the square considered abstractly public, not communal, then there is much less of the informal social policing about which Jane Jacobs wrote so persuasively, some twenty years prior.

Following Newman’s designs, the new projects are emphatically not to be high-rise tower blocks. They’re designed to be low-density homes, townhouses for families at one end, mid-rise condos at the other, scattered through the white areas of the city, to both improve the quality of the housing for its tenants, reduce the likelihood of crime and antisocial behaviour for its neighbours, and help dilute the political effects for the councilmen. All of this forethought makes the council’s intransigence all the more frustrating.

3.

There are, I think, plenty of lessons for the modern YIMBY to learn.

Hero is a story of political courage and naïvety and the inevitable relationship between the two. The entire saga is, in many ways, a referendum on Wasicsko’s political courage, and the grubbier side of its motivation. But it’s also an incredibly clever look at the violence of bureaucracies, and the contradictions that sit at the heart of high modernism.

NIMBYism is a procedural phenomenon as well as a psychological one. I feel that many YIMBYs miss this point. It isn’t just that NIMBYs have economic interests against development, nor that they are fundamentally opposed to it in some vibes-y, worldview sense (though in many cases both of those things are true.) It’s that we have allowed systems to be designed with veto points. Political asymmetries mean that these systems get captured by the anti-development lobby, and the veto points proliferate. And then, like all systems, they ossify around those veto points, which makes it near-impossible to reverse course from within the system.

Hero’s vetocratic capture looks quaint in comparison to ours. The protestors and councilmembers are more loud than they are powerful, and the entire story is ultimately motivated by the failure, and the inevitability of the failure, to veto. But there are so many instances of our modern problem appearing inchoate: the local council refusing to comply, even when overruled by entities higher up the legal hierarchy; the protest groups and public meetings and harassment of officials; perennial legal appeals and the rent-extraction that entails.

All this in mind, the real power of Hero is that it shows what is necessary for a development to happen outside of the system’s regular scheduled programming. Political courage in itself isn’t enough. It’s a much shakier basis for campaigns than we might like; it’s always political courage up to a point, and once that point has been reached, the political incentives change. In Hero, a Catholic bishop offers support for the new housing, but then quickly u-turns. He grounds his support in moral terms, which is enough inertial energy to overcome the opposition, but when the opposition continues to mount, he is forced to reverse his position. Short term political incentives will almost always override longer term plans, and under those conditions ‘political courage’ seems to be emptied of much of its content. (Compare, for instance, Labour and their reversal on nutrient neutrality.)

If political courage isn’t enough, reason isn’t either. The loudest politicians care very little about the object-level issue. It is almost instantly mobilised by almost every person running for election. We see three cycles of Mayoral elections, and each time the housing debate is the fulcrum on which the winner gains his leverage. Spallone understands that the fines will be crippling, but pushes on opposing anyway. Every attempt to lead is quickly forgotten; they only end up responding. There ceases to be any spirit of negotiation, any attempt to communicate the finer points.

In an institution captured by inertia and a lack of ambition, an exogenous shock is what’s needed. But even in that case, it is far from easy. The system will put up a fight. Lawsuits will be brought, protests will be had. And the protestors’ ultimate frustration – that of being ignored, sidelined, talked down to – only becomes validated. Thus the tension of the reformer from within a vetocracy: forcing a system to adopt change it opposes, without rendering legitimate the opposition.

That’s why outside mechanisms are often crucial: they help push the equilibrium above a local minima. This is, incidentally, supposed to be a virtue of the way the UK system is structured - heavy centralisation should allow for such equilibrium-pushing. But we lack serious politicians, possessed of political courage and clear reasoning, and who ultimately are missing the actual power to see these changes through. As Hero teaches us, even political courage won’t be enough if the vetocratic rot has set in.

This raises the question: what sort of exogenous shock could drive more development in the UK? The obvious answer is a significant legal change: if Parliament decides to zone the whole of England independent of the councils, then the veto points could be dissolved and the system would realign, ideally – though not necessarily – around more development. There are more subtle reforms, such as the excellent Street Votes, that are being passed, which might help nudge the system toward more development. In the case of Street Votes, this is in effect by bypassing the local authorities altogether. In the case of Community Land Auctions, it attempts to solve the ‘value capture problem’, allowing local authorities to capture more of the uplift in land value, effecting something like a Coasean bargain.

Another obvious answer is rely on the legal system. This seems de facto to be what happens now; developers get rejected, appeal, then often win. This is especially the case in local authorities that are falling behind on their required housing supply; the NPPF provides a mechanism for applying a presumption in favour of development when housing delivery in an area is insufficient. But there’s a lot of legal wrangling involved to get there, and there are still opportunities to veto: the development must still be ‘sustainable’, ‘in keeping with the character of the local area’, etc etc, all good things on their own merits but in aggregate used to prevent any development at all. It’s also worth pointing out that the costs in both time and money are huge; appeal just isn’t an option many of the smaller developers can justify.

We could punt on political courage, which in some cases does work; though there are lots of times when the power given isn’t wielded effectively, and, at any rate, Hero shows us that it’s only ever ‘courage up to a point’. So we ideally need to work around the system without relying on people whose incentives are internal to the system at all. That means we have to presume we can’t rely on the Secretary of State, nor on the Mayor, nor the council, nor the planning officer. Unlike the US, we don’t have a federal system where higher level courts sit strictly above, deriving their power from a constitution that allows them to override the decisions of elected representatives.

Like The Wire, the real point of Show Me A Hero is that an outsider to a system will inevitably be destroyed by his attempts to reform it. “Show me a hero, and I’ll write you a tragedy”, says Fitzgerald. So we need something else. That something else might be technology. At least, that’s the bet we’re making at Tract. But it’s not going to be easy.

This is annoying and foolish for many reasons:

• As has been demonstrated time and again, the UK housing crisis is a supply problem. We don’t build enough houses in the places where people want to live, especially London and the South East. Taking supply off the market in the short term may be helpful to social renters, but will only exacerbate the problem in the medium-term. This is a zero-sum transfer from the private rented sector to the social sector.

• Because it’s a zero-sum transfer from private renters to social renters, it pits these two groups against each other, accelerating rent growth for ~30% of Londoners in the former group.

• Acquiring existing homes is expensive! Some two-thirds of the market value of new housing stock is the value of the land, so two-thirds of this money will be spent underwriting the scarcity premiums currently being paid by renters and buyers alike. This is especially infuriating in a city where councils own one-fifth of the land. (In certain boroughs, such as Islington, it’s even higher.)

The announcement says that the number of homes bought through CHAP will be capped at 10%, representing an increase in council stock of ~2,500. At a median home value of £500k, this ~2,500 increase in stock will cost £1.25 billion of public money. This is 10-ish per cent more expensive per home than a recent regeneration project in Sutton, much of which will be funded by the private sector. New housing delivery is an increase in supply; Khan plans to spend more money per home to increase supply by zero.

Policies like this give the impression of a Mayor fundamentally unserious about fixing the problems in London housing, and reveal the lack of understanding about, or a lack of interest in, the levers that he can pull to address them.

It’s easy to complain though. What proactive steps could the Mayor make to help the housing crisis? Well, it turns out, there are plenty of things that are well within his power which would boost supply of both market-rate and social housing.

The London Plan

In the UK system, development is shaped by a ‘Local Plan’ – a binding policy document that sets out the spatial strategy, restrictions, design codes, and other considerations that apply to new development. Applications are then evaluated against this plan, as well as any regional or national rules. Does the proposed development meet the design code? Is it to be located in a conservation area, and does it meet the heightened standards for that area? Is it within guidelines for the access and environmental and waste management and crime and heritage constraints and all the other things we use the planning system to address?

The Mayor of London is responsible for the London Plan, and therefore is able to alter or supplement it. There are many changes to this document that would meaningfully improve housing delivery in London.

One such change would be to remove the current Strategic Industrial Land policy to allow much more residential/mixed redevelopment on what are currently industrial sites. As Samuel Hughes writes:

One is allowing industrial, retail and logistics sites to be redeveloped for housing. Somewhat surprisingly, there is actually a lot of scope for this. The reason is that the London Plan contains an amazing ‘Strategic Industrial Land’ policy that essentially bans housing on vast swathes of the city, requiring that they be used for industrial or retail purposes only. This is why swathes of inner London are still covered by one-storey light industrial sheds surrounded by surface-level car parks – what Create Streets call ‘boxlands’ – an astonishingly inefficient land use in a city with some of the most expensive housing in the world. Allowing some of this to be redeveloped as dense, mixed-use, traditional urbanism would make a considerable contribution to addressing the housing crisis.

Promoting more mixed-use development on this existing land by removing these restrictions could be done in a matter of weeks, and the market would move in short order to develop more housing. In the same post, Samuel also encourages estate regeneration: redeveloping existing social housing into higher-quality and higher-density schemes. This is exactly the sort of thing the AHP can be useful for. Roughly 40% of inner London is social housing, and regeneration has proven time and again to be popular with existing tenants. So far no new affordable homes have been started with the £4 billion AHP programme; this would be a smart place to begin.

The London Plan encourages the development of surplus TfL land for housing on “all suitable and available brownfield sites”. This requirement could be strengthened, compelling TfL to allow residential development over their stations. Many tube stations are single- or two-story and could easily support a few dozen flats built over them with appropriate foundation engineering:

Borough Tube Station, yet another example of the horrendous use of space in Central London

Aside from increasing housing stock simpliciter, this would enable more housing stock directly above and/or adjacent to public transport, which is (almost by definition) the most efficient place to put it. TfL have a lot of land that could be redeveloped, and since it is already publicly-owned a significant part of the value uplift could be directed to improving transportation infrastructure, to the benefit of all Londoners.

There are also many restrictions to development in central London that harm our ability to build more homes. Approximately 15% of London land is designated as a conservation area, which goes as high as 72% in Kensington and Chelsea and 77% in Westminster. Removing some of these heritage designations and relying on design codes to prevent the most egregious architectural errors could help simplify brownfield redevelopment.

Similarly, 22% of London land lies within the Green Belt; a policy designed not protect the environment nor to give Londoners access to nature, but merely to contain urban development. Much Green Belt land is not green at all, and could be added to brownfield registers, producing a marked improvement in the quality of the urban landscape and increasing housing supply to boot.

There are other regulations in the London Plan that could be removed to help drive housing delivery. There are no national requirements on minimum sizes of housing stock, but following some national guidelines the London Plan sets both minimum gross internal floor areas (39m2 for a one-bed, one-person home; over four times larger than the equivalent number for Paris) and minimum bedroom sizes, along with levers of veto to discourage the development of one-bedroom studio flats. These restrictions could be loosened, allowing for greater density and the freedom for poorer workers or students to decide whether they wish to trade off living centrally for less space (see, eg, the chambres de bonne of Paris; read the excellent Order without Design for more on this topic).

And, of course, most of all, the Local Plan could include much more aggressive density guidelines, encouraging both high-rise development in central locations and mid-rise gentle density in Zone 2 and the suburbs. Densification must be a big part of the story: if London had the same density as Paris, there would be 30 million Londoners! The Mayor has the power to suggest and even make these sorts of amendments to the London Plan. It is either a failure of imagination or a failure of competence that he doesn’t.

Advocacy and Lobbying

A lot of the Mayor’s power comes from advocacy and lobbying. The Mayor could be a lot more muscular with borough councils on hitting housing targets, for instance, as well as pushing for new regional infrastructure funding, such as the ill-fated Crossrail 2, which will drive value uplift and could even be paid for in part by releasing council land to the market through mechanisms like Community Land Auctions. This could both increase supply and also make it easier to commute into central London from currently underserved places, increasing the effective accessible size of the city and encouraging further agglomeration effects.

There are other, softer levers that the Mayor can use to encourage housing development. He can push for much more transparency and reporting on development density within Greater London. He can call on London MPs to support development in their constituencies. His office could also provide support for digital local plans, digital tree protection orders, and other technological innovations that help add clarity and certainty to the system.

Finally, under no circumstances should he be advocating for rent controls, mortgage payment freezes, or anti-gentrification policies, ideas that have proven time and again to not work. They might appeal ideologically to his base, but they make the problem worse, not better.

Strategically Important Applications

In cases where borough councils are especially intransigent, the Mayor has powers to take over strategically important applications to help push them through (which is especially important in cases where larger housing developments face asymmetrically NIMBY local opposition, such as Helen Hayes’s opposition to a 100% affordable housing development because it was seven stories tall, or Greg Hands’s opposition to a new high-rise development in Earl’s Court).

The Mayor should be much bolder in doing this. Significant amounts of London could be given strategically important status, enabling fast-track approvals and providing financing through public-private partnerships via the London Development Agency.

In many cases it could also help local authorities reorient their development away from institutional capture by NIMBYism, by providing political cover. They can blame the Mayor on new development, and gradually enjoy the benefits of an increased tax base and better urban design and infrastructure. I’m sure that plenty of councillors and planning officers would support such development privately.

Conclusion

None of these interventions are silver bullets, and reasonable people can disagree about the details. But the Mayor has a substantial amount of power that he lacks the political courage, interest, or infrastructure to wield. Most importantly: he needs to say loudly, to Westminster, to the councils and constituencies within his jurisdiction, and to the rest of the country, that London should continue to densify, continue to grow, and continue to build.

“Incomparably beautiful in many things, miserably defective in others, Cambridge is still one of the most pleasant places on earth in which to live. Moreover, it is now perhaps the only true ‘University town’ in England. The question is whether it can control its own destiny in the face of a multitude of unplanned events that will certainly tend to change it.”

Holford and Wright, A Report to the Town and Country Planning Committee of the Cambridgeshire County Council, 1950.

Over the past few weeks, plenty of ink has been spilled on the government’s new proposed Cambridge Quarter, a suggested plan to expand the city by 250,000 residents over the next 17 years. Based on my – admittedly biased – viewpoint from Twitter, it seemed that the overwhelming majority of voices in support of the proposal were coming from outside Cambridge, and the majority of dissension from those within. Even my friend Julian Huppert, who is by no means a NIMBY, is concerned about growing the population at that rate.

I think Julian has little reason to be concerned, and in the next post I’ll examine the proposals in more detail and argue why. But for today it’s worth dwelling on this resistance, and attempting to understand its provenance. Cambridge is an otherwise liberal, progressive, pro-industry town with a lot of science, technology, cycling infrastructure, and a world-class university. This instinctual caution is, at first blush, an uncomfortable bedfellow.

A culture of preservation

…until you look at the history, and you realise that resistance to development in Cambridge is a long, noble, and codified tradition.

When, in 1948, Holford and Wright were invited by Cambridgeshire County Council to prepare a local plan for Cambridge, they entered a city poised for growth and expansion. The population of Cambridge had grown to around 86,000 in the city and an additional 17,600 in neighbouring villages, an increase of some 24 per cent between 1931 and 1948. 

The planners were brought in, it seems all too clear, to stop it:

We believe that a rapid growth is likely to continue, and even to accelerate, unless special effort is made to prevent it. This effort seems to us both nationally and locally desirable … That there should be a resolute effort to slow down migration into the Cambridge district, and to reduce the high rate of growth so that future population should not greatly exceed present figures, is our first and main proposal and permeates all others.

A lot of what the original plan was concerned with was traffic congestion; it makes up close to half of the total plan. In particular, they are concerned with what the authors call the “spine road”, the road that begins in the north as Huntingdon Road and runs through town, over the Cam as Bridge St, changing its name three more times before emerging as Hills Road in the south. But much of the focus is also on land preservation, resisting industrial encroachment, some small development on the outskirts (eg Milton) and keeping density low and commercial activity to a minimum.

This plan was not imposed from above by some planners errant; Holford’s team was financed by the Cambridgeshire County Council and the work was mostly done from within the council’s planning department. It was prepared for, funded by, and embraced by the council. Its proposals relating to size were accepted by the committee when discussing the report:

The Committee were unanimously agreed on the necessity for limiting the growth of Urban Cambridge and accepted the Consultants’ proposals that endeavours be made by the Planning Authority to reduce the rate at which Cambridge is growing to reach a stable population figure of about 100,000 in the Borough and 120,000 - 125,000 in Urban Cambridge.

And in the eventual development plan, published in 1952:

The basic proposals of the County Council are:

(a) That Cambridge should romain predominantly a University town

(b) To reduce the rate at which the City is growing and to stabilise the population within the Town Map Area at not more than about 100,000 persons.

It also didn’t come out of nowhere; the preceding regional plan from 1934 makes reference to the “encroaching industrial developments” and the need to “guarantee this supremacy [of the college buildings]”. There was a clear understanding of the distinctive character of Cambridge, and the threat that industrialisation of the Fens posed.

It therefore doesn’t seem unreasonable to think that, in 1950, the County Council got what it always wanted: a plan expressive of a deeply conservative vision for what Cambridge ought to be. One that was regimented into the standard logic of preserving local character and protecting historical significance, something that becomes even clearer when we see how the plan was implemented. The Council, on recommendation from the Committee, agreed to:

• seek “the support of the Ministry of Town and Country Planning and the Board of Trade be sought in diverting new mass production industry or large extensions of existing factories to sites outside Urban Cambridge”;

• ask “Central Government Departments … to assist in reducing their demands on the Cambridge labour market”

• and, finally, ask “the University and the Ministry of Town and Country Planning … to assist in examining methods whereby the rapid growth of the town can be checked”

This was a plan that was wanted, and the commitment to curtailing the population growth of the town was kept. The net result, 71 years later, is that Cambridge now has a population of some 146,000, just under a 70% increase, or roughly 0.75% population growth each year. Holford’s target has been overshot, of course, but, in absolute terms, not by much. Even to this day, the Cambridge green belt is still justified as helping “to preserve the unique character of Cambridge as a compact, dynamic city with a thriving historical centre”.

The speculative case for planning success, then, is that Holford’s prescriptions were crucial to the success of the University. Thus the key rationale for Holford’s conclusions: if the University were to grow, then it would need the space to grow into. The expansion of university buildings, especially the sorts of large scientific laboratories that the University, with its renewed emphasis on the natural sciences, would have to come at the cost of either a restricted population or the walkable local character and agglomeration effects beneficial to collegiate life. Holford, the University, the city and county councils, and the relevant Westminster departments, all chose the former. Without these protections, the argument goes, Cambridge would be a much less successful university, and city, than it is today.

But this feels like motivated reasoning. As we will see, Cambridge’s economy has been driven by the tech and biomedical startups that are spillovers from the University. The recruitment power for any academic institution is driven overwhelmingly by academic prestige and the availability of funding, not the local character of the town it sits within nor per se how walkable it is (though we’ll discuss that in part 2). It seems hard to imagine how a Cambridge 30% bigger (approximately the same size as Oxford), say, would lose enough of what makes it special to erode the prestige associated with 121 Nobel prizes.

It’s also hard to imagine that newer University buildings, such as the West Cambridge site, could not have found other locations within a reasonable travel time. Here, for instance, is the 20 minute cycling radius from King’s College:

It stretches well into the neighbouring villages, and one imagines specific routes could go further still with dedicated cycle lanes and better bus infrastructure. And, at any rate, Cambridge could be quite a bit denser by building higher rather than building further out. (As it happens, the colleges and university already owned much of the land to the west of the city anyway, so it’s likely it would always have been built there.)

None of this is to say that there aren’t benefits to the university being concentrated within the town, and having access to grow and expand its facilities. There obviously are – agglomeration effects are one of the main reasons why I support greater densification of Cambridge and elsewhere. It simply seems unrealistic to assume that the non-Holford counterfactual results in a Cambridge with substantially retarded growth and a university with significantly less prestige. Especially given that the primary level of organisational infrastructure in Cambridge is the college, an institution explicitly designed to agglomerate; and the colleges certainly weren’t going anywhere.

So if it isn’t the planning that drove the economic success of modern Cambridge, what was it? In order to understand Cambridge, you need to understand its university.

The University of Cambridge, Science, and the Modern Cambridge Economy

The University of Cambridge took its modern shape in the period covering the 1830s - 1880s. Until that point Cambridge, like Oxford, had been predominately an ecclesiastical institution, training boys for entrance to the clergy. Between 1831 and 1840, fully a third of the matriculating Cambridge graduates were to be ordained as ministers in the Anglican Church.

Then a series of changes occurred that altered the university’s path quite radically. Pressure from a rapidly urbanising society, and a colonial infrastructure at the height of its powers, drove a greater need for administrators, teachers, civil servants, and other professionals. The ban on dissenters and nonconformists was revoked in 1856, as was the requirement that teaching staff be celibate and within the holy orders. The University was forced to introduce new professorships, libraries and lecture rooms to meet the challenge posed by the recently emerging redbrick universities in London, Manchester, Birmingham and Liverpool. This gradually began to introduce the thinking that the University could help prepare individuals for government and industry, rather than just the Church.

But it was the expansion of the natural sciences that truly gave Cambridge the edge it enjoys today. The mathematical tradition, strong in Cambridge at least since the Lucasian Professorship was established in the 1660s, proved to be a robust foundation for the teaching of the natural sciences. Cambridge offered scholarships for mathematics and the physical sciences, whereas Oxford offered none. The Natural Sciences Tripos were first introduced in 1848, and, perhaps importantly, the Cavendish Laboratory was founded in 1870. This lead to a chair in experimental physics in 1873, and from there the reputation of science in Cambridge, especially physics, was very strong; by 1937, nine cantabs had won the Nobel Prize in Physics. World War II compounded these advantages, by shifting resources over to research into radar, radioactivity, and other areas of applied physics valuable to the war effort. This research produced a plethora of new technologies, many of which were responsible for the shape and texture of the modern world, as well as the institutional knowledge and global expertise at how to develop and deploy them.

Which meant that by the time the personal computing revelation came around, Cambridge had the intellectual resources to capitalise. Herman Hauser, for instance, played a pivotal role in the founding of Acorn Computers in the late 1970s, a company responsible for pioneering home computing in the UK with machines like the Electron and BBC Micro. Acorn spun out ARM, which evolved into a global leader in microprocessor intellectual property, its designs powering billions of devices worldwide.

And that is just one story among many. Cambridge is full of similar companies, adjacent to the University, or attracted there because of it: Pye, Sinclair, CSR, Sepura, Microsoft Research, WorldPay, Red Gate, the games developer Jagex, the aerospace manufacturer Marshall’s, biotech companies Amgen, AstraZeneca, Napp, Bayer, and many many more all based a significant part of their UK operations or R&D from the city. Science, Engineering and Research professionals now make up roughly 20% of the workforce.

And so we can start to see a strange paradox emerge. A booming and buoyant commercial sector, a vibrant start-up ecosystem, a highly productive university and a stream of exceptional graduates ready to participate in the workforce on the one hand. A planning culture of caution, conservatism, maintaining local character, strict adherence to the Green Belt and the distinctness of settlement boundaries on the other.