Battle for the right to build

News analysis: Clumsy and tortuous local planning laws may cause a housing shortage, claim angry builders

BRITAIN IS AT risk of suffering a housing shortage because the inefficiencies of the planning system are hindering land development, according to the country's major housebuilders.

In the past two weeks most of the industry's big players have use their interim results announcements as an opportunity to launch a barrage of attacks on the planning system. Despite strong finances and optimistic statements about the future, the constant refrain from the bosses of Britain's biggest house builders has been: "We can't build nearly as many houses as we would like because planners won't let us".

Beazer, Bryant, Bovis Homes and Redrow - the companies have lashed out at a planning policy they describe as "bureaucratic", "tortuous", "useless" and "crazy".

Dennis Webb, chief executive of Beazer, the UK's third-largest housebuilder, summed up the mood last week when he called for the scrapping of a planning system plagued by councils' "negative attitude to development". Andrew MacKenzie, the Bryant chief, was no less provocative: planning difficulties were "blighting the whole industry, causing delays in job starts and inhibiting growth in the number of selling outlets."

The builders claim that the inability to develop their bulging landbanks cripples their profits and cash flow. They also warn that the delays will make it impossible to hit the Government's target of 4.4 million new houses by 2016.

They are not alone in singling out planning as the key problem for UK housing policy. Environmental campaigners and planners concede that the planning process is not working properly and needs overhaul. However, they say the builders' protests are driven by self-interest and that construction companies will have to accept that they will never be allowed to develop as much as they want.

The housebuilders' major gripe is the so-called "plan-led" system. Under this, introduced in 1991, local authorities are required to draw up a plan of their area, specifying the use of each plot. In broad terms the local plans separate land between residential and other uses, such as industrial or retail.

The housing shortage problem arises with"brownfield sites" - derelict urban land which used to house factories or schools and therefore designated non-residential. They are the fulcrum of the Government's urban regeneration plans. In a White Paper in February John Prescott, the Deputy Prime Minister, said that about 60 per cent of all new houses should be built on brown land rather than virgin or "greenfield" sites.

Housebuilders then concentrated their land purchases on brownfield sites, in the hope of capitalising on a new housing spree. Industry estimates suggest that more than half of the major players' landbank is now brown land.

To their dismay, they found that getting local authority permission to develop brownfield sites was difficult and time consuming. The main reason is that the areas are designated "non-residential" in local plans and, under the plan-led system, councils need to approve a change of use. Bureaucracy, understaffing and lack of resources mean that neither the builder nor the council know when the application will be processed.

Roger Humber, the chief executive of the House Builders Federation (HBF), the industry body, says it can take up to a year to get the go-ahead. "The typical case is that a housebuilder makes an application which then gets stuck in the system or even chucked out because it is not in the local plan."

Paul Pedley, the managing director of Redrow, believes these delays squeeze land supply and push up prices and, eventually, house prices and inflation. "The whole process is inflationary and goes against the grain of the Government's economic policies."

But the effects go deeper. To meet the Government's target of 4.4 million new dwellings between 1991 and 2016, the private sector needs to build 175,000 houses a year. As the table show, it is already lagging behind, averaging less than 150,000 between 1991 and 1997.

"If we carry on like this there is no way the Government will meet its twin goals of 4.4 million new houses, 60 per cent on brownfield sites. People won't have the houses they need," says one builder.

It is estimated that between 75,000 and 100,000 permissions are stuck in the planning system. Housebuilders say a more efficient planning process would clear the logjam. This is why the HBF is planning to launch a campaign at the end of the month to press for a "fast-track'' channel for approvals.

Planners vigorously reject the idea. David Rose, of the Royal Town Planning Institute, the planners' professional body, says: "Fast-track sounds wonderful, but what does it actually mean? Does it mean that when a brownfield site application comes in, every other application falls to the bottom of the pile?

"The housebuilders have got to understand in very big letters that it is not the planning system's task to get as many developments as they want as soon as possible. There are many competing needs."

Mr Rose says housebuilders are blaming planners for their own shortcomings. "It looks to me that they are looking for scapegoats and laying down markers for their poor performance next year." He acknowledges that planning is slow, but says there is a need for a government-led review rather than a piecemeal solution.

The Government says it is looking at ways to speed up the process and is consulting with a number of parties. But in the meantime, the battle of the land between housebuilders and planners goes on.