An essentially valuable aims of the planning system have been subverted by its inheritors
The Town and Country Planning Act of 1947 was an epochal change. Today, planning permission seems unremarkable, but the idea of nationalising the right to develop land was (and remains) one of the most radical moves in British economic history. Until the TCPA, land ownership and development rights were one and the same; today, obtaining development permission is a continuous source of friction for just about every form of economic activity.
Rightfully, the most insightful economic liberals and libertarians in Britain have identified the TCPA and its successor acts as the true “original sin” in their vision of British economic history. With the TCPA, wartime expediencies were extended into peacetime for perpetuity.
With today’s system, it’s hard to argue with them. The planning system has largely devolved into an exercise in bureaucracy and paperwork, with an intricate ecosystem of rent-seeking lawyers and surveyors sucking the blood out of just about any attempt to build a thing. As a result, housebuilding is now an oligopoly, and manufacturing base expansion has been stagnant for decades.
Perhaps most frustratingly, the “democratic oversight” the system provides has given an excuse for busybodies, histrionics, and losers of all stripes to arbitrarily block development based on nebulous “community” concerns. Whether it be safe disposal of nuclear waste, railways, water reservoirs, or a simple back garden housing extension, the TCPA has created a system where the lazy, ill-educated, and entitled can veto development — regardless of whether their position is well-founded or not.
However, it’s key to understand that this system was not the natural or planned outcome of the TCPA. Rather, the TCPA represents in many ways a squandered opportunity. It was supposed to be a mechanism to turbocharge Britain’s growth and resilience in the postwar era.
It’s a mistake to understand British planning laws as humanitarian or proto-socialist
To understand why, we first must understand the genesis of the 1947 TCPA. It was not just a sudden creation of the Attlee Ministry. It was the culmination of quite a lot of interwar and wartime trends among the British policy elite. Some of its most significant intellectual heavy lifting had been done by the Barlow Report, which had been commissioned back in 1937 as one of the first initiatives of the Chamberlain Ministry. And that in turn was inspired by the reports for the Commissioners for Special Areas that had been created during the Depression.
It’s a mistake to understand British planning laws as humanitarian or proto-socialist. While much of their retail value lay in items like slum clearance and enabling the New Towns, their true economic rationale was cold and strategic.
Ever since Lloyd George stemmed the Shell Crisis of 1915, we had realised that victory in modern warfare was largely a function of wartime production. But wartime production is unsustainable indefinitely, which means that it requires the conversion of civilian industries to military industries — and the speed of this conversion is what wins wars. But industry is non-fungible: you can’t quickly convert textile mills into chemical plants.
This means that your civilian industrial base needs to be rationalised. You need domestic coverage of strategic industries, elimination of single points of failure in logistics networks and supply chains, and the information to be able to issue instructions to that base if you need to militarise.
But this is in tension with the “natural” profit motive. Capital owners want to get the best return they can, and this can be found by taking advantage of urban agglomeration effects. And when you throw in via free trade the tendency towards Ricardian comparative advantage, that also means entire strategic industrial capabilities may wither away domestically.
Even beyond military-strategic considerations, there is also the fact that by the mid-1900s it was clear we were moving to a new phase of industrial development. Many modern, capital-intense industrial processes demand almost by design multi-decade coordination between capital, labour, and state to ensure infrastructure is in place, workers are educated properly, and that informal routines/processes are in place. But this requires that you reserve land for decades in advance for potential new industries and industrial clusters to realise these opportunities (not to mention the non-land planning considerations like ensuring insulation from foreign competition while they grow).
And, once again, this is subject to a coordination problem. Profit motives for individual firms — especially if they happen to exist in public markets — can be at odds with these concerns, with numerous innovation-heavy industries facing pre-commercial “valleys of death” before they reach profitability. By providing a clear roadmap for the coordination of capital and labour, Britain’s planning system was designed to resolve this challenge while maintaining the viability of private enterprise and the profit motive.
This system, however, demanded that the planners and strategists at the centre develop a plan. By design, the TCPA’s success required the government to adopt a multi-year economic planning function.
One of the few people to realise this was Stafford Cripps, the Minister of Aircraft Production between 1942 and 1945. Just two months after the TCPA came into force in July 1947, Cripps was promoted to lead the department that was supposed to engage in the required planning function: the Department of Economic Affairs.
However, Cripps was a victim of his own success. He was made Chancellor shortly after his appointment, and in effect merged the role of Chancellor with his role as Minister for Economic Affairs. This proved to be a mistake, with the short-term political pressures of fiscal policy preventing the formation of an overall economic plan. While Cripps was one of the few people in the British state to truly grasp the nature of the architecture required to make the TCPA work, he was unable to make it take root.
As his health broke down in 1950, succession of the Economic Affairs brief and then the Chancellorship was taken up from Cripps by Hugh Gaitskill. Unfortunately, Gaitskill’s preference for micromanagement and his feud with Aneurin Bevan meant that he squandered his opportunity to build on Cripps’s work.
After winning in 1951, then, the stage had been set for the Conservatives to launch the processes that ultimately would turn the TCPA into a farce. The Conservatives let the Department of Economic Affairs wither, and while they nominally maintained the principles of the postwar consensus — particularly high levels of public investment — they rejected the idea of it happening on a planned basis.
Instead, they established what would become the infamous “stop-go” cycle of postwar economic management: they’d indiscriminately invest in a range of one-off projects or cut taxes to encourage a short-term consumption boom, experience a few quarters of growth, then turn off the taps once the subsequent inflation depleted the foreign exchange reserves.
Critically, however, the Conservatives did not abolish the TCPA. Instead, in 1954, they made a subtle and cynical change.
The 1947 TCPA was written in the knowledge that planning permission would increase the value of land. To ensure that farming this premium would not create an industry — after all, planning permission is not actually a productive transformation of land, but a bureaucratic fiction — it was clear that this value uplift would need to be taxed to ensure it didn’t represent a wealth transfer from the general public to landowners. This came in the form of a “development charge” in the 1947 TCPA, a 100 per cent tax on the planning gain.
In 1954, the Conservatives removed the development charge. This created the foundation of a long-term alliance between the Tories and the inevitable oligopoly of land owners and property developers that arose — the financial basis for the long-term survival of the party. To cement this, the Conservatives embarked on a campaign to transform the TCPA from an instrument of socialist overreach to a patriotic tool to prevent the spoilage of the natural environment: this was cemented via a circular by the government in 1955 to all local planning authorities, asking that they all adopt the still-novel idea of a green belt around their land.
In a few strokes, the Conservatives had defanged the TCPA as a tool of economic planning and instead turned into a generational tool for the party’s finances and self-image. By the time the Wilson government took over in the 1960s, it was likely too late to correct course. While attempts were made to reestablish the Department of Economic Affairs and multi-year strategic affairs, the competition between this new department and a jealous Treasury proved too much to make it viable. The idea of government planning was dead, and the TCPA itself had become synonymous instead with vague ideas of provincial democracy and rural preservation.
In the end, the worst of all worlds has been chosen
The TCPA was supposed to be a tool for Britain to escape the postwar trap it ended up falling into. Our strategic industries have atrophied, we host few truly modern industries, and our postwar economy has continuously underperformed relative to peers.
In the end, the worst of all worlds has been chosen, with the TCPA used to prop up the very sort of irrational economic management that its authors hoped to stop.
