Brickonomics

London Mayor Ken Livingstone is quoted in today’s Local Government Chronicle (not online) as claiming that councils’ reluctance to endorse housebuilding schemes is pushing up London house prices. “Someone”, he says, “has to take an overall, London-wide overview”. I wonder if he has anyone in mind?

Ken’s obviously got a vested interest in taking power from the councils, but figures from his own statisticians undermine his claim that they’re holding back housing development in London. Chart 5.6 in this part of the evidence base for the 2005 London Housing Strategy says that while housebuilding is relatively low in historical terms in London at the moment, this is entirely down to the collapse in construction by local authorities, which is due to the central government cutting back on funding and restricting their borrowing power. In fact, the most recent year (2003/04) saw the most units of private housing completed since records began in 1970.

And that’s not all – figures from the Mayor’s 2005 Housing Provision Survey show (in Table 1, if you can read it) that in the last two years London councils granted planning permission for a net additional 90,000 units of housing, which compared to current supply (arguably already quite high, as mentioned above) doesn’t look much like NIMBYism to me.

The Mayor’s remarks raise another question, though. He wants the power to approve bigger ’strategic’ housing schemes (over 200 units) even (maybe especially) over the opposition of local councils, and therefore local residents. There is a clear argument in favour of this – why should residents in one part of London be able to veto a development that could benefit the whole city for years to come? But at the same time, why should the Mayor, who after all won’t have to deal with any negative consequences from his river-side HQ, be able to force through a development which a local council may have rejected for sound planning purposes? How should we resolve these kinds of disputes? Economists of a Coasian persuasion might favour government butting out and interested parties negotiating a solution involving compensatory payments, but are invited to outline how that theory applies to, say, an application to build 500 homes on greenfield in leafy Bromley.