Planning reform must focus on role of SMEs

A new report calls for changes to the planning system to open up the market and allow better access for small and medium sized companies and to diversify the housing supply.

The Housing Guarantee, published by the Centre for Policy Studies, argues that the top 10 house builders currently build 40 per cent of all new homes, with the top six controlling around 33 per cent of the market.

Facing challenges to obtain land, this means that smaller builders face being squeezed out of the system – falling from building around 40 per cent of homes in the 1980s to around 10 per cent now.

The report sets out three key reforms that the think tank argues must be made to address the systemic failures in the current system and support delivery of more homes. Firstly, changing permissions to delivery contracts based on an agreed timeline. Where house builders cannot deliver this, they would have to pass the land on at an agreed price to local SMEs. This would mean as land came forward for development, it was actually translated into new homes.

Secondly, creating a renewed emphasis on the Housing Delivery Test, ensuring councils are assessed on the basis of numbers of homes built, not on planning permissions granted – and are penalised if they are not delivering for their community. This would increase not just the number of homes built, but their speed, diversity and quality.

Lastly, introducing panels of local house builder SMEs that public sector land is sold to, with challenging delivery targets to ensure the quality and diversity of local housing supply, and support competition within the sector.

Alex Morton, CPS Head of Policy, said: “The government’s planning reforms are very welcome. But we need to focus on delivery and learn from previous attempts to fix England’s housing supply problems. The reforms we are proposing would help create a new, better planning system that focuses on ensuring delivery, working alongside the other proposals government is bringing forward. We have a once-in-a-generation opportunity to fix these issues, and with a Planning Bill under way, now is the time for action.”