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Yahoo
09-03-2025
- Business
- Yahoo
How Britain surrendered to a plague of ugly new homes
Have you found Britain's ugliest new-build estate? Let us know in the comments or send photos via the form below. Shapeless masses of bright orange bricks, pockmarked by tiny windows. Little boxes that sandwich neat squares of lawn, often artificial, permeated by flimsy fencing that looks like it would lose in a fight with a gust of wind. You've probably seen them in a hollowed-out field, out of the window on a train journey, or driving past a new site that has mushroomed near your town. Britain is surrendering its landscape to a plague of unsightly new homes. If the glut of houses popping up in their hundreds of thousands on housing estates up and down the country are not built to your tastes, you are not alone. In 2020, the Government funded a report to tackle the epidemic of ugly, new buildings. It said: 'We naturally aim for beauty in our everyday lives and many people are puzzled that we seem to have lost the art of creating beauty in our built environment. All around us, we see ugly and unadaptable buildings, decaying neighbourhoods and new estates that spoil some treasured piece of countryside or are parasitic of existing places, not regenerative of them. 'Clearly, we must change the incentives. Beauty must become the natural result of working within our planning system.' Five years on, it is difficult to argue that the report has had much of an impact. And that is salient, given the Government has set a target of building 1.5 million homes before the next election in 2029. Homebuyers are showing their disdain. Research from insurer GoCompare found that 80pc of first-time buyers opted for an older property. The number of new-build properties sold subject to contract dropped by 24pc in 2024 compared with 2019, according to data by analytics firm TwentyCi – in part due to the withdrawal of the Help to Buy scheme. As a percentage of UK home purchases, new-build sales have also fallen for a third year running: in 2024, it stood at 10pc, down from 14pc in 2021, according to solicitors Bird and Co. So what is going on? And what can the Government do to try to push them in a better direction? The chokehold in which a certain type of design Britain's new-build industry finds itself can, in part, be attributed to cost. 'Although it is possible to make beautiful buildings out of concrete, plastic, steel and extruded brick, the cheapest building in these materials is probably ugly,' says Samuel Hughes, of think tank Centre for Policy Studies, which contributed to the 2020 report on building more beautiful homes. 'The cheapest building in timber, handmade brick and stone is probably still fairly attractive. Utilitarian buildings are naturally ugly now in a way they wouldn't have been in the 18th century. '[Back then], the cheapest possible building would be made of hand-moulded brick, lime mortar and Welsh slate. The cheapest possible building today would probably be made of breeze blocks and corrugated plastic. Working with traditional materials meant you got something fairly attractive almost automatically. Working with modern materials means we have to be a lot more proactive if we are to build beautiful places.' Developers are now working to a much lower price point of the market than they were in, for example, the Regency era, when they were mostly building for the middle and upper classes. 'This means there is less money available to build to a high spec,' he adds. Britain's housebuilding market is also an oligopoly, meaning a small number of firms dominate the supply, and are ultimately able to dictate the status quo regarding the style of new homes. Small and medium-sized developers built 10pc of new homes in 2020, down from 39pc in 1988, according to a report from the House of Lords built environment committee. 'We are reliant on too few major housebuilders, so there isn't a great deal of competition and housing is a scarce good. Beggars can't be choosers,' says Paula Higgins, of HomeOwners Alliance. An ongoing housing crisis also means that developers are not punished for building less desirable homes, says Ike Ijeh, of think tank Policy Exchange. 'The harsh reality is that developers don't need to build homes of exceptional quality to sell them, because we have a restricted supply of homes. Every bit of supply is likely to be sold, so it is not necessary for developers to invest in quality. 'Something we will see when the housing crisis does subside, hopefully, is an up-tick in quality and beauty, as buyers can afford to be more picky.' Ultimately, developers are businesses, and must factor in profit when designing homes, especially to meet the demand from government targets. Faced with the soaring cost of land, this can mean sacrifices, explains Anthony Codling, of investment bank RBC Capital Markets. 'If I'm a developer, I'm answerable to shareholders – what I build has to generate returns so I can buy more land and build more homes. 'Housebuilders look at a bunch of fields that they want to buy and they look at what is around, they look at demographics and demand. They ask what is the housing need within that local authority and try to match what they believe the market demand is. They know what price these homes sell for and they know what profit they want to make.' The way property is priced in the UK is partly to blame for the boxy look that characterises many of Britain's new homes, Ms Higgins adds. 'One of the problems is that we price houses based on the number of bedrooms, whereas in other countries its square metres. So this is why we get a boxy room that counts as a third bedroom.' As for infuriatingly tiny windows, buyers of new homes have a Kafkaesque regulatory nightmare to thank. 'The logic was perverse,' says Nicholas Boys Smith, of think tank Create Streets. 'The idea is that because of global warming, people will open windows more because of the heat, which will mean children fall out of windows more.' He adds: 'Under the last government, officials snuck through changes to Part O building regulations that mean it is more expensive to make windows that are not tiny on the first floor or above. There are workarounds, but they tend to only get deployed in more expensive areas.' It is still possible to build beautiful homes on a budget, says Mr Ijeh. 'There is a really strong perception among developers that building beautiful homes costs more, but this is a myth. We think of beauty and we think of palaces, Georgian townhouses. But it's a misunderstanding of what beauty is. There are all manner of developments that have had lots of money spent on them but are unremittingly ugly. Equally, there are lots of things that we can do to make buildings more beautiful that don't cost lots of money.' More broadly, Mr Ijeh attributes changes in building trends to wider cultural shifts. 'There has been a general erosion of the idea of beauty and aesthetics, that these things matter. That's not just in housebuilding, but in public buildings, too. There's been a general ideological shift away from beauty for its own sake.' Ms Higgins adds: 'One reason we don't have nicely designed houses [is that] the volume developers tend not to use architects. They get a classic house and build it over and over again.' Some developers do build higher-quality new-build homes, proving a better standard is possible. Spitfire Homes, for example, builds properties that have thatched roofs. Councils, if they so choose, can create and enforce a local design code, based on the preferences and needs of their local communities, explains Mr Boys Smith. 'It can be done very cheaply, and gives councils a non-challengeable right to tell developers that if they are building there, they have to do it in a certain way. For example, that can be in terms of building materials, a certain roof angle, window requirements, how parking is handled. 'Any council that wants to care about this can. There remain some challenges: some architects and developers are trying to convince councils that this is expensive, but it is nonsense – it can be done for thousands of pounds. It's very easy to poll what people like, and put codes in for it.' Another key aspect of new-build housing estates that people find off-putting is how they are set out. 'The density of development really, really matters,' Mr Boys Smith explains. 'It's not just that the buildings look wrong – bright orange bricks in the middle of Oxfordshire – but they tend to be far more spaced out than older villages tend to be. Corners are more splayed, roads are wider, houses are further apart, driveways are larger. 'If the design is done well, houses can be brought closer together and people actually prefer it. It's easier if people live closer to each other to have a pub or station or park within walking distance. It's called gentle density.' The town of Poundbury, Dorset, developed by the Duchy of Cornwall, has gained a reputation for its traditional architectural style. 'Houses in Poundbury are selling at a 55pc premium over comparable developments,' says Mr Boys Smith. 'Everything is a bit closer together there, with fewer detached houses, smaller streets. It's a real place, and less of a soulless estate. It's not just houses – people don't want to live somewhere that is made up of just houses.' Both Mr Ijeh and Mr Boys Smith lay part of the blame at the door of Britain's planning system, which is discretionary, meaning each application is reviewed individually. This makes it much more difficult to push through positive, innovative change. 'There is a failure in the planning system to recognise and demand quality,' says Mr Ijeh. 'If we did demand that there would be no more orange boxes, we may have even less housing than we have now, which is difficult to politically justify. But too much substandard housing has passed through the net. 'It's very important that we build the number of homes that we need. But we know from the 1960s and 1970s, when we built a huge number of homes, that some of those homes were substandard. They didn't work, they're not desirable, and lots of them are being torn down now. There is no point building our way out of the housing crisis if these new homes don't have quality.' But Mr Codling argues that even if the style of new homes is not broadly popular, it doesn't mean they should not be built – and that it is not straightforward for councils to demand change overnight. 'Developers only need a certain percentage of people to like the homes, as they know they will buy them anyway. If these houses weren't selling, developers would change the look and feel of them. Bentleys are better than Ford Focuses – but it wouldn't make sense to just build Bentleys. 'Ultimately, developers build what they get planning permission to build. Regulations on heat loss, ventilation ... this all impacts how homes look and feel. Councils can't just turn around and demand that developers only build Georgian town houses; it would not be fair to change the planning rules after developers have bought land for a certain price.' Broaden your horizons with award-winning British journalism. 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Telegraph
09-03-2025
- Business
- Telegraph
How ugly new-builds took over Britain
Have you found Britain's ugliest new-build estate? Let us know in the comments or send photos via the form below. Shapeless masses of bright orange bricks, pockmarked by tiny windows. Little boxes that sandwich neat squares of lawn, often artificial, permeated by flimsy fencing that looks like it would lose in a fight with a gust of wind. You've probably seen them in a hollowed-out field, out of the window on a train journey, or driving past a new site that has mushroomed near your town. Britain is surrendering its landscape to a plague of unsightly new homes. If the glut of houses popping up in their hundreds of thousands on housing estates up and down the country are not built to your tastes, you are not alone. In 2020, the Government funded a report to tackle the epidemic of ugly, new buildings. It said: 'We naturally aim for beauty in our everyday lives and many people are puzzled that we seem to have lost the art of creating beauty in our built environment. All around us, we see ugly and unadaptable buildings, decaying neighbourhoods and new estates that spoil some treasured piece of countryside or are parasitic of existing places, not regenerative of them. 'Clearly, we must change the incentives. Beauty must become the natural result of working within our planning system.' Five years on, it is difficult to argue that the report has had much of an impact. And that is salient, given the Government has set a target of building 1.5 million homes before the next election in 2029. Homebuyers are showing their disdain. Research from insurer GoCompare found that 80pc of first-time buyers opted for an older property. The number of new-build properties sold subject to contract dropped by 24pc in 2024 compared with 2019, according to data by analytics firm TwentyCi – in part due to the withdrawal of the Help to Buy scheme. As a percentage of UK home purchases, new-build sales have also fallen for a third year running: in 2024, it stood at 10pc, down from 14pc in 2021, according to solicitors Bird and Co. So what is going on? And what can the Government do to try to push them in a better direction? Orange boxes with tiny windows The chokehold in which a certain type of design Britain's new-build industry finds itself can, in part, be attributed to cost. 'Although it is possible to make beautiful buildings out of concrete, plastic, steel and extruded brick, the cheapest building in these materials is probably ugly,' says Samuel Hughes, of think tank Centre for Policy Studies, which contributed to the 2020 report on building more beautiful homes. 'The cheapest building in timber, handmade brick and stone is probably still fairly attractive. Utilitarian buildings are naturally ugly now in a way they wouldn't have been in the 18th century. '[Back then], the cheapest possible building would be made of hand-moulded brick, lime mortar and Welsh slate. The cheapest possible building today would probably be made of breeze blocks and corrugated plastic. Working with traditional materials meant you got something fairly attractive almost automatically. Working with modern materials means we have to be a lot more proactive if we are to build beautiful places.' Developers are now working to a much lower price point of the market than they were in, for example, the Regency era, when they were mostly building for the middle and upper classes. 'This means there is less money available to build to a high spec,' he adds. Big housebuilders dominate Britain's housebuilding market is also an oligopoly, meaning a small number of firms dominate the supply, and are ultimately able to dictate the status quo regarding the style of new homes. Small and medium-sized developers built 10pc of new homes in 2020, down from 39pc in 1988, according to a report from the House of Lords built environment committee. 'We are reliant on too few major housebuilders, so there isn't a great deal of competition and housing is a scarce good. Beggars can't be choosers,' says Paula Higgins, of HomeOwners Alliance. An ongoing housing crisis also means that developers are not punished for building less desirable homes, says Ike Ijeh, of think tank Policy Exchange. 'The harsh reality is that developers don't need to build homes of exceptional quality to sell them, because we have a restricted supply of homes. Every bit of supply is likely to be sold, so it is not necessary for developers to invest in quality. 'Something we will see when the housing crisis does subside, hopefully, is an up-tick in quality and beauty, as buyers can afford to be more picky.' Ultimately, developers are businesses, and must factor in profit when designing homes, especially to meet the demand from government targets. Faced with the soaring cost of land, this can mean sacrifices, explains Anthony Codling, of investment bank RBC Capital Markets. 'If I'm a developer, I'm answerable to shareholders – what I build has to generate returns so I can buy more land and build more homes. 'Housebuilders look at a bunch of fields that they want to buy and they look at what is around, they look at demographics and demand. They ask what is the housing need within that local authority and try to match what they believe the market demand is. They know what price these homes sell for and they know what profit they want to make.' The way property is priced in the UK is partly to blame for the boxy look that characterises many of Britain's new homes, Ms Higgins adds. 'One of the problems is that we price houses based on the number of bedrooms, whereas in other countries its square metres. So this is why we get a boxy room that counts as a third bedroom.' As for infuriatingly tiny windows, buyers of new homes have a Kafkaesque regulatory nightmare to thank. 'The logic was perverse,' says Nicholas Boys Smith, of think tank Create Streets. 'The idea is that because of global warming, people will open windows more because of the heat, which will mean children fall out of windows more.' He adds: 'Under the last government, officials snuck through changes to Part O building regulations that mean it is more expensive to make windows that are not tiny on the first floor or above. There are workarounds, but they tend to only get deployed in more expensive areas.' 'Building it over and over again' It is still possible to build beautiful homes on a budget, says Mr Ijeh. 'There is a really strong perception among developers that building beautiful homes costs more, but this is a myth. We think of beauty and we think of palaces, Georgian townhouses. But it's a misunderstanding of what beauty is. There are all manner of developments that have had lots of money spent on them but are unremittingly ugly. Equally, there are lots of things that we can do to make buildings more beautiful that don't cost lots of money.' More broadly, Mr Ijeh attributes changes in building trends to wider cultural shifts. 'There has been a general erosion of the idea of beauty and aesthetics, that these things matter. That's not just in housebuilding, but in public buildings, too. There's been a general ideological shift away from beauty for its own sake.' Ms Higgins adds: 'One reason we don't have nicely designed houses [is that] the volume developers tend not to use architects. They get a classic house and build it over and over again.' It doesn't have to be like this Some developers do build higher-quality new-build homes, proving a better standard is possible. Spitfire Homes, for example, builds properties that have thatched roofs. Councils, if they so choose, can create and enforce a local design code, based on the preferences and needs of their local communities, explains Mr Boys Smith. 'It can be done very cheaply, and gives councils a non-challengeable right to tell developers that if they are building there, they have to do it in a certain way. For example, that can be in terms of building materials, a certain roof angle, window requirements, how parking is handled. 'Any council that wants to care about this can. There remain some challenges: some architects and developers are trying to convince councils that this is expensive, but it is nonsense – it can be done for thousands of pounds. It's very easy to poll what people like, and put codes in for it.' Another key aspect of new-build housing estates that people find off-putting is how they are set out. 'The density of development really, really matters,' Mr Boys Smith explains. 'It's not just that the buildings look wrong – bright orange bricks in the middle of Oxfordshire – but they tend to be far more spaced out than older villages tend to be. Corners are more splayed, roads are wider, houses are further apart, driveways are larger. 'If the design is done well, houses can be brought closer together and people actually prefer it. It's easier if people live closer to each other to have a pub or station or park within walking distance. It's called gentle density.' The town of Poundbury, Dorset, developed by the Duchy of Cornwall, has gained a reputation for its traditional architectural style. 'Houses in Poundbury are selling at a 55pc premium over comparable developments,' says Mr Boys Smith. 'Everything is a bit closer together there, with fewer detached houses, smaller streets. It's a real place, and less of a soulless estate. It's not just houses – people don't want to live somewhere that is made up of just houses.' 'If these homes weren't selling, developers wouldn't build them' Both Mr Ijeh and Mr Boys Smith lay part of the blame at the door of Britain's planning system, which is discretionary, meaning each application is reviewed individually. This makes it much more difficult to push through positive, innovative change. 'There is a failure in the planning system to recognise and demand quality,' says Mr Ijeh. 'If we did demand that there would be no more orange boxes, we may have even less housing than we have now, which is difficult to politically justify. But too much substandard housing has passed through the net. 'It's very important that we build the number of homes that we need. But we know from the 1960s and 1970s, when we built a huge number of homes, that some of those homes were substandard. They didn't work, they're not desirable, and lots of them are being torn down now. There is no point building our way out of the housing crisis if these new homes don't have quality.' But Mr Codling argues that even if the style of new homes is not broadly popular, it doesn't mean they should not be built – and that it is not straightforward for councils to demand change overnight. 'Developers only need a certain percentage of people to like the homes, as they know they will buy them anyway. If these houses weren't selling, developers would change the look and feel of them. Bentleys are better than Ford Focuses – but it wouldn't make sense to just build Bentleys. 'Ultimately, developers build what they get planning permission to build. Regulations on heat loss, ventilation ... this all impacts how homes look and feel. Councils can't just turn around and demand that developers only build Georgian town houses; it would not be fair to change the planning rules after developers have bought land for a certain price.'
Yahoo
03-03-2025
- Business
- Yahoo
How the British Broke Their Own Economy
What's the matter with the United Kingdom? Great Britain is the birthplace of the Industrial Revolution, which ushered in an era of energy super-production and launched an epoch of productivity advancements that made many life essentials, such as clothes and food, more affordable. Today, the country suffers from the converse of these achievements: a profound energy shortage and a deep affordability crisis. In February, the Bank of England reported an ongoing productivity slump so mysterious that its own economists 'cannot account fully' for it. Real wages have barely grown for 16 years. British politics seems stuck in a cycle of disappointment followed by dramatic promises of growth, followed by yet more disappointment. A new report, titled 'Foundations,' captures the country's economic malaise in detail. The U.K. desperately needs more houses, more energy, and more transportation infrastructure. 'No system can be fixed by people who do not know why it is broken,' write the report's authors, Sam Bowman, Samuel Hughes, and Ben Southwood. They argue that the source of the country's woes as well as 'the most important economic fact about modern Britain [is] that it is difficult to build almost anything, anywhere.' The nation is gripped by laws and customs that make essentials unacceptably scarce and drive up the cost of construction across the board. Housing is an especially alarming case in point. The homeownership rate for the typical British worker aged 25 to 34 declined by more than half from the 1990s to the 2010s. In that same time, average housing prices more than doubled, even after adjusting for inflation, according to the Institute for Fiscal Studies. [Read: How the U.K. became one of the poorest countries in Western Europe] The housing shortage traces back to the postwar period, when a frenzy of nationalization swept the country. The U.K. created the National Health Service, brought hundreds of coal mines under state control, and centralized many of the country's railways and trucking and electricity providers. In 1947, the U.K. passed the Town and Country Planning Act, which forms the basis of modern housing policy. The TCPA effectively prohibited new development without special permission from the state; 'green belts' were established to restrict sprawl into the countryside. Rates of private-home building never returned to their typical prewar levels. With some spikes and troughs, new homes built as a share of the total housing stock have generally declined over the past 60 years. The TCPA was considered reasonable and even wise at the time. Postwar Britain had been swept up by the theory that nationalization created economies of scale that gave citizens better outcomes than pure capitalism. 'There was an idea that if we could rationalize the planning system … then we could build things in the right way—considered, and planned, and environmentally friendly,' Bowman told me. But the costs of nationalization became clear within a few decades. With more choke points for permitting, construction languished from the 1950s through the '70s. Under Prime Minister Margaret Thatcher, the Conservatives rolled back nationalization in several areas, such as electricity and gas production. But their efforts to loosen housing policy from the grip of government control was a tremendous failure, especially once it was revealed that Thatcher's head of housing policy himself opposed new housing developments near his home. Housing is, as I've written, the quantum field of urban policy, touching every station of urban life. Broken housing policies have a ripple effect. In London, Bowman said, the most common options are subsidized flats for the low-income and luxury units for the rich, creating a dearth of middle-class housing. As a result, the city is bifurcated between the über-wealthy and the subsidized poor. 'I think housing policy is a major driver of a lot of anti-foreigner, white-supremacist, anti-Black, anti-Muslim attitudes among young people who are frustrated that so-called these people get free houses while they have to live in a bedsit or move somewhere an hour outside the city and commute in,' Bowman said. [Read: The urban family exodus is a warning for progressives] Constrictive housing policy in Britain has also arguably prevented other great cities from being born. If the University of Cambridge's breakthroughs in biotech had happened in the 19th century, Bowman said, the city of Cambridge might have bloomed to accommodate new companies and residents, the same way Glasgow grew by an order of magnitude around shipbuilding in the 1800s. Instead Cambridge remains a small city of fewer than 150,000 people, its potential stymied by rules all but prohibiting its growth. The story for transit and energy is similar: Rules and attitudes that make it difficult to build things in the world have made life worse for the British. 'On a per-mile basis, Britain now faces some of the highest railway costs in the world,' Bowman, Hughes, and Southwood write. 'This has led to some profoundly dissatisfying outcomes. Leeds is now the largest city in Europe without a metro system.' Despite Thatcher's embrace of North Sea gas, and more recent attempts to loosen fracking regulations, Britain's energy markets are still an omnishambles. Per capita electricity generation in the U.K. is now roughly one-third that of the United States, and energy use per unit of GDP is the lowest in the G7. By these measures, at least, Britain may be the most energy-starved nation in the developed world. Scarcity is a policy choice. This is as true in energy as it is in housing. In the 1960s, Britain was home to about half of the world's entire fleet of nuclear reactors. Today, the U.K. has extraordinarily high nuclear-construction costs compared with Asia, and it's behind much of Europe in the share of its electricity generated from nuclear power—not only France but also Finland, Switzerland, Sweden, Spain, and Romania. What happened to British nuclear power? After North Sea oil and gas production ramped up in the 1970s and '80s, Britain redirected its energy production away from nuclear power. Even this shift has had its own complications. In the past few years, the U.K. has passed several measures to reduce shale-gas extraction, citing earthquake risks, environmental costs, and public opposition. As a result, gas production in the U.K. has declined 70 percent since 2000. Although the country's renewable-energy market has grown, solar and wind power haven't increased nearly enough to make up the gap. The comparison with France makes clear Britain's policy error: In 2003, very large businesses in both countries paid about the same price for electricity. But by 2024, after decades of self-imposed scarcity and the supply shock of the war in Ukraine, electricity in the U.K. was more than twice as expensive as in France. There is an inconvenient subcurrent to the U.K.'s scarcity crisis—and ours. Sixty years ago, the environmentalist revolution transformed the way governments, courts, and individuals thought about their relationship to the natural world. This revolution was not only successful but, in many ways, enormously beneficial. In the U.S., the Clean Air Act and Clean Water Act brought about exactly that. But over time, American environmental rules, such as those in the National Environmental Policy Act and the California Environmental Quality Act, have been used to stop new housing developments and, ironically, even clean-energy additions. Similarly, in the U.K., any individual who sues to stop a new project on environmental grounds—say, to oppose a new road or airport—generally has their legal damages capped at £5,000, if they lose in court. 'Once you've done that,' Bowman said, 'you've created a one-way system, where people have little incentive to not bring spurious cases to challenge any new development.' Last year, Britain's high-speed-rail initiative was compelled to spend an additional £100 million on a shield to protect bats in the woods of Buckinghamshire. Finding private investment is generally difficult for infrastructure developers when the path to completion is strewn with nine-figure surprise fees. Some of Britain's problems echo across the European continent, including slow growth and high energy prices. More than a decade ago, Germany began to phase out nuclear power while failing to ramp up other energy production. The result has been catastrophic for citizens and for the ruling government. In the first half of 2024, Germans paid the highest electricity prices in the European Union. This month, Social Democrats were punished at the polls with their worst defeat since World War II. Bowman offered a droll summary: 'Europe has an energy problem; the Anglosphere has a housing problem; Britain has both.' These problems are obvious to many British politicians. Leaders in the Conservative and Labour Parties often comment on expensive energy and scarce housing. But their goals haven't been translated into priorities and policies that lead to growth. 'Few leaders in the U.K. have thought seriously about the scale of change that we need,' Bowman said. Comprehensive reform is necessary to unlock private investment in housing and energy—including overhauling the TCPA, reducing incentives for anti-growth lawsuits, and directly encouraging nuclear and gas production to build a bridge to a low-carbon-energy economy. Effective 21st-century governance requires something more than the ability to win elections by decrying the establishment and bemoaning sclerotic institutions. Progress requires a positive vision of the future, a deep understanding of the bottlenecks in the way of building that future, and a plan to add or remove policies to overcome those blockages. In a U.S. context, that might mean making it easier to build advanced semiconductors, or removing bureaucratic kludge for scientists while adding staff at the FDA to accelerate drug approval. [Read: A simple plan to solve all of America's problems] In the U.K., the bottlenecks are all too clear: Decades-old rules make it too easy for the state to block housing developments or for frivolous lawsuits to freeze out energy and infrastructure investment. In their conclusion, Bowman and his co-authors strike a similar tone. 'Britain can enjoy such a renewal once more,' they write. 'To do so, it need simply remove the barriers that stop the private sector from doing what it already wants to do.' Article originally published at The Atlantic
Atlantic
03-03-2025
- Business
- Atlantic
How the British Broke Their Own Economy
What's the matter with the United Kingdom? Great Britain is the birthplace of the Industrial Revolution, which ushered in an era of energy super-production and launched an epoch of productivity advancements that made many life essentials, such as clothes and food, more affordable. Today, the country suffers from the converse of these achievements: a profound energy shortage and a deep affordability crisis. In February, the Bank of England reported an ongoing productivity slump so mysterious that its own economists ' cannot account fully ' for it. Real wages have barely grown for 16 years. British politics seems stuck in a cycle of disappointment followed by dramatic promises of growth, followed by yet more disappointment. A new report, titled 'Foundations,' captures the country's economic malaise in detail. The U.K. desperately needs more houses, more energy, and more transportation infrastructure. 'No system can be fixed by people who do not know why it is broken,' write the report's authors, Sam Bowman, Samuel Hughes, and Ben Southwood. They argue that the source of the country's woes as well as 'the most important economic fact about modern Britain [is] that it is difficult to build almost anything, anywhere.' The nation is gripped by laws and customs that make essentials unacceptably scarce and drive up the cost of construction across the board. Housing is an especially alarming case in point. The homeownership rate for the typical British worker aged 25 to 34 declined by more than half from the 1990s to the 2010s. In that same time, average housing prices more than doubled, even after adjusting for inflation, according to the Institute for Fiscal Studies. The housing shortage traces back to the postwar period, when a frenzy of nationalization swept the country. The U.K. created the National Health Service, brought hundreds of coal mines under state control, and centralized many of the country's railways and trucking and electricity providers. In 1947, the U.K. passed the Town and Country Planning Act, which forms the basis of modern housing policy. The TCPA effectively prohibited new development without special permission from the state; 'green belts' were established to restrict sprawl into the countryside. Rates of private-home building never returned to their typical prewar levels. With some spikes and troughs, new homes built as a share of the total housing stock have generally declined over the past 60 years. The TCPA was considered reasonable and even wise at the time. Postwar Britain had been swept up by the theory that nationalization created economies of scale that gave citizens better outcomes than pure capitalism. 'There was an idea that if we could rationalize the planning system … then we could build things in the right way—considered, and planned, and environmentally friendly,' Bowman told me. But the costs of nationalization became clear within a few decades. With more choke points for permitting, construction languished from the 1950s through the '70s. Under Prime Minister Margaret Thatcher, the Conservatives rolled back nationalization in several areas, such as electricity and gas production. But their efforts to loosen housing policy from the grip of government control was a tremendous failure, especially once it was revealed that Thatcher's head of housing policy himself opposed new housing developments near his home. Housing is, as I've written, the quantum field of urban policy, touching every station of urban life. Broken housing policies have a ripple effect. In London, Bowman said, the most common options are subsidized flats for the low-income and luxury units for the rich, creating a dearth of middle-class housing. As a result, the city is bifurcated between the über-wealthy and the subsidized poor. 'I think housing policy is a major driver of a lot of anti-foreigner, white-supremacist, anti-Black, anti-Muslim attitudes among young people who are frustrated that so-called these people get free houses while they have to live in a bedsit or move somewhere an hour outside the city and commute in,' Bowman said. Constrictive housing policy in Britain has also arguably prevented other great cities from being born. If the University of Cambridge's breakthroughs in biotech had happened in the 19th century, Bowman said, the city of Cambridge might have bloomed to accommodate new companies and residents, the same way Glasgow grew by an order of magnitude around shipbuilding in the 1800s. Instead Cambridge remains a small city of fewer than 150,000 people, its potential stymied by rules all but prohibiting its growth. The story for transit and energy is similar: Rules and attitudes that make it difficult to build things in the world have made life worse for the British. 'On a per-mile basis, Britain now faces some of the highest railway costs in the world,' Bowman, Hughes, and Southwood write. 'This has led to some profoundly dissatisfying outcomes. Leeds is now the largest city in Europe without a metro system.' Despite Thatcher's embrace of North Sea gas, and more recent attempts to loosen fracking regulations, Britain's energy markets are still an omnishambles. Per capita electricity generation in the U.K. is now roughly one-third that of the United States, and energy use per unit of GDP is the lowest in the G7. By these measures, at least, Britain may be the most energy-starved nation in the developed world. Scarcity is a policy choice. This is as true in energy as it is in housing. In the 1960s, Britain was home to about half of the world's entire fleet of nuclear reactors. Today, the U.K. has extraordinarily high nuclear-construction costs compared with Asia, and it's behind much of Europe in the share of its electricity generated from nuclear power—not only France but also Finland, Switzerland, Sweden, Spain, and Romania. What happened to British nuclear power? After North Sea oil and gas production ramped up in the 1970s and '80s, Britain redirected its energy production away from nuclear power. Even this shift has had its own complications. In the past few years, the U.K. has passed several measures to reduce shale-gas extraction, citing earthquake risks, environmental costs, and public opposition. As a result, gas production in the U.K. has declined 70 percent since 2000. Although the country's renewable-energy market has grown, solar and wind power haven't increased nearly enough to make up the gap. The comparison with France makes clear Britain's policy error: In 2003, very large businesses in both countries paid about the same price for electricity. But by 2024, after decades of self-imposed scarcity and the supply shock of the war in Ukraine, electricity in the U.K. was more than twice as expensive as in France. There is an inconvenient subcurrent to the U.K.'s scarcity crisis—and ours. Sixty years ago, the environmentalist revolution transformed the way governments, courts, and individuals thought about their relationship to the natural world. This revolution was not only successful but, in many ways, enormously beneficial. In the U.S., the Clean Air Act and Clean Water Act brought about exactly that. But over time, American environmental rules, such as those in the National Environmental Policy Act and the California Environmental Quality Act, have been used to stop new housing developments and, ironically, even clean - energy additions. Similarly, in the U.K., any individual who sues to stop a new project on environmental grounds—say, to oppose a new road or airport—generally has their legal damages capped at £5,000, if they lose in court. 'Once you've done that,' Bowman said, 'you've created a one-way system, where people have little incentive to not bring spurious cases to challenge any new development.' Last year, Britain's high-speed-rail initiative was compelled to spend an additional £100 million on a shield to protect bats in the woods of Buckinghamshire. Finding private investment is generally difficult for infrastructure developers when the path to completion is strewn with nine-figure surprise fees. Some of Britain's problems echo across the European continent, including slow growth and high energy prices. More than a decade ago, Germany began to phase out nuclear power while failing to ramp up other energy production. The result has been catastrophic for citizens and for the ruling government. In the first half of 2024, Germans paid the highest electricity prices in the European Union. This month, Social Democrats were punished at the polls with their worst defeat since World War II. Bowman offered a droll summary: 'Europe has an energy problem; the Anglosphere has a housing problem; Britain has both.' These problems are obvious to many British politicians. Leaders in the Conservative and Labour Parties often comment on expensive energy and scarce housing. But their goals haven't been translated into priorities and policies that lead to growth. 'Few leaders in the U.K. have thought seriously about the scale of change that we need,' Bowman said. Comprehensive reform is necessary to unlock private investment in housing and energy—including overhauling the TCPA, reducing incentives for anti-growth lawsuits, and directly encouraging nuclear and gas production to build a bridge to a low-carbon-energy economy. Effective 21st-century governance requires something more than the ability to win elections by decrying the establishment and bemoaning sclerotic institutions. Progress requires a positive vision of the future, a deep understanding of the bottlenecks in the way of building that future, and a plan to add or remove policies to overcome those blockages. In a U.S. context, that might mean making it easier to build advanced semiconductors, or removing bureaucratic kludge for scientists while adding staff at the FDA to accelerate drug approval. In the U.K., the bottlenecks are all too clear: Decades-old rules make it too easy for the state to block housing developments or for frivolous lawsuits to freeze out energy and infrastructure investment. In their conclusion, Bowman and his co-authors strike a similar tone. 'Britain can enjoy such a renewal once more,' they write. 'To do so, it need simply remove the barriers that stop the private sector from doing what it already wants to do.'
