Why We Can't Build

Lessons from Britain's Planning System Disaster

Why We Can't Build: Lessons from Britain's Planning System Disaster

In one of my recent episodes with the excellent Eric Jennings, (@worldxppodcast, worldxppodcast.com), he asked what I would do to boost economic growth. One of my comments was that we need a new way of "building". And then I saw an excellent post by @samdumitriu and decided that I should put together a good outline of what we should be doing. And so, this analysis is based on the comprehensive research framework provided by Sam Dumitriu's Planning Reform Reader [1], which outlines the foundational texts, political economy constraints, and policy solutions for understanding Britain's planning crisis.

New York's Second Avenue Subway cost $2.5 billion per mile to build—making it the most expensive subway line in the world. By contrast, Paris is simultaneously constructing 124 miles of new metro lines, with central tunnel sections running about $450 million per mile and the network averaging $305 million per mile. That means New Yorkers pay 5–8 times more than Parisians for identical infrastructure [2, 3]. This isn't an anomaly. From Seattle to Los Angeles to Boston, American cities routinely spend multiples of what their European counterparts pay for the same transit, housing, and energy projects. The easiest way to understand why we can't build in America is to study places where the problem is even worse—and better documented. Britain offers the perfect case study, with a planning system so dysfunctional it makes American bureaucracy look efficient.

Housing costs, infrastructure delays, and energy prices all share a single root cause

Britain's economic stagnation isn't caused by Brexit, skills shortages, or insufficient R&D spending. The real culprit is a planning system that makes it extraordinarily difficult and expensive to build anything—from homes to railways to power plants. This comprehensive analysis, based on Sam Dumitriu's influential reading list [1], reveals how restrictive planning regulations cost the economy trillions annually and offers proven solutions from successful reforms worldwide.

The evidence is overwhelming: Britain builds infrastructure at 2–8 times the cost of comparable European projects [4], has built 30% fewer homes per capita than France since 1970 [5], and now takes 15+ years to approve major projects that once took 3–5 years [6]. The Lower Thames Crossing planning application alone ran to 359,000 pages and cost £267 million [7]—more than Norway spent building the world's longest road tunnel. These aren't isolated failures but symptoms of a planning system that has evolved from facilitating development to preventing it.

Yet there's reason for optimism. From Auckland's successful upzoning that reduced rents by 21% [8] to South Korea's nuclear plants that cost one-fifth of Britain's [9], international examples demonstrate that different approaches work. Even within Britain, recent reforms to the National Planning Policy Framework are projected by the Office for Budget Responsibility to boost GDP by £15 billion over the next decade [10]—the largest positive growth impact the OBR has ever scored for any policy change.

The planning system creates an everything crisis

Britain's discretionary planning system blocks development at every scale

The 1947 Town and Country Planning Act fundamentally transformed Britain from a property rights system to a discretionary planning regime. Before 1947, landowners could build unless explicitly prohibited, and refusing permission required compensation. The new system reversed this: all development now requires explicit permission, with no compensation for refusal. This created what Sam Bowman calls "vetocracy"—a system where small groups can block projects that would benefit millions (the opposite of democracy, where majorities decide).

The results have been catastrophic for housing supply. Victorian Britain built more homes annually than modern Britain, despite having half the population [11]. While Switzerland and Germany started with fewer homes per capita than Britain in 1955, both overtook Britain by the 1970s. Today, Britain has just 30 million homes compared to France's 37 million, despite identical populations [5]. In the most productive areas where housing is most needed—London, Oxford, Cambridge—the shortage is most acute, with house prices reaching ten times median incomes [12].

Infrastructure tells a similar story. HS2 costs £396 million per mile compared to £31 million for similar French high-speed rail [4]. Britain builds trams at 2.5 times the European average cost [13]. The planning process for major projects routinely produces documents exceeding 100,000 pages. The Norfolk Vanguard offshore wind farm waited 44 months for approval—nearly four years just for permission to start building [7]. This isn't because British engineers are incompetent or British workers unproductive. It's because the planning system adds years of delays and billions in costs through excessive consultation, environmental assessments, and opportunities for legal challenge.

How planning restrictions destroyed British productivity growth

The economic consequences extend far beyond construction costs. In their landmark study, economists Chang-Tai Hsieh and Enrico Moretti found that housing constraints in just three US cities—New York, San Francisco, and San Jose—reduced American GDP growth by 36% from 1964 to 2009 [14]. If these cities had maintained elastic housing supply, the average American would earn $8,775 moreannually. Applying similar analysis to Britain suggests even larger losses given more severe constraints.

The mechanism is straightforward: when productive cities can't accommodate more workers, those workers are forced to less productive locations. A software engineer who could earn £100,000 in London might instead work in Manchester for £60,000 because London housing costs consume the entire wage premium. This "spatial misallocation" (where high earners are priced out of productive cities) means the economy operates far below potential. Recent OECD analysis found that every 33-point increase in real house prices reduces labor productivity growth by 0.6 percentage points—explaining much of Britain's productivity puzzle [15].

Energy infrastructure faces similar constraints. Britain generates only two-thirds as much electricity per capita as France, with energy costs that have tripled since 2004 [5]. Nuclear plants that cost $2,200 per kilowatt in South Korea cost $12,500 per kilowatt at Hinkley Point C [9]. The difference isn't technology or labor costs—it's regulation. Britain's interpretation of radiation safety through ALARP ("As Low As Reasonably Practicable") means regulators can demand any safety measure not deemed "grossly disproportionate" to benefits, creating an endless ratchet of increasing costs with no upper limit [16].

International success stories show another way is possible

New Zealand's upzoning revolution delivered immediate results

Auckland faced a housing crisis similar to London's, with prices rising faster than incomes for decades. In 2016, the city implemented the Auckland Unitary Plan, upzoning three-quarters of residential land to allow medium-density housing [17]. The plan tripled the city's theoretical dwelling capacity overnight, allowing three-story, three-dwelling developments on most residential lots without discretionary approval.

The results exceeded expectations. Housing permits increased immediately, with upzoned areas accounting for two-thirds of all New Zealand dwelling consents by 2023 [18]. Independent analysis found the reforms generated 21,803 additional homes in the first five years—a 4% increase in total housing stock [19]. Most importantly, rents grew more slowly than the national average, with Auckland becoming cheaper than Wellington for the first time in decades. Econometric analysis suggests rents are now 14–35% lower than they would have been without reform [8].

Emboldened by Auckland's success, New Zealand implemented nationwide reforms in 2021 through the Medium Density Residential Standards, allowing three homes up to three stories on most urban land [17]. Though later partially reversed by a new government, the reforms demonstrated that rapid, large-scale planning liberalization is both politically feasible and economically beneficial.

South Korea builds nuclear plants at one-fifth of Western costs

While Britain's Hinkley Point C nuclear plant will cost over £43 billion for 3.2 gigawatts of capacity [20], South Korea builds identical capacity for under £9 billion [9]. The Korean model demonstrates how different institutional approaches to the same technology yield radically different outcomes.

South Korea's success rests on four pillars. First, they build fleets of identical reactors rather than one-off projects, enabling learning-by-doing and supply chain efficiency [9]. Second, they maintain continuous construction programs that preserve institutional knowledge and skilled workforces. Third, their safety regulation balances protection with practical cost considerations, avoiding the endless gold-plating that plagues Western projects. Fourth, they treat nuclear plants as essential infrastructure requiring swift approval rather than decades of consultation.

The results speak for themselves: Korean nuclear plants achieve 93.4% capacity factors compared to 76.1% in France, while costing one-fifth to one-quarter of Western equivalents [21]. This isn't achieved by cutting corners—Korean plants meet all international safety standards. Instead, it demonstrates how regulatory approach matters more than technology.

Houston's no-zoning model enables abundant housing

Houston remains America's largest city without traditional zoning, having rejected it in voter referendums three times [22]. Instead of use-based restrictions, the city relies on deed restrictions, subdivision codes, and infrastructure provision to guide development. This creates a fundamentally different dynamic: developers can build what the market demands rather than what planners permit.

The economic benefits are substantial. Houston consistently ranks among America's most affordable major cities despite rapid population growth. When demand increases, supply responds quickly—construction of new housing closely tracks population growth and price signals. During the 2000s boom, Houston permitted more housing than the entire state of California. Housing costs remain 50–60% lower than in comparable coastal cities with strict zoning [22].

Critics point to Houston's sprawl and occasional incompatible land uses. But surveys show high resident satisfaction, particularly among lower-income households who voted overwhelmingly against adopting zoning because they understood it would raise housing costs [23]. Houston demonstrates that market-based coordination, while imperfect, can deliver abundant housing in ways planned systems cannot.

Political reform requires changing incentives, not just rules

Why planning reform is so politically difficult

The political economy of planning reform presents a fundamental challenge: the benefits of development are diffuse while costs are concentrated. A new apartment building might provide homes for 100 families and increase local tax revenue, but it also brings construction disruption, parking challenges, and aesthetic changes that directly impact immediate neighbors. Those neighbors are highly motivated to oppose development, while future residents who would benefit can't participate in local planning decisions because they don't yet live there.

This dynamic is worsened by what Joe Hill calls "Everythingism"—the belief that every policy must simultaneously advance every national goal [24]. Housing developments must not only provide shelter but also protect biodiversity, achieve net-zero carbon, provide community facilities, preserve heritage, and create jobs. When policies try to do everything, they typically achieve nothing. A wind farm that must protect bats, provide community benefits, enhance biodiversity, and guarantee local jobs becomes so complex and expensive that it never gets built [24].

The consultation system, originally designed to give communities input, has evolved into a de facto veto system. Britain has become what Sam Dumitriu calls a "consultation nation" where process matters more than outcomes [7]. Sizewell C nuclear station underwent seven separate public consultations over eight years, each generating thousands of pages of documents and responses. Yet these consultations rarely improve projects—they simply add years of delay and millions in costs while providing ammunition for legal challenges.

The failure of land value tax shows implementation matters

Britain's experiment with land value tax from 1910–1920 offers crucial lessons for modern reformers [25]. The tax enjoyed strong political support, united the Liberal Party, and promised to solve local government funding crises while encouraging development. Henry George's ideas were reportedly more popular among Labour MPs than Shakespeare [25]. Yet within a decade, the same politicians who introduced the tax repealed it.

The tax failed not for lack of political will but because implementation proved impossible. Valuing land separately from buildings required individual assessments of 10 million properties with no market comparables [25]. The tax cost more to administer (£2 million) than it collected (£500,000). Worse, design flaws meant it functioned as a tax on builders' profits rather than landowner rents, causing housing starts to crash from 100,000 to 61,000 annually.

The lesson is clear: even the most popular reforms fail if they can't be implemented effectively. Modern planning reform must focus not just on optimal policy design but on practical implementation. Complex schemes requiring new bureaucracies or unprecedented coordination across government levels are likely to fail regardless of their theoretical merits.

Street votes show how to align local incentives with development

The most promising reform proposal comes from Samuel Hughes and Ben Southwood: allowing residents to vote on gentle densification of their own streets [26]. Under this system, a 60% supermajority of households could approve development to pre-set design codes, with residents sharing in the enormous value uplift created by new development rights.

The economics are compelling. In Southeast England, agricultural land worth £20,000 per hectare can be worth £3.6 million with planning permission—a 180-fold increase [26]. Even modest densification creates enormous value. Analysis suggests participating homeowners could receive £900,000 on average from allowing gentle densification of suburban streets into attractive four-story terraces or small apartment buildings.

Street votes solve the political economy problem by making local residents partners in development rather than opponents [27]. Instead of fighting to preserve the status quo, they have strong incentives to approve high-quality development that enhances their neighborhood while delivering massive financial benefits. The proposal includes safeguards: design codes ensure quality, infrastructure funding is built in, and sensitive areas like conservation zones are excluded [26].

Economic evidence quantifies trillion-dollar opportunities

Academic research confirms massive GDP impacts

Multiple studies using different methodologies reach similar conclusions about planning reform's economic impact. Beyond Hsieh and Moretti's 8.9% GDP finding, commercial real estate research suggests deregulating commercial land use alone would increase US GDP by 3% perpetually—approximately $1 trillion annually. UK-specific analysis by the Office for Budget Responsibility projects recent modest reforms will add £15 billion to GDP over a decade.

The channels are multiple and reinforcing. Agglomeration effects mean that doubling city size typically increases productivity by 3–8% through knowledge spillovers and better job matching. Investment effects occur when businesses can expand facilities and entrepreneurs can start companies without years of planning delays. Innovation effects arise when researchers and companies can cluster together rather than being dispersed by housing costs. Consumption effects happen when households spend less on housing and more on other goods and services.

Planning constraints also worsen inequality. When housing supply is restricted, economic gains from productivity improvements flow to landowners rather than workers. In San Francisco, real wages for most workers have actually fallen since 1980 despite massive productivity gains because housing costs absorbed more than 100% of nominal wage increases. Planning reform would not only grow the economy but ensure gains are more widely shared.

Infrastructure costs reveal the scale of the problem

International comparisons reveal the extraordinary costs Britain's planning system imposes. HS2's £396 million per mile cost compares to:

• France: £31 million per mile for Tours-Bordeaux high-speed rail

• Japan: £50 million per mile for Hokkaido Shinkansen (despite 50% tunneling)

• Italy: £165 million per mile for Naples-Bari high-speed rail

For urban transit, Madrid built 35 miles of metro in 4 years for what Leeds will spend on planning applications. Birmingham's tram extension costs £252 million per mile versus £28 million in Besançon, France. These aren't small differences reflecting local conditions—they're order-of-magnitude variations that can only be explained by fundamentally different planning approaches.

The economic implications are profound. If Britain could build infrastructure at French costs, every pound of transport investment would deliver 2–4 times more actual infrastructure. The same budget that delivers 100 miles of high-speed rail in Britain would deliver 400 miles in France. This infrastructure productivity gap compounds over time, leaving Britain with increasingly inadequate transport networks that constrain economic growth.

Key Takeaway: British infrastructure costs 2–8 times more than European equivalents. HS2 costs £396 million per mile vs. £31 million in France. UK trams cost 2.5 times the EU average. The same money could build 4 times more infrastructure at European prices [2].

The path forward requires systemic reform, not just tweaks

Immediate reforms can deliver quick wins

Several reforms could be implemented quickly with immediate benefits:

1. Abolish pre-application consultation requirements for major infrastructure, saving years and millions in costs

2. Increase NSIP thresholds to 150MW for solar and 100MW for wind, allowing more projects to use streamlined local planning

3. Mandate standard designs for common infrastructure like substations and tram stops rather than bespoke architecture

4. Time-limit planning decisions with automatic approval if deadlines are missed

5. Require objectors to post bonds covering delay costs if challenges prove unfounded

The government's recent National Planning Policy Framework changes represent meaningful progress. Restoring mandatory housing targets, creating the "Grey Belt" category for lower-quality Green Belt land, and allowing easier upward extensions will enable hundreds of thousands of additional homes. The OBR's £15 billion GDP score validates that even modest reforms deliver substantial benefits.

Medium-term changes must address institutional problems

Beyond quick wins, deeper institutional reforms are necessary:

• Create integrated delivery agencies combining planning, funding, and construction authority. Eliminates coordination failures that add years to projects (e.g., Madrid model) [1].

• Implement systematic zoning with by-right development. Replaces discretionary permissions with predictable rules [2].

• Establish special economic zones for clean energy. Streamlined approvals for renewable projects [3].

• Reform judicial review to prevent vexatious challenges. Preserves genuine oversight while stopping frivolous delays [4].

• Decentralize planning powers to mayors with electoral accountability. Creates clear responsibility for delivery [5].

The key insight from international examples is that institutional design matters more than specific rules. Madrid's metro success came from giving regional government complete control with electoral accountability. South Korea's nuclear success stems from treating plants as essential infrastructure requiring rapid deployment. These models can be adapted to British governance while respecting democratic oversight.

Long-term success requires cultural change

Ultimately, Britain must shift from a permission culture to a presumption of development. This requires:

1. Reframing the narrative from protecting the status quo to building the future

2. Celebrating successful projects rather than focusing on problems

3. Training planners as facilitators rather than gatekeepers

4. Measuring success by outcomes (homes built, emissions reduced) not process compliance

5. Building state capacity to deliver projects, not just regulate them

Other countries prove rapid change is possible. France transformed from planning laggard to infrastructure leader through TGV development. China built the world's largest high-speed rail network in 15 years. South Korea went from importing all nuclear technology to world-leading exporter in one generation. Britain invented railways, pioneered nuclear power, and once built beautiful cities quickly and affordably. With planning reform, it can do so again.

Planning reform is the key to solving multiple crises simultaneously

The evidence is overwhelming: planning reform isn't just about building more homes or infrastructure—it's about unlocking trillions in economic growth, reducing inequality, fighting climate change through clean energy deployment, and restoring faith that democratic governments can deliver results. From Auckland's successful upzoning to South Korea's affordable nuclear plants to Houston's abundant housing, international examples prove that better approaches exist.

Britain's planning system evolved from managing post-war reconstruction to blocking development of all kinds. What began as ensuring orderly development became a system where saying no is easier than saying yes, where process matters more than outcomes, and where those who would benefit from development have no voice while opponents have multiple veto points. This must change.

The political challenge is real but not insurmountable. Street votes show how to align local incentives with development. State-level action in America demonstrates how to overcome local opposition. The economic benefits—measured in trillions globally—provide resources to compensate genuine losers while leaving society massively better off. Most encouragingly, public opinion increasingly recognizes that housing shortages, high infrastructure costs, and expensive energy stem from planning failures, creating political space for reform.

The choice is stark: continue with a system that makes Britain poorer, less equal, and less capable of addressing major challenges—or embrace reform that unlocks growth, opportunity, and the ability to build solutions to pressing problems. The evidence shows which path leads to prosperity. The question is whether Britain will take it.

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References

[1] Dumitriu, S. (2024). The Planning Reform Reader. https://www.samdumitriu.com/p/the-planning-reform-reader
[2] Bloomberg (2023). In NYC Subway, a Case Study in Runaway Transit Construction Costs. https://www.bloomberg.com/news/articles/2023-02-23/in-nyc-subway-a-case-study-in-runaway-transit-construction-costs
[3] VICE (2024). A $100 Billion Lesson In Why Building Public Transportation Is So Expensive in the US. https://www.vice.com/en/article/a-dollar100-billion-lesson-in-why-building-public-transportation-is-so-expensive-in-the-us/
[4] Dumitriu, S. & Hopkinson, B. (2023). Britain's infrastructure is too expensive. Notes on Growth. https://www.samdumitriu.com/p/britains-infrastructure-is-too-expensive
[5] Southwood, B., Bowman, S., & Hughes, S. (2024). Foundations: Why Britain has stagnated. UK Foundations. https://ukfoundations.co/
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[14] Hsieh, C.T. & Moretti, E. (2019). Housing constraints and spatial misallocation. American Economic Journal: Macroeconomics, 11(2), 1–39. https://www.aeaweb.org/articles?id=10.1257/mac.20170388
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[19] Maltman, M. (2023). Auckland. One Final Effort. https://onefinaleffort.com/auckland
[20] EDF Energy (2024). Hinkley Point C. https://www.edfenergy.com/energy/nuclear-new-build-projects/hinkley-point-c
[21] Dumitriu, S. (2024). Could South Korea build nuclear cheaply in Britain? Notes on Growth. https://www.samdumitriu.com/p/could-south-korea-build-nuclear-cheaply
[22] Martin, A. (2023). Houston, we have a solution. Works in Progress Magazine. https://worksinprogress.co/issue/houston-we-have-a-solution/
[23] Rice University (2023). Is Houston really better off without zoning? Kinder Institute for Urban Research. https://kinder.rice.edu/urbanedge/houston-without-zoning-arbitrary-lines
[24] Hill, J. (2023). Everythingism: an essay. Re:State. https://reform.uk/publications/everythingism-an-essay/
[25] Watling, S. (2023). The failure of the land value tax. Works in Progress Magazine. https://worksinprogress.co/issue/the-failure-of-the-land-value-tax/
[26] Hughes, S. & Southwood, B. (2021). Strong Suburbs. Policy Exchange. https://policyexchange.org.uk/publication/strong-suburbs/
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