Hamish McRae: The hidden costs of planning delays

It was not the intention of the procedures to be socially divisive, but that has been the effect

So the planning nettle is to be grasped at last. There is an irony here. For many years there has been mounting evidence that our planning laws have had unintended consequences but it has taken concern about climate change to unblock the process.

Among these unintended consequences have been about the most expensive house prices per square foot in the world, the longest commutes, the very rapid run-down of manufacturing industry - and the highest prices in Ikea stores. Yet if you said to people, do you want more expensive housing, longer commutes, fewer jobs in industry, higher prices in the shops and higher interest rates, most would say no.

Now, of course planning is not the only cause of those outcomes. House prices are also affected by global demand for UK properties, particularly in the south-east. The run-down of industry was partly the result of the higher sterling exchange rate and not just high land costs. High prices in the shops are partly an exchange rate function too and not just the higher costs of providing retail facilities. High interest rates are a function of a whole range of features, not just the need to curb house prices. But the bottom line is that planning has played a central role in making the UK a high-cost country.

The costs accrue in two ways. The obvious one is the higher cost of land. Special locations will always command a premium so land use always in some measure restricted. But planning restricts it further. The green belt round London means people either pay more for homes within the belt or have a 10-mile longer commute each way.

Less obvious are the hidden costs of the bureaucratic process. There are the delays, most famously in the case of Terminal Five at Heathrow. Shanghai designed and built an entire new airport in the time taken for that inquiry. Though I would not necessarily recommend Chinese planning procedures as a model for us, it is fascinating that it is China that is building (with the help of UK company Arup) a whole environmentally sensitive city outside Shanghai called Dongtan.

These delays do, however, add to the costs of providing new residential accommodation, typically adding 10 per cent. Anyone buying or renting a home pays a little bit more than they need - or has rather less space for their money. We build the smallest homes in Europe, not because people want smaller homes but because planning encourages that.

But it is not only the cost of delays. It is also the conformity that planning imposes. You see this better in the high street and out-of-town shopping centres. Because the planning process is so cumbersome, only large organisations with planning and financial resources can make their way through the process. You need the power of a Tesco to counterbalance the power of the authorities. The unintended consequence is high streets that all look the same.

What worries me most about our planning system, however, is not just the economic consequences. It is its social costs: the extent to which it favours the "haves". People who own houses or land benefit at the cost of those who rent. It helps the old vs the young, the South vs the North. It was not the intention of the people who created our planning procedures to be socially divisive but that has been the effect.

Hardly anyone would argue for a planning free-for-all. It is true that sometimes where controls have been loosened dramatically there have been dramatic results. The regeneration of London Docklands and the creation of a new financial centre in Canary Wharf have brought direct benefits to the whole of London not least because it is leading to central London developing towards the east, thereby balancing the pressure of development to the south and west.

A wise planner might have seen, a quarter of a century ago, that London needs to develop a third central business district and that Docklands was the obvious place. But as it turned out, it was lack of planning controls, not wise planning, that delivered this outcome.

Still, I don't think we can rely on happy accidents such as this happening all the time. Infrastructure in particular needs detailed planning and that is something that, let's face it, we don't seem to be very good at.

So will the new planning procedures be any better? I suppose in the sense that they are designed to do something about our poor record in major infrastructure projects, they are a useful start. Just acknowledging failure is always a good start in itself. But there seem to be to be two major concerns.

One is that we have no idea how the new procedures will work in practice. There is an odd irony that a government that says it wants to push decisions out to the country seems to be pulling powers back to the centre.

The other is that these changes will be seen as pro-business. The business community, which has in the first instance had to bear the costs of planning regulation, has welcomed them. Business people have to allocate time and money to solving planning problems. But that time and money are costed through to the final user. Someone has to pay the salaries of the planning barristers, the extra fees of celebrity architects who can get plans though, the banks that provide additional funds and so on. That someone is us: people who use the buildings, products and services that the business community provides.

What the business community has been bad at is explaining that it only benefits from speedier planning procedures in the first instance. If a builder can build a bigger home for the same price, or get one to market a year earlier, then the buyer of the home is the person who gains most of the reward. Indeed, if looser planning reduces the value of the builder's land bank, as in theory at least it should, then the builder actually loses - or at least has to find another way of making a profit, perhaps by building a higher-quality home.

Some people will have a natural suspicion when they see big business welcoming something, just as others have a natural suspicion when the Government proposes a new initiative. But for most of us the social costs of our present planning system, and in particular the way it favours the "haves", should outweigh this natural suspicion.

None of this is a call to concrete over much of Britain. There are sound arguments for building to higher densities, including the fact that were London built to the same density as Paris, it could fit in 35 million people. Nor is it to suggest a judgement either way on the merits of nuclear power or wind farms. Those are separate arguments. The key point is that planning has imposed huge costs on our society and in particular on those least able to bear those costs. Here is a chance to do better.