The UK’s essentially rigged market for land and its restrictive planning system are as big an obstacle to economic growth as restrictive labour markets and protected professions are in Southern Europe.
The number of new homes built each year in Britain has lagged far behind demand from a growing population for 30 years. Despite faster population growth, house construction is currently running at half the level of the 1960s. At the same time the average size of homes built in Britain is now the smallest in the EU. The result of these two trends has been a steady fall in the amount of living space per head. Property prices relative to average household incomes have come down a bit since 2007, but remain very high. Moreover, the problem is not just restricted to the residential sector: Britain has the highest office rents in the EU. Firms in cities such as Manchester pay more than in Frankfurt or Milan. And transport infrastructure is very expensive to build in Britain, which is one reason why there is too little of it.Most of us might baulk at one of Tilford’s proposed remedies, which is to build on the green belt. Also, he fails to acknowledge the profligate use of land in British cities (where people prefer to live in a detached or semi-detached house with a garden rather than a flat or town house as in continental cities).
Nevertheless, his basic analysis is sound and the proposed move to a land tax is the single best policy that could be adopted.