The planning system needs to be scrapped and replaced with a new rules-based system to “save capitalism” in the UK.
A new report by Policy Exchange proposes a series of radical reforms to “create millions of new capitalists” and give younger people a better chance of becoming property owners.
The report, penned by Dr James Vitali, the think tank’s head of political economy, found capitalism is increasingly unpopular. The poll suggested that just 13% of those under the age of 49 believe it is working effectively, while 67% of those in the Millennial and Generation Z cohorts want to live in a socialist economic system.
The report blames this on the increasing concentration of property ownership across the economy and British society. Homeownership has collapsed by 26% for 25-34-year-olds since 1991.
British individuals also own just 12% of the UK’s listed shares. They used to own more than half. Foreign investors, meanwhile, hold 56% of listed UK equities.
The paper argues that as ownership is on the wane, “so too are the moral values of responsibility and self-sufficiency and the sense of personal stake that healthy communities rely upon”.
To fix this, the paper says millions more people need to be given the rights and responsibilities of ownership.
Firstly, it sets out how to increase homeownership through changes to the planning system, reform of the leasehold system and a strengthened right to build. The Policy Exchange has previously stated that building 100,000 more homes each year will create thousands more homeowners and unlock £17.7bn in GDP each year.
Rules-based system
In a wide-ranging set of reforms, the paper says greater homeownership would be extended by scrapping the existing planning regime. This should be replaced instead by a new rules-based planning system with design codes and built-in assumptions in favour of development.
It also recommends establishing a commission into the green belt. But this would go further than Labour’s proposal.
Vitali’s suggestion is that all land of “genuine environmental value” should be reclassified as Areas of Outstanding Natural Beauty. Anything does not meet this standard and is within a certain radius of existing transport infrastructure will be reclassified as developable.
New development corporations should be established in urban areas of high housing demand, with broad powers to boost housing supply.
It also proposes a reform the Right to Build programme, including the creation of a new urban right to build.
Other recommendations include the abolition of the leasehold system and a new market-led 25-year fixed mortgage product, with funding provide from a blend of retail banks, pension funds and investment banks.
It also calls for broadening investment in shares by reforming Help to Save and increasing incentives and support for retail investors. This would be accompanied by a national information campaign to increase awareness about how to invest, and a new tax super deduction for the value of shares offered to employees.
The paper also recommends reforms to improve major infrastructure investment, including a new pathway for community ownership schemes in energy infrastructure like wind farms and solar farms.
In a foreword to the paper, philosopher and MP Jesse Norman, wrote: “There has always been a political tension between the rights of those with property, and the desires of those without it; this has been a source of revolution the world over. But there is also an intellectual tension, between the established and the aspirant parts of society, between Burke and Smith so to speak, between the protection of what exists, and the yeasty energetic challenge of the new. As property evolves, as markets evolve, the basic question remains of how those seeking the benefits and responsibilities of ownership can have a fair and open opportunity to achieve them.”
In an accompanying preface, the Labour peer Lord Glasman, director of the Common Good Foundation, writes: “The Property Owning Democracy is a vital contribution to the debate about perhaps the central problem of our politics. The post-war consensus did succeed in extending property ownership and the ‘boomer’ generation were its primary beneficiaries. The new generations, however, have largely been excluded from this, and nowhere is this more apparent than in the housing market.
“The central task of our politics is thus to build more homes through land reform, and Vitali’s suggestions are worth exploring. But of course, as the authors point out, promoting diffuse ownership in British society is about far more than bricks and mortar: it’s about our country’s businesses; its high streets; and its infrastructure. We urgently need to reconnect the British people with the material of social and economic life in the UK.”
The paper has also picked up support from the libertarian right of the Conservative Party, with endorsements from trade secretary Kemi Badenoch, former levelling up secretary Simon Clarke and former housing minister Brandon Lewis.
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