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Artillery Row

Michael Gove’s convenient conversion won’t be enough

Britain’s economic dysfunction runs very deep indeed

In one way, news of the recession is overstated. GDP shrank for the last two quarters, but the recession is thought to be already over. This focus on headline GDP belies the real problem: permanent stagnation. As Andy Bruce from Reuters pointed out, GDP per capita dropped every quarter in 2023, and hasn’t grown at all for seven quarters. GDP per head is still lower than it was before the pandemic. Whether we are in “technical recession” or not is almost irrelevant at this point. All the British economy has been doing for the last few years is bobbing along on a shallow tide, going nowhere very fast.

As the economist Tim Leunig said, seven consecutive quarters of falling living standards hasn’t been seen since records began seventy years ago. We are in a deep, deep mess.

We know what causes this. While the discourse roils about Brexit and wokeism, the real problems of the British economy are well documented by campaigning groups like Britain Remade and think tanks like the Centre for Policy Studies. Britain cannot build. We are stuck without the infrastructure, energy, or houses that we need to raise GDP.

We have swapped building for bureaucracy.

The Lower Thames Crossing involves 359,000 pages of planning approval. The planning stage for that project has cost more money than it cost Norway to build a longer tunnel. Add in the known problem Britain has with infrastructure outside of London and it’s little wonder the economy is so stagnant. We love arguing about immigration and Brexit, but we need to pay more attention to the sclerosis. 

The high price of energy is another barrier to growth. How can it be that it costs 5 times more to build a nuclear reactor here than in South Korea? In Cornwall, where a climate crisis was declared in 2019, the council refused permission for enough solar panels to be built to power 30,000 homes. They’re not the only ones. According to Britain Remade, “1 in 5 councils that have declared a climate emergency have blocked enough clean energy projects to power a whopping 4.4m homes.”

At the heart of this problem is housing. We are short of hundreds of thousands of homes and this stops people living and working in the most productive areas. Of all of the government’s failures, this is among the worst. And so it seems promising that Michael Gove has become a convert to yimbism. He thinks the lack of home ownership among young people is a threat to democracy, and plans to introduce policies that automatically grant planning permission in areas that aren’t 95 per cent below their housebuilding target (currently that applies at 75 per cent below). It should be easier to convert shops into houses, too. 

But at the same time, the Chancellor is working on a scheme to give mortgages to people with a 1 per cent deposit. Policies like this are the hallmark of Tory housing policy, which has subsidised demand through schemes like Help To Buy, without increasing supply. Gove wants to allow more building on brownfield sites, but as the Centre for Cities points out, with the current target of 300,000 thousand homes a year, it will take fifty years to fill the shortage of 4.3 million homes. To take that down to a decade, the annual target needs to more than double

Alas, these problems run deep not just in the Tory party but in the British psyche

And Michael Gove’s recent conversion to YIMBYism is belied by the fact that he blocked Marks & Spencer from demolishing their Oxford Street store to rebuild it, ordering them instead to refurbish, on the grounds that it would negatively impact Selfridge’s Grade II* listed building opposite. How bitterly laughable this is, from the man who has suddenly become the voice of the millennial renters, mired in small flats with high rents by decades of underbuilding (such that it could easily take the entire lifetime of that generation simply to build out the backlog). Gove likes to position himself as a radical reformer, a daring defier of blobs. On this issue, he seems more like an over-mighty petty bureaucrat, groping for a reliable campaign promise as election season looms. That he is sending Jeremy Hunt daily notes about the importance of house building seems a little hollow in the circumstances.

Alas, these problems run deep not just in the Tory party but in the British psyche. The housing shortage didn’t begin in the 1980s, with the Right to Buy scheme, as commonly stated, though Thatcher certainly didn’t make the necessary reforms to the housing market. The root cause in the 1947 Town and Country Planning Act. The Centre for Cities shows that the rate of house building dropped by a third, from 2 per cent growth a year to a mere 1.2 per cent. 

Until we learn to stop fetishing the socialistic controls on our planning system, that have kept Birmingham bound in a ring of iron and left London as a shabby city full of creaky old houses, occasionally punctuated by large blocks of glass flats, Michael Gove’s convenient conversion won’t be enough.

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