The increasing number of environmental rules make it harder to build homes Britain needs

Effective biodiversity policies must be balanced with the need to fix the chronic housing shortage

It is difficult to overstate the damage complex planning policies have done to the British economy by holding back development and fuelling the housing crisis. In some ways it should surprise us that failure to fix a system that has been in steady decline since the mid-1940s has not backfired on the Tories to a far greater degree.

Last year, Rachel Reeves promised to tackle “head-on the obstacles presented by our antiquated planning system” – a pledge that, unlike some of Labour’s other announcements, will have resonated with many British voters. About one in 10 people over the age of 30 are living with their parents. Millennials are spending about a third of their salaries on rent. The housing crisis affects almost everything: where we live, where we work, even how many children we have.

Yet housebuilding is in freefall. The number of new houses registered, according to the National House Building Council, in the third quarter of 2023 was 20,680, down 53pc on the previous year. Housing completions are also down by 15pc over the same period. And this decline was not coming from a good starting point.

The “steady state requirement” for new housebuilding, according to the LSE Commission, is 250,000 every year, with additional requirements for the current levels of net migration. That is what’s needed to stop things getting worse. Yet just 173,660 new build dwellings were completed in the year to June 2019. In 2021-22 there were 210,000 new build completions. And if the current rate of registration continues, we will be lucky to have an extra 100,000 houses this year.

The situation is so dire that, even when faced with rocketing mortgage rates, house prices have only fallen by 2pc over the past year on the official measure. Between high prices and high interest rates, the affordability of new housing has never been worse.

One might imagine that in these circumstances, the authorities would be pulling out all the stops to make it easier to build houses. This couldn’t be farther from the truth. Somewhere in the heart of the Government, more and more environmental measures are being promoted, which stack the deck against economic development.

Just last year, the Government made an about-turn on plans to scrap European Union “nutrient neutrality” rules – environmental regulations that restrict where houses can be built by placing an obligation on builders to ensure there is no nutrient pollution in areas already suffering a degree of it. This rule held back tens of thousands of homes for little environmental benefit. In 2020, one large developer was fined £600,000 after destroying the home of a single bat.

Research for the Home Builders Federation suggests that as many as 45,000 new homes a year may not be delivered because of the nutrient, water and recreational applications of the Habitats Regulations.

Now builders have the biodiversity net gain (BNG) policy to contend with. This aims to ensure that developments requiring planning from this month onwards will leave the habitat for wildlife in a better state than it was before development. Species decline is a serious concern, but it must be balanced with the need to fix our chronic housing shortage. And as a recent House of Lords report pointed out, the impact of sudden and new environmental regulations can be extremely costly.

So costly, in fact, both financially and through delays to projects, that they dissuade developers from seeking planning permission altogether.

Now consider that, while the draft secondary legislation which allows the Government to implement this BNG rule was published last November, finalised details have not yet been released. Yet the rules apply from Feb 12 this year, or April 2 for smaller sites.

The fact that the rules are meant to apply before they have even been published indicates an arrogance among the woke environmentalists who have pushed for them.

An economic impact assessment was published in 2019 and concludes that there is a real-life cost to business of £1.469bn at 2016 prices, allegedly balanced by £9.7bn of apparent environmental gains. But the environmental benefits are highly theoretical; the costs are real.

In any case, the £1.5bn is almost certainly an underestimate and may not take into account the knock-on effects of fewer homes on our wider economy. Builders are not just faced with the challenge of how to make their buildings enhance biodiversity. They must also read the minds of the civil servants to guess the contents of this secondary legislation. They will have to deviate from their core task of building and devote their efforts to establishing how best to satisfy vague environmental requirements.

Many, one suspects, simply won’t bother. In his book Home Truths, Liam Halligan shows how the planning around housebuilding has already become so complicated that it has been taken over by an “oligopoly of large builders”. Only large companies can manage the problems caused by the planners. The biodiversity net gain secondary legislation is bound to make this much worse.

It is not too late to reconsider this policy. There is still time to repeal the elements of the Environment Act 2021 that have “led the world” to such an extent that no one seems to want to replicate them.

Our future prosperity depends on politicians making sensible decisions – however fierce the opposition.