23 May 2023

The cost of neutrality: how nutrient rules are sabotaging housebuilding


We have plenty of external economic problems – wars, plague, failed harvests abroad and so on – but never underestimate the British capacity for shooting ourselves in the foot with well-intentioned but damaging rules.

Natural England’s nutrient and water neutrality rules fall firmly into this category. The aim is noble enough: to ensure the vitality of our waterways by stopping excessive discharge of nasty chemicals like phosphates and nitrates. Which sounds fine and dandy, until you see the effect these rules are having on development.

For, if today’s Times scoop is to be believed, no fewer than 160,000 new homes that have planning permission are being held up because developers have to prove that they don’t fall foul of the nutrient rules. Now, even if you are a keen environmentalist deeply concerned about the health of our rivers, that’s a hell of a price to pay – if the 160,000 figure is right it’s more than half the 300,000 new homes a year the Government is at least notionally committed to.

The scale of the wider economic impact is difficult to gauge, given the panoply of variables around investment, council tax payments, but the Home Builders Federation cites a retina-scorching figure of £27bn of lost economic output and half a million jobs. There are ‘offsetting’ schemes, whereby developers pay to turn agricultural land into woodland and wetland, but as the Times report notes, they are both very expensive and there aren’t enough of them.

This would all be bad enough even if the lion’s share of this pollution was due to housebuilding, but it’s actually farmers and water companies that are responsible for most of the phosphate and nitrate discharge that so exercises Natural England.

This whole farrago is also a fine example of the various pathologies that bedevil the post-Brexit British state. The ability of a small group of bureaucrats to come up with rules that imperil companies, council finances and local economies without really being held to account for their impact. The failure of the Government to rein in quangos producing this kind of regulation and the fact that rules that stem from a European Court of Justice ruling are still hampering British economic growth years after we left Brussels’ regulatory orbit.

This is far from the only such area: not only is the Government labouring to get EU laws off the statute books, but our own regulators are actually going further in some areas than their continental counterparts – witness the CMA’s decision to block Microsoft’s acquisition of Activision/Blizzard a few weeks ago. For a party and government that has regularly promised red-tape slashing and quango bonfires, the arms-length bodies still seem decidedly unburned.  And, as former Communities Secretary Simon Clarke notes, when it comes to housing policy this really is ‘low hanging fruit where the Government could act’.

Of course, we should be wary of over-egging the pudding here. Some estimates put the number of new homes the UK needs at over 4 million, so revising nutrient neutrality rules and sorting out Habitats Regulations alone is certainly not going to solve the housing crisis at the stroke of a ministerial pen.

But it’s still really frustrating that a significant number of new homes that have planning permission are being stopped because of rules the Government ought to be able to adjust or simply do away with – if it really is serious about getting more houses built, of course.

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John Ashmore is Editor of CapX.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.