Problems of housing affordability have been afflicting parts of the UK, especially the South East of England, for a number of years. The problem is closely related to shortages in housing supply, which are, in turn, largely associated with constraints imposed by the English land planning system. A leading theory for explaining these constraints posits that they reflect political economy forces that convey the interests of current homeowners to planning decisions in disproportionate and excessively influential ways. We test this theory by examining survey data on public attitudes to house building in local communities; and by investigating whether these attitudes are related to local planning decisions. We find that there is a tendency for owner-occupiers to express greater opposition to local house building and that, in the decade to 2011, the housing stock grew significantly less in local authorities with higher proportions of owner-occupiers among local households. The results suggest the risk that planning decisions might have been distorted in favour of current homeowners is real and economically significant. We discuss a range of historical, socioeconomic and policy trends that help explain why successive governments of various stripes have been reluctant to address head-on problems in housing supply and put a curb on house prices.

What policies and institutions are needed to sustain long-run growth in the UK? We describe an optimistic story of the UK economy over the past 30 years. From the late 1970s, the UK reversed a century of relative decline in terms of per capita GDP with our main counterparts in the US, France and Germany. A key factor behind this improvement was an array of policy changes including an expansion of higher education and greater competition in product and labour markets. However, major weaknesses with respect to long-run investment in human capital, infrastructure and innovation remain. These are hampered by problems of short-termism and policy risk. We propose a series of radical reforms to address these problems: such as more flexibility in schooling with a new focus on disadvantage; a new architecture for national infrastructure decisions and more competition in banking.

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