The existing system of land use planning in the UK dates back to the 1947 Town and Country Planning Act and is therefore now well over half a century old. For most of that time, the town and country planners have run the system and until recently there has been remarkably little serious economic evaluation of it. However, there have been indications that government is beginning to take seriously the case for radical reform.
Having published a series of green consultation papers, followed by a policy statement, the government introduced the Planning and Compulsory Purchase Bill during the 2002/3 Parliamentary session. This Hobart Paper examines some of the government’s proposals against economic evaluation criteria. The principal deficiencies are found to be that the proposals do not properly address important topics such as the internalisation of environmental externalities or land betterment taxation. The author focuses on the former in particular. He discusses various options for change to the land use planning system primarily designed to introduce voluntary trading and the privatisation of development decisions. He argues that these options, and also market- based instruments such as tradable development rights, have the capacity to achieve a greater degree of allocative efficiency and to take some of the political heat out of the land use planning process.