A new Harvard paper by three economists, including the former shadow chancellor Ed Balls, offers a fresh understanding of sluggish regional growth in Britain. This is crucial for the country’s future. Regional inequalities produce major differences in living standards, education and life expectancy. The authors conclude Britain needs: more Stem subject education, better infrastructure and transport, support for R&D clusters, and greater opportunities to move to other parts of the country. The fact that more delays on HS2 were announced yesterday (9 March), with doubts if the line will go north of Birmingham, is an example of the problems the study examines.
It highlights one of the key political issues of our time – the moral problem of Nimbyism, or the Not-in-my-back-yarders who oppose new development. Because it is expensive to move to London, people are trapped in sluggish local economies. A lack of housing in London and the south-east is slowing down the whole economy. We are allowing Nimbys to limit the sort of lives people want to live.
We can see the problem of Nimbyism locally. When preservation societies oppose extensions and councils fail to meet house-building targets, we see families living in small flats, housing stock that is badly maintained, or, worst of all, children living in flats with chronic mould. In these cases, the moral problem of Nimbyism is obvious enough.
This paper shows the unseen problem of these objections. London’s housing crisis is either locking people out of the UK’s most productive city or, for those living there, draining too much of their wages. Before housing costs, the economists explain, median household income is 14 per cent higher in London than the national average. After housing costs, it is 1 per cent.
That’s for the people who get to London. What stands out, sadly, is the way that many are priced out because of Nimbyism. We can see the long rows of Victorian houses that are preserved. Think of the careers that haven’t been started, the families that haven’t been formed, the experiences that haven’t been lived because many are unable to move there. It is easy to damage people so out of sight and out of mind.
No one living in a house that has gained in value has earned that money. It is not like owning stocks and shares which are linked to the productive output of a company. Indeed, many Victorian houses have gained in value despite being damp and draughty. But, by retaining those buildings, Nimbyism blocks out other people from the system and slows down and distorts the whole economy. It prevents people from making fundamental decisions about their lives – where to live, what work to do, how to raise their family. And the longer this delay continues, the worse the impact will be.
There are solutions that take account of both sides. Under the “street votes” proposal, for example, which would allow residents to take local planning decisions into their own hands, homeowners could benefit from new development. But we need to start calling out Nimbyism for what it is: a miserly system of privileging one group over another. For the sake of people who live in nice expensive houses we are jeopardising the performance of the whole economy. And the lives of people who go unseen by the current system.