Fine for my backyard, not my neighbour's Perhaps we should simply scrap planning permission altogether, writes Tim Harford Eric Pickles has promised a hasty rethink of proposals to let homeowners bulldoze their back gardens without planning consent in another setback for government efforts to streamline the planning process. FT.com, April 16 I am never entirely reassured by the words "hasty" and "rethink" in proximity. Proximity is what this is about - Mr Pickles, the local government secretary, was trying to pass a law that would enable people to build substantial home extensions without planning permission. How substantial? Eight metres, which would consume my entire back garden and half of the garden beyond that. But the idea looks like it will be modified, because many Conservative MPs, local councillors and others don't like it. Zac Goldsmith, who has led the rebellion, said it was a "recipe for community disharmony" and suggested instead that developments should go ahead by default if neighbours did not oppose them. Sounds reasonable. Sounds nonsensical. Moving from a scheme where you decide what you build in your garden to a scheme where your neighbours decide what you build in your garden may change what gets built, but does nothing to reduce community disharmony. The same people will argue about the same things. Close neighbours often have conflicting interests about development - which is one reason why we have planning rules in the first place. So what is Mr Pickles trying to achieve? He wants more building. British homes are prohibitively expensive because we haven't built enough of them - new homes are being built at about half the rate that new households are forming. What's more, it's a good time to make up some of the shortfall. The economy is depressed and construction activity would be a good stimulus. Unfortunately the government's attempts to kick-start construction have not yet borne fruit. Don't lose hope. Perhaps George Osborne can delay the recovery so that Mr Pickles can make a difference. Ha! Perhaps. I wonder, though, whether Mr Pickles shouldn't think differently about planning reform. His current proposals will benefit homeowners with plans to expand, rather than large developers - whom journalistic ethics require me to describe as "canny." What would you suggest? The basic problem is simple enough. The market tells us there is a huge pent-up demand for building new homes - converting some shops and offices, but in particular building on green space. However, we are wary of letting the market allow any building without planning permission, because of the possible spillovers - new developments can clog roads, raise the risk of floods or simply look ugly. Building new luxury homes all over Hyde Park would be profitable in its own right but awful for London; a similar, if gentler, consideration applies to building in any field or garden. And so we have rules aimed at figuring out what should be allowed. And do they work? Not really. Casual observation suggests that planners allow all sorts of monstrosities while imposing a huge cost on homeowners - although probably not on "canny developers," whose knowledge of the intricacies of the planning system is a barrier to pesky competitors. So what is to be done? We could scrap planning permission, of course - the system was introduced in 1947 and it's far from clear that the UK's cityscapes have improved since then. But I suspect most people believe the island is too crowded to return to pure libertarianism. A more practical approach could retain the existing system, which gives planners widespread authority to determine what is best for a local area, but use market signals to persuade planners to approve more. How might that work? One proposal, floated by the think-tank CentreForum, would allow councils to reap the financial benefits of granting planning permission - which in some parts of the country can increase the value of agricultural land to a few million pounds per hectare. The landowner enjoys all that windfall - why should that be so? The duly motivated council would still be democratically accountable; considerations of safety, environmental hazard, congestion and aesthetics would remain on the table; and local taxpayers would benefit from local development. And yet we'd see more houses. All without fighting with the neighbours.