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Investible Infrastructure

13th March 2018

Through the eyes of a Town Planner or Land Economist, change in our built environment can be seen as the product of a series of activities and transactions with both private and social costs and benefits.

For private benefits think of income derived from rent, and for private costs think of building maintenance costs. For social benefits, think of infrastructure like roads and railway lines, and for social costs think of the pollution created by the use of that infrastructure.

I believe it’s fair to describe the Town Planning process as existing primarily to maximise social benefits whilst minimising or mitigating social costs. Admittedly this is a bit of a sweeping statement but our Town Planning system isn’t primarily driven by considerations of private costs and benefits – like views of fields from your house, or its value or of profits or losses derived from development (apart from some matters connected to affordable housing and viability). Although the plan making and planning application process allows individual concerns to be aired I believe my position holds broadly true. Equally, and equally generally, I suggest it’s fair to view the investment market as primarily driven by private costs and benefits rather than broader social matters. Maximising private income and minimising private outgoings are the order of the day. There are exceptions to these rules, but I think they hold true enough too.

If you can bear the continued wanton oversimplification, for the purpose of this article I will refer to  social features of our built environment (serving no single economic beneficiary) as ‘infrastructure’, and private ones as ‘assets’.

In this context, Housing is an interesting subject area for me as it is an example of both a private and a social good, it can be viewed as both a private ‘asset’ and as public ‘infrastructure’. The absence of housing inhibits both broader economic progress (by making it harder to move closer to work for example) but also denies individuals a safe and secure family life. I suggest that this distinction is important as, for me, it is sharply reflected in how we finance its delivery.

Since the 1980s the UK Government has clearly viewed Housing as a private good, and not as ‘infrastructure’ capable of creating significant social benefits worthy of its own investment. The fact that new housing is largely delivered by the private sector, and not central government, is the evidence of this. (see graph below, extracted from the National Audit Office report in 2017).


In 1980, almost a third of housing supply was directly delivered by Government. Last year, with private provision not greatly different to 1980, the lack of public delivery was the main difference in overall delivery.

As others have noted previously, until we can agree that Housing is a social good – and rightly seen as infrastructure worthy of direct public expenditure then I don’t think we will be able to fix the broken housing market.

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