Bring back urban development corporations  to build the homes we need, says Adam Smith Institute

A new paper from the Adam Smith Institute (ASI) sets out how Urban Development Corporations (UDCs) could unlock housebuilding and drive growth.

The housing crisis affects everyone, but it hits young people, who are disproportionately concentrated in cities, especially hard. Nine of the ten areas with the highest numbers of 25- to 34-year-olds are in inner London, where sky high renting and housing costs prevent them getting on in life.

By embracing UDCs, the government could get Britain building, bringing new opportunities to young people living in cities. The UDC model has a proven track record of delivering homes in areas where housing is particularly expensive.

The ASI has outlined 3 new potential sites for UDCs, which have been brought to life with mapping from LandTech. Their most ambitious proposal is for a UDC in the Thames Gateway, spanning from East London out into Essex and Kent, and covering what would be the largest area ever managed by a development corporation. The ASI says this could deliver 163,000 new homes, turning the Thames Gateway into a vibrant economic hub which extends from the original Docklands UDC. 

The Thames Gateway UDC, which has been brought to life with new mapping from LandTech, would be a particularly effective way of expanding Greater London's housing stock. Not only would it require comparatively modest adjustments to London's greenbelt, it would also transform the lives of existing residents. With seven of the ten proposed boroughs ranking among the poorest in the country, new housing and infrastructure would provide a vital boost to local living standards.

In addition to this proposal, the paper also outlines new plans, complete with brand new maps, for two further UDCs in Oxford and Bristol.

The economic potential of both of these cities' has been stifled by outdated planning rules. Oxford risks falling behind as a global leader in research and development thanks to limited lab space. Meanwhile Bristol's budding digital, science and tech industries are constrained by a restrictive Green Belt. Creating UDCs in both cities would enable them to build the homes and infrastructure they need to thrive.

As well as setting up brand new UDCs, the government should adapt existing regeneration strategies in Cambridge and Liverpool to a UDC model, using private sector dynamism to enhance their impact. 

The most famous example of a UDC is the London Docklands Development Corporation (LDDC) – founded by Michael Heseltine during the first Thatcher administration. Over 17 years, it transformed nearly 5,000 acres of East London from industrial wasteland into a thriving urban centre home to upwardly mobile young people. It spurred the creation of Canary Wharf, now the capital's second financial centre, 120,000 jobs and 17 million square feet of office space. For every £1 the state put in, there was £4 return in private investment.

But, it wasn't just London that was transformed by UDCs. The previous Liverpool UDC, set up by the Thatcher administration, breathed new life into the city, regenerating the iconic Royal Albert Dock and creating over 22,000 jobs across Merseyside. 

They can still be used today to transform depressed urban areas. Under the Local Government, Planning and Land Act 1980, the Secretary of State can set them up when it's in the national interest. Once established, these UDCs can acquire land, build infrastructure and bypass local authority planning systems.

UDCs are designed to be small, lean and entrepreneurial. Historically, their boards, staffed by part-time members from both the private and public sector, were appointed by the central government and were accountable to the Secretary of State, not local authorities. This meant that they were opportunistic and agile, responding dynamically to events rather than seeking to impose a master plan.

The brilliance of the UDC model lies in their ability to speed up development while relying on private sector dynamism. They succeed because they are not constrained by red tape and can work across boundaries to build at speed and scale. By making way for new homes and infrastructure, they nurture the ideal conditions to start a business, attracting outside investment and stimulating growth. 

The recently elected Labour government has signalled that it wants to create a fleet of 6 ‘new towns'. Any expansion of the housing stock is welcome. But, developing existing settlements is better than artificially creating new ones. To succeed, new towns must learn from UDCs.

Instead of working from a central plan that uses statist planning principles, new towns should copy the UDC model, using market incentives to build communities that people actually want to live in. Politicians should ensure that new developments are linked to existing centres of economic activity and involve private sector partners. This will mean that new towns are built where there is genuine demand, tackling the housing crisis and creating communities that will be able to support themselves.

Sam Bidwell, report co-author and Director of Research at the Adam Smith Institute said:

“The housing crisis continues to be one of the most important issues facing Britain today. Sky-high housing costs are affecting everyone, but they are particularly preventing young people from being able to afford suitable accomodation in our cities.

But there is a ready-made tool to tackle this: Urban Development Corporations. Time and time again, they've unlocked housing for young people, created huge private sector investment, and transformed derelict parts of our cities - and they can do so again.

We've outlined 3 new ambitious proposals for UDCs in three of Britain's most productive cities. But the government could also consider using the UDC model to build the new towns it has promised. 

Britain's stagnant economy and broken planning system are not laws of nature. By embracing the creative power of UDCs, they can be reversed”

Rolf Merchant, report co-author said:

“The last 50 years of urban development policy offers both cautionary tales and sources of inspiration. The success of the 80s and 90s UDC model - in some cases completely changing the face of swathes of urban fabric and bringing huge societal benefit - stands out as a policy worth revisiting and re-invigorating to help tackle today's problem of housing shortages in British cities. 

It makes complete sense to focus on this proven solution, which can provide more opportunities for young people to live, work, and build their futures in our biggest cities."