The previous chapter set out the key assumptions and elements of the growth-dependent model of planning. This has made it clear that growth-dependent planning has two requirements if it is to be effective. First, it needs regulatory control to deliver social and environmental benefits from marketled development. Second, it assumes economic growth to drive such market-led development. Chapter 2 has already shown that ideological and political shifts often result in regulation within the planning system being relaxed to the point where growth-dependent planning cannot be fully effective in delivering widely spread benefits. But this is often a governmental response to the vulnerability of the paradigm to the absence of economic growth. This chapter explores these vulnerabilities further, looking both to the short and longer term. It also examines how the planning system generally responds through offering leverage of private sector development and the problems that current austerity budgets in the public sector pose to this apparent solution in an economic downturn.

The core assumption of economic growth

The main strength and also weakness of the growth-dependent approach lies in its reliance on economic growth to drive urban development activity. Without demand for the new land uses, the growth-dependent model does not work. Demand drives the profitability of new developments, without which the development would not go ahead and the social and environmental benefits, both direct and indirect, cannot be financed. The expectation of growth has not been an unreasonable assumption. Since the postwar period, governments have become accustomed to national economic output increasing. Over the period from the first quarter of 1955 to the last quarter of 2010, it increased in real terms (that is, allowing for inflation) by 3.68 times, that is, an average annual growth rate of 2.4 per cent per annum. This is clearly illustrated in Figure 4.1, which shows the real level of national economic output or GDP. Growth is thus, in some sense, a norm.

However, looking at GDP figures more closely highlights that this growth has not been a steady and continuous upward trajectory. The growth rate has varied up and down. In the year to the first quarter of 1973 it reached almost as high as a heady 10 per cent. But there have also been years, sometimes periods of several years, when growth has been negative, that is, the economy has been in recession.