Restrictive Planning Laws and Occupational Licensing in Britain: A Barrier to Social Mobility

Research shows Britain's planning and licensing regulations impede social mobility. Advocates suggest economic freedom as a solution to enhance income mobility.

By Hadeel Hashem.

"New research from the Institute of Economic Affairs highlights how Britain's planning system and occupational licensing regulations are impeding social mobility for the nation's poorest. Dr Justin Callais and Dr Vincent Geloso's study reveals a correlation between the rigidity of these systems and the stagnation of income mobility since the 1970s.

Britain's planning restrictions have been criticized for disproportionately benefiting wealthier homeowners at the expense of the wider population. Evidence suggests that without these regulatory barriers, housing prices could have been significantly lower, making it easier for individuals to relocate for better employment opportunities. This inability to move closer to more lucrative job markets is a critical factor holding back social mobility.

The study also addresses the issue of occupational licensing, which has seen a marked increase in the number of professions requiring certifications. By comparing UK regulations with those of Denmark, Callais and Geloso argue that reducing the scope of occupational licensing could considerably improve income mobility. They suggest that revisiting and potentially scaling back these regulations to 1990s levels could lead to a significant boost in social mobility, by up to 3.1%.

Contrary to the belief that government spending on welfare and education is the primary means to enhance social mobility, the authors advocate for a different approach. They propose that enhancing economic freedom through limited regulation, more flexible labour markets, and fewer barriers to business formation could be more effective. This perspective is supported by the argument that economic freedom not only facilitates individual prosperity but also has fewer negative repercussions compared to policies like high taxation and redistribution.

As Britain grapples with these challenges, the findings of Callais and Geloso offer a compelling argument for reevaluating the country's approach to planning and occupational licensing. By embracing the principles of economic freedom, there is a potential pathway to breaking down the barriers that prevent many from climbing the social ladder. The dialogue surrounding these issues is crucial, as it prompts a reexamination of policies that may inadvertently be hindering the very progress they seek to promote."