This was the subject of an article in today's Observer. To judge from the article and comments, the issue is not being explored in the necessary depth.
85% of Britain's population live within an area of about 150 miles radius centred roughly on Leicester. This is not because they particularly want to but because that is where the jobs are.
There are many reasons for this but the main explanation is that it is an example of the workings of Ricardo's Law of Rent, as it interacts with a tax system that ignores the facts of geographical advantage and disadvantage. The tax per unit of wealth production is the same in, say, the far north of Scotland as it is in the middle of London, and the effect is to make large tracts of the country sub-marginal for economic activity. With a different tax system, taking account of geographical advantage and disadvantage, these marginal areas could sustain viable economies; one need only look at places like Jersey and Iceland where it would be impossible to make a livelihood under the UK tax system.
The present concentration of population gives rise to a collection of problems - high housing costs, road and rail congestion, shortage of people to run essential service industries. In the absence of other measures, building on green field land in London and the South East will do little to alleviate rising costs of housing and will create other problems in its wake.
As regards high densities and quality of living space, typical Victorian suburbs with two-storey terrace houses have densities of around 45 houses per hectare whilst still leaving a decent amount of garden space and without feeling oppressively over-built. The trick of the better Victorian developers was to have efficiently designed houses laid out in a way that used the land efficiently. This is a technique - I would not call it an art -that has been forgotten.
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