Rachel Reeves' planning reforms lay good foundations Institute for ...

Rachel Reeves has set out the new Labour government’s first steps towards “fixing the foundations” of Britain’s economy. In a speech at the Treasury, the new chancellor announced a series of planning reforms which she says will get Britain building the infrastructure it needs, including the 1.5 million homes in five years and clean power system that the government committed to in its manifesto. This is a promising start, but actually building the homes and infrastructure that Britain needs may mean difficult battles ahead and the government needs to make sure its reforms stick. 

The new government has signalled that it is serious about planning reform

The government has followed through on the tone of its manifesto, which made no bones about prioritising building over local objections. Reeves criticised a “status quo which responds to the existence of trade-offs by always saying no”. Local authorities will be required to produce local plans that meet mandatory housing targets and, where necessary, they will be expected to review their green belt. If the government feels they have blocked a development that would benefit the regional and national economy, Reeves confirmed that deputy prime minister Angela Rayner “will not hesitate” to use her prerogative to review the application.

Sending such a strong signal about the government’s commitment to reform planning is welcome, with England’s planning system long holding back building. On housing, upcoming Institute for Government research finds that, over the last two decades, the most effective planning reforms have been top-down measures that incentivise local authorities to approve more building. Similarly, planning delays have been slowing down attempts to build more renewables and decarbonise the power system – reform is needed to accelerate progress.

The first test will come when the government reveals where it plans to build

The government has said it will publish a draft National Planning Policy Framework before the parliamentary recess in August.  4 https://www.thetimes.com/uk/politics/article/rachel-reeves-speech-chancellor-labour-d9z6mll7c  The big question is what its mandatory housing targets will look like. It could keep the current formula (based on population projections, with a 35% uplift for the 20 largest urban areas), or it could realign the targets according to its own economic strategy, and national spatial plans for energy and other infrastructure. The government also needs to decide how much new housing it will expect local authorities to plan for independently, and how much it will deliver through its new towns programme.

Whatever it chooses, it will need to build lasting consensus behind its building programmes. Housing targets have long been controversial, and various versions have been unmoored by political opposition – just ask Boris Johnson about the “mutant algorithm”, or Michael Gove about why he made targets advisory in 2023. And while Rachel Reeves announced the end of restrictions on new onshore wind in England, these were previously introduced because of concerns about vocal local opposition. With lots of new renewable generation needed, as well as extensive grid upgrades, the new government will have to be prepared for potential opposition, even if only from vocal minorities. The first test for this government’s planning reform programme will be whether it can maintain support when the realities of building new infrastructure become apparent.

The government's building plans will face other pressing issues

Planning reform is not the panacea for all Britain’s building problems. The housing market is in a downturn, materials costs are up, and there are skills shortages in many sectors, including construction. The UK is also competing with other countries for materials and skilled workers, particularly when it comes to energy infrastructure. Reeves made it clear that the private sector will be doing the heavy lifting in her plans but, in the last century, governments have only managed to build more than 300,000 houses a year when there has been both significant state and private investment.

There is a lot more to do, but seeing the Treasury engaging properly with planning reform is encouraging. Given the scale of the challenge, this is a strong start.